Siemens will apply a severe adjustment of 400 million euros to its subsidiary Gamesa to restructure the business and return it to profitability within two years. The German company has summoned financial analysts today to explain its exit strategy from the crisis, which fully affects the group’s presence in Spain, where it has nine factories and an R&D center that directly employ almost 5,000 workers.
Siemens has indicated that it will restructure its onshore wind installations activity based on criteria such as “the existence of favorable regulations and policies and the obtaining of significant benefits, which will allow the company’s industrial footprint to be optimized.” The presence in Spain is so relevant that one of the Government’s main tasks is to become the second contributor to the company’s rescue, after Germany. The total cost of this rescue amounts to 15,000 million euros and the new Minister of Industry, Jordi Heréu, will be in charge of containing the impact on employment with the offer of public guarantees and support for new projects.
But, for now, Siemens has avoided specifying how it will apply the proposed structural adjustment. Throughout this week he is expected to inform workers and the Ministry of Industry about his plans in Spain. UGT has criticized “the obscurantism” of Siemens Energy, regretting that it has not defined when it will resume the commercial activity of Siemens Gamesa, paralyzed after technical problems were detected in its main models of land-based wind turbines. “If there are no sales of wind turbines in a short period of time,” UGT FICA has warned, the viability of the company and its suppliers will be penalized, in addition to jeopardizing the future of Gamesa’s 5,000 workers.
What is clear is that the company will enter a stage of more moderate growth in the next two years. More than accelerating production to win new customers in the global race for energy transition, in the next four years it will absorb the almost 17 billion euros it has accumulated in orders. “Market share is no longer our priority,” the company summarized. Its president, Christian Bruch, has explained this by indicating that, in the future, Siemens will continue in the renewable and wind business but that it will change its current approach.
Over the last few months, the company has created a technical team of 50 people to investigate the origin of the failures in the turbines, finding problems in the turbines themselves, in the propeller production process and in some materials. The tracking led, according to CEO Jochen Eickholt, to factories in Portugal, Spain, Mexico and India. For this reason, the marketing of wind turbines on the 5x platform has been suspended and Gamesa, the third largest global turbine manufacturer with almost 60,000 units installed around the world, has opened discussions with customers to inform them that “it does not guarantee certain deliveries.” within the scheduled time.”
The extent that this stoppage may have in projects and promotions already underway has not been determined by Siemens either, but taking into account that its market share in installed wind power in Spain exceeds 50%, it could be considerable. The lack of infrastructure can delay the connection of wind farms to the grid within the period provided for by the Energy Transition, in addition to causing significant economic damage to developers and large clients. The company has already started talks with these agents and, as it has admitted, is renegotiating contracts. A good part of the provisions that it has charged on its balance sheet would be allocated to an expected fear of litigation to compensate for these non-compliance.