DES MOINES, Iowa (AP) — Wind energy equipment manufacturer Siemens Energy Inc. will lay off 615 workers in Iowa, Kansas, and Florida in part because Congress has not renewed a tax credit for wind energy, the company said Tuesday.
Siemens said the biggest job losses will come in Fort Madison, Iowa, where 407 workers at a wind-turbine blade factory will be out of work. About 220 workers will be retained at the plant to support ongoing operations, spokeswoman Melanie Forbrick said in a statement.
About 146 workers are affected in Hutchinson, Kan., leaving 152 still working. In Orlando, Fla., about 62 workers will lose their jobs and about 150 will remain.
The company blamed difficult market conditions due to lack of congressional action on a wind energy tax credit as well as increased use of natural gas-fired power plants. It said it has worked for the past 10 months to address the uncertainties but needed to adjust its work force until demand for turbines returns.
"As a result, following the rapid ramp-up of the wind power industry over the past five years, the industry is facing a significant drop in new orders, and this has an unfortunate consequence on employment in this segment of the power industry," the company said in a statement. "Now, we have had to make the difficult decision to adjust the manufacturing, projects and administrative support functions of our wind power operations to reflect the current and projected business volume."
Full-time workers with at least six months on the job will get a severance package which includes continuation of some benefits, career counseling, resume preparation and job-placement assistance.
The layoffs will leave the company with about 1,000 workers in its wind power business in the United States.
Siemens said over the past five years it has invested $100 million in building its U.S. wind power production. It had reached more than 1,650 workers.
The company says it has manufactured, installed and serviced over 3,900 wind turbines across the country, representing enough electricity to power more than 1.75 million average households.
It says it remains committed to maintaining its U.S. factories and will continue to support the U.S. industry as well as export wind turbine components.
The company began production in a 311,000-sq. foot plant in Fort Madison in 2007 and expanded it to nearly 600,000 sq. feet in 2008, receiving $3.4 million in Department of Energy manufacturing tax credits for the project.
The Kansas plant is about 300,000 square feet and makes wind turbine nacelles.
Orlando, Fla., is the headquarters for the company's wind operations in the Americas.
Extension of the tax credit is caught up in deep differences over spending in Congress, where fiscal conservatives in the Republican Party are fighting renewal even as other GOP members push to continue the program.
Sen. Charles Grassley, R-Iowa, the author of the original tax credit in 1992, introduced a bill that would extend it for a year. The Senate Finance Committee approved it, but Grassley doubts the measure will come up for a vote before the November election. He hopes for a Senate vote later in November or December, but its fate in the Republican-controlled House is uncertain.
The production tax credit provides an income tax credit of 2.2 cents per kilowatt-hour for the first 10 years of electricity production from large-scale wind turbines.
The credit expired in 1999, 2001, and 2003 and was always renewed, but each time it expired jobs plummeted as energy producers held off on planned projects. It was most recently renewed in the economic stimulus bill signed by President Barack Obama in February 2009.
Opponents of the tax credit, including U.S. Sen. Ron Johnson, a Wisconsin Republican, say the government should not be providing an incentive to products that can't make it on their own in the marketplace. Johnson has signed on to a bill that would end all energy tax subsidies.
Obama visited the Siemens plant in Fort Madison in 2010, pointing out that government stimulus money helped the plant increase production.
"This is what's possible in a clean-energy economy," he said. "And while it may not feel like it every day when you punch in, to all the folks who work here at Siemens, I want you to understand, you're making it possible. You are blazing a trail. You're showing America our future."