Western wind turbine manufacturers are treading a cautious path back to full production in China following plant stoppages due to the Coronavirus, but their supply chain will need more time to get back to normal, Recharge has learned from three major OEMs.
Danish wind giant Vestas said it restarted operations as planned on 15 February and received further approval on 23 February, enabling it to significantly ramp up its production in China again.
“We are maintaining a continuous dialogue with local authorities, and expect to return to full capacity soon, provided local conditions allow,” Vestas said in a statement sent to Recharge.
Vestas produces blades, generators, control systems and nacelles in Tianjin, China.
The region on 25 February reported 135 cases of Covid-19, and three deaths. That makes it one of China’s less affected regions. In the epicentre of Hubei, 64,786 cases of the virus have been reported, with 2.563 deaths.
German-Spanish manufacturer Siemens Gamesa also said it has begun to gradually resume production in China again since mid-February.
“Comprehensive preventive actions are taken to make sure our employees are safe when returning to work,” the OEM said.
“We are assessing the impact the virus is causing on our supply chain, the movement of components and people, and the operation of manufacturing facilities.”
Siemens Gamesa also has factories also in Tianjin and in Shanghai, where 336 cases of the virus have been reported, with three deaths.
Siemens Gamesa declined to make more detailed comments about its supply chain, but rival German-Spanish OEM Nordex – which has no factories in China, but sources key components form the Asian country – offered further insights.
Company spokesman Felix Losada admitted that the company’s procurement activities along the entire supply chain – from the manufacture of components to the transportation of components within China to export and shipping from China – are already affected by transport restrictions and production delays.
“The containment measures have led to disruptions in our Chinese supply chain for modules (i.e. Tier 1 products) and indirect effects on component deliveries,” Losada told Recharge.
“The virus affects the entire global economy and therefore also our industry. The measures taken in China to limit the virus have brought a large part of local component production to a standstill, including for wind turbines.”
But matters may be improving for the supply base.
Like Vestas and Siemens Gamesa, Nordex said local suppliers have already started production again, or at least are about to do so.
“However, it is foreseeable that they will still be below the promised production capacity,” Losada acknowledged.
None of the three Western OEMs made clear statements on whether, or how, the production stoppages and supply chain disruptions might affect their revenues.
“Due to the complex situation, we cannot yet finally assess the situation, like the entire industry,” Losada said. “Details are not yet foreseeable today.”
Vestas said it continues to “leverage our global footprint to mitigate impact,” and Nordex added it is currently looking whether some components can be produced in other parts of the world instead of in China. The company itself also has production facilities in India, Brazil, Spain and Germany.
Despite the cautious optimism about a return of business activities at the turbine manufacturers and their suppliers, all three companies are taking precautions to protect their staff.
Siemens Gamesa said that as of now it has no employees infected by the virus. Nordex said its office in Shanghai with 60 employees will remain closed until 2 March, while the employees there will work from their home office.
However, as the virus outbreak is on its way to becoming a pandemic, companies may also have to face business disruptions outside China.
Following the developments in South Korea and Italy, Vestas already said it is restricting all travel to and from those two nations to business-critical trips only, in addition to existing restrictions the OEM has on China.