All over the U.S., people are wondering aloud whether manufacturing that left our shores is now ready to come back. Factors like greater supply chain efficiency and intellectual property security, coupled with high shipping costs and the rising cost of labor overseas, have many believing that the pendulum may be swinging back in favor of manufacturing in the United States.
How this ultimately plays out remains to be seen, but there’s plenty of reason to be optimistic. Coupled with this is a golden opportunity to “take the bull by the horns” in another area. An excellent bet for rebuilding a strong manufacturing base in the states is to support the growth of emerging technologies targeted at high-growth areas like renewable energy (solar, wind, and geothermal power); fuel-efficient, hybrid, and all-electric vehicles; and cleantech sectors such as water desalination and purification. It’s an opportunity for America to become the leader in the manufacturing of parts and components necessary for renewable power-generating equipment and systems, as well as other systems that will be crucial to solving some of the planet’s biggest issues–such as clean water shortages–over the long term.
Many of the skilled workers formerly employed in industries that have lost jobs to overseas companies already have the skills required by a clean energy economy. These include sheet metal workers, welders, and machinists ready to ply their trade in an important growth industry. And many of the domestic manufacturing plants formerly used for manufacturing parts that are now being outsourced overseas can be retooled for production of components needed in new energy technologies, like wind, solar, and geothermal.
As it turns out, American manufacturing for the wind power industry, in particular, has already gotten off to a pretty good start. On September 3, the American Wind Energy Association (AWEA) issued a statement announcing that U.S. wind industry installations had surpassed 20,000 megawatts (MW), achieving in two years what had previously taken more than two decades. According to AWEA, wind now provides 20,152 MW of electricity-generating capacity in the United States. It is said to produce enough electricity to serve 5.3 million American homes or power a fleet of more than 1 million plug-in hybrid vehicles.
“Wind energy installations are well ahead of the curve for contributing 20% of the U.S. electric power supply by 2030 as envisioned by the U.S. Department of Energy,” said Randall Swisher, executive director of the American Wind Energy Association (AWEA), in the statement.
Earlier this year, AWEA reported an increase in the share of U.S.-made wind turbine components, from less than 30% to approximately 50% in three years. A big factor, AWEA said, was the “relatively stable availability” of the production tax credit (PTC) over the last three years. As a result, U.S.-based supply chain providers have been able to establish a much stronger foundation of domestic manufacturing for turbine components, ranging from towers and blades to gear boxes, bearings, and electrical and electronic components. AWEA estimated that, by the end of 2008, approximately half of the turbine components for turbines installed in the U.S. will be produced domestically. It also said that in 2007 and early 2008, at least 17 manufacturing facilities had been brought online or expanded in the U.S., creating more than 4,000 jobs and $500 million in manufacturing investment.
In August, a new market research report from BCC Research projected the domestic market for wind turbine components and systems to be worth $60.9 billion in 2013, up from $7.9 billion in 2007 and an estimated $11.2 billion in 2008. This growth potential hasn’t gone unnoticed outside the U.S., either, as evidenced by a recent Wall Street Journal report (September 12, Alexander Becker, B4) that Germany’s Siemens AG planned to increase its production of wind-turbine parts in the United States. Andreas Nauen, chief executive of Siemens’s wind power unit, reportedly told the Wall Street Journal’s Alexander Becker that Siemens plans to manufacture wind-turbine nacelles in the U.S., in addition to the rotor blades that it already produces at a plant in Iowa. “By boosting its manufacturing capacity,” Becker wrote, “Siemens is getting in gear for the expected long-term growth of the world-wide wind-power market.”
As Design-2-Part goes to press, the recently-adjourned U.S. Congress has taken a necessary step toward ensuring that renewable energy technologies continue to play a vital role in the expansion of U.S. manufacturing. Its passage, on October 3, 2008, of the Energy Improvement and Extension Act of 2008 extends the federal investment tax credits for businesses and individuals who invest in various forms of renewable energy. The new law, signed by the President the same day, also extends the production tax credits for facilities that generate energy from renewable sources. Both actions are expected to increase the market demand for American-made parts, components, and assemblies on the part of OEMs serving industries such as solar, wind, geothermal, and green building.
Renewal of the tax credits encourages further investment in renewable energy industries that have the potential to help solve our nation’s energy problems while providing meaningful jobs for thousands of workers. According to a report from AWEA earlier this year, expiration of the tax credits could have placed $19 billion in renewable energy investment and some 116,000 American jobs at risk. Let’s hope that the tax credits help to continue the momentum that’s been built toward strengthening America’s economy around a clean-energy manufacturing base.
For more information on AWEA, visit www.awea.org.
For more on BCC Research, or its report, “Wind Turbines: The U.S. Market (EGY058A),” visit www.bccresearch.com or contact the company at 866-285-7215.