EkaLore has written previously about Alien Invaders changing the marketplace for wind energy during the globe’s ongoing Green Energy transition. Enterprises in this marketplace are under financial and operational pressures even as advocates hope for double-digit growth in capacity volumes sold/installed. This is a quick Alien Sighting report of how the marketplace continues to change as market players react and execute.
EU market players (Siemens/Gamesa, Vesta, Nordex, others) are perceived as weaker competitors with problems in raw materials (steel and semiconductors), capital flexibility (equity valuation, balance sheets), and market uncertainty (EU Green Investment Policy). The ongoing problems in global materials cost increases (steel) and availability (semiconductors) is compounded by companies adjusting demand causing increased costs and lead times for specialty products. Capital flexibility is limited by steep declines in stock prices (15-20% year on year), increases in borrowing costs (inflation and market rates), and balance sheet ratios (with margins and cash flow pressures). Market uncertainty over EU market preferences (or lack of firm policy favoring wind) acts against expansion of capacity to service an uncertain ‘domestic’ demand. In sum, global enterprises are forced to change execution as double digit increases in costs, market desires for lower prices, and raw materials issues all occur simultaneously.
General Electric (GE) is facing parallel challenges in North American markets with recent financial disclosures citing raw materials and logistics cost increases as major factors. GE disclosed tactical responses of raising prices, cost containment (new suppliers/sourcing), and product line management (redesign, configuration). US federal/state domestic policy is creating market uncertainty that restrains enterprise investment and sales. In sum, EU and North American players are challenged in parallel ways that require changes in execution.
Read the next post to see our overview of the Chinese marketplace and the challenges/opportunities.
If you are a domestic or European wind power manufacturer and you’d like to chat about how you can better compete consider scheduling a free consultation with a Senior Analyst at Ekalore – www.ekalore.com/contact
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