FORT MADISON – While the fact that Congress finally approved a renewal of tax credits is good news for the wind energy industry, it does not mean former workers of the Siemens plant in Fort Madison will be getting called back anytime soon.
Siemens Energy Inc., which manufactures wind turbine blades and other equipment, laid off 615 workers in Iowa, Kansas and Florida last September. The layoffs at the Fort Madison Siemens plant accounted for 407, or 66 percent, of that number, with 18 salaried and 389 workers losing their jobs in the last quarter of 2012. At present, 220 full-time employees remain at the local facility.
The renewal of the production tax credits, most of which expired on Dec. 31, was part of the tax relief bill approved earlier this week by Congress. While a majority see the renewal of the tax credits as a positive, their optimism varies as to whether the renewal will result in some of the laid off workers being called back to work.
Steve Bisenius, executive director of the Lee County Economic Development Group, says feedback he has gleaned from MidAmerican Energy officials indicates the renewal could prompt new orders for blades and equipment.
“They say it could be a good start for the first part of this year,” Bisenius said. “Only time will tell whether it will be enough to make orders come in or enough to impact employment.”
A lack of orders was cited by Siemens spokesperson Melanie Forbrick last September as a reason for the company’s 600 some layoffs.
Forbrick then said the tax credits, and their pending Dec. 31 expiration date, caused a surge of pre-orders from companies for 2012 wanting to reap the tax advantage, but left the company with 90 percent fewer orders for 2013.
“But we definitely plan on maintaining a presence in Fort Madison until the market changes,” Forbrick said in September, adding that once market demand increases and stabilizes for 1,500 to 2,000 wind turbine units, some of the laid off workers may be called back to work.
In light of Congress’ last-minute renewal of the tax credit, Forbrick told the Associated Press, “We are currently evaluating the potential impact the extension will have in the short term.”
A message was left for Tony McDowell, plant manager of the Fort Madison Siemens plant, but it was later learned he is on vacation until Jan. 7.
Others are more skeptical as to whether the one-year renewal of the tax credits will be enough to increase orders and stabilize demand.
“It certainly would have been better if Congress had made it for five years, rather than a one-year renewal that will be considered each year. It would have created more stability,” Bisenius said, adding that projects started in this year will have until end of 2014, perhaps the first part of 2015, to be completed and eligible for the tax credits.
Tim Gobble, executive director of Fort Madison Partners, agrees that renewal of the tax credits is a positive step, but doubts it will have any measurable impact on employment during the first quarter of 2013.
“Historically, once things expire, it takes months and months for companies to move forward,” said Gobble. “I don’t know that the year-to-year renewal will do much initially, but only time will tell.”
Both Bisenius and Gobble cite Congress’ indecision about the renewal in 2012 as the reason for the dramatic drop in orders and subsequent layoffs at wind energy plants.
“Yeah, it’s great Congress did something, but their lack of movement caused companies to pre-order and, for some, hold back, but at least it’s something,” Gobble added.
It was just six years ago that Siemens Power Generation executed a purchase agreement for the manufacturing plant in Fort Madison – the company’s first turbine production facility in the US.
The State of Iowa, Lee County and the City of Fort Madison pooled resources to provide an attractive incentive package to assist with the start-up effort. The Iowa Economic Development Board approved direct assistance from the Economic Development Set-Aside Program and tax incentives from the High Quality Jobs Creation Program as part of the agreement to locate the project in the state.
On the federal side several years ago, Congress adopted energy tax credits in hopes of increasing renewable energy sources in the U.S.
David Pitt of the Assoocated Press contributed to this report.