Gamesa Making Major Job Cuts in Asia

In reaction to negative market forces, Gamesa are making major job cuts globally. The most employee reduction is, not surprisingly, happening in Europe, where the company will lay off 1,280 people. In the US, 505 Gamesa employees will need to look for other jobs.

Asia is also affected, with China losing a huge chunk of the workforce. China — which for Gamesa is the only manufacturing hub other than its home country, Spain — as many as 680 people are to be laid off.

Even India, which contributes 13% to worldwide sales of the global wind power major Gamesa, has felt the pressures of the market compulsions which has caused the company to decide to lay off 135 people in India.

Gamesa’s action in India is yet another symptom of the tough conditions prevailing in the Indian wind power industry. In wanting to reduce its manpower, Gamesa is in good company — wind turbine manufacturers such as Suzlon and Vestas have also announced manpower reduction. Only, Regen Powertech seems to be bucking the trend and has plans to hire.

Despite the current slowdown in the Indian market, Gamesa, which is one of the top five wind turbine manufacturers in the world, sees India as one of its major markets. In the current year, it sold machines for 210 MW and the sales contributed 13% to its worldwide sales according to information made available by the company. Gamesa has global orders worth 1,578 MW on hand, and India accounts for 16% of it.

Though India is a major market for sales, Gamesa does see it as big enough for integrated manufacture. All the key parts for Gamesa’s turbines are imported, mostly from China. Gamesa says the machines sold in India are 70% indigenised. However, since it counts logistics costs and customs duties in the calculations, the actual value of made-in-India items is less than 70%.

The level of indigenisation is a key data point in the context of an unfolding development. The Government of India is working on a ‘generation-based incentive’ scheme for the wind industry (basically, reviving a similar scheme that existed until March). The GBI is a fixed amount per kWhr produced. There is a call in the industry to provide higher incentives for those who buy machines that have higher local content.