LITTLE ROCK — Nordex USA announced Friday that it is closing its Jonesboro wind turbine factory because of overcapacity and cuts in government tax benefits, a decision Gov. Mike Beebe blamed on Congress.
The plant, lured to Arkansas with millions of dollars in state incentives, will cease production after it fills current orders. Production will be moved to a factory in Rostock, Germany, officials said. The training academy and the central parts storage and repair facility in Jonesboro will remain in operation in support service and operations.
About 40 employees both in Jonesboro and at offices in Chicago, are expected to be laid off starting this fall, said Naomi Lovinger, spokeswoman for Nordex USA, a subsidiary of the German firm Nordex SE. She did not know how many of those employees would be from Arkansas.
“This is a sad day for all of us,” Ralf Sigrist, president and CEO of Nordex USA, said in a news release. “We will lose valued colleagues who have done their very best for us, but the decision was inevitable considering the underutilization of our plant.”
The company said Nordex’s service activities for all existing U.S. wind farms are not affected by the closure of the Jonesboro plant.
When Nordex officials and the Jonesboro Regional Chamber of Commerce announced plans to build the $100 million facility in the Craighead Technology Park in 2008, they said the wind turbine manufacturer would employ at least 700 workers with average wages of $17 an hour.
Lovinger said Friday that 50 people currently work at the Jonesboro plant. Joe Holmes, spokesman for the Arkansas Economic Development Commission, said the plant had no more than 100 workers at the height of production.
The state’s relationship with the wind energy industry began in 2007 when LM Glasfiber, now LM Windpower, announced plans to build a $150 million plant at the Port of Little Rock. The plant is now operational.
Other wind industry companies soon followed to supply LM Windpower, including Nordex and Beckman Volmer, which last year opened in Osceola and provides steel parts to Nordex.
Congress had been approving the tax credit annually, but it expired in January when federal lawmakers failed to agree on a budget. The tax credit was revived for one more year when the fiscal cliff deal was reached.
Last year, during a speech in Atlanta at the WindPower convention, Beebe called opponents of an extension of the wind production tax credit “unAmerican.”
He later described his comment as “hyperbole,” but added, “I stand by the fact that energy independence for America is an American value that all of us ought to be interested in, and one component of energy independence is wind energy.”
The governor said Friday said that Congress’ failure to approve a long-term extension to the wind production tax credit led to Nordex’s decision to shut down production in Arkansas.
“I’ve been preaching for as long as you can remember that the lack of certainty by extending for a year at a time the wind energy tax credit is terrible public policy,” Beebe said in an interview with the Arkansas News Bureau. “This is directly related to Congress’ inability and dysfunctionality to be able to follow through on a policy they started, and now they can’t get together and come to an agreement.”
Beebe said the state started recruiting the wind power industry after the federal government expressed interest in alternative energy, such as wind power, and Congress approved the production tax credit.
Holmes said AEDC officials were not surprised by Nordex’s announcement because the wind industry as a whole has been struggling.
“The wind industry, the last three or four years, it’s been in real flux, primarily because of the production tax credit, the uncertainty of it from year to year to year,” he said.
H0lmes said AEDC offered $8 million in economic incentives from the Governor’s Quick Action Closing Fund to attract Nordex to the state, including $6 million allocated to Nordex for training and sight preparation. The company has spent about $2.5 million of the funds, he said.
The city of Jonesboro received the other $2 million for road and rail improvements, and spent about $1.3 million, Holmes said.
The AEDC and the Arkansas Development Finance Authority gave Nordex an $11 million bond guaranty, Holmes said, adding that the company still owes about $9.3 million and has been making payments.
Nordex also was offered a cash rebate for 10 years at 5 percent of total payroll for new jobs. Holmes said Nordex received one check for $263,275 last year, which it returned to the state.
“They gave it back because things were in flux,” he said. “Things weren’t growing as planned. They thought, we thought, back in 2008 and ‘09 that the wind energy and alternative energy development in the United States was catching fire. That hasn’t happened, certainly not the way everybody anticipated.”
Holmes said the state is working with Nordex to recoup the unspent incentive money.