Campaigning in 2008, President Obama promised 5 million “green” jobs over a 10-year period. Vice President Biden said that the 2010 American Recovery and Reinvestment Act would add 722,000 of them. By the end of 2010, the new job count was only about 225,000.
For the wind power industry, 2012 has been a year of layoffs, not job growth. In Denver, one-third of the people are gone from Walker Components, which makes custom cables for wind turbines. [http://www.manufacturing.net/news/2012/11/jobs-dwindle-during-green-power-debate] In Iowa, Clipper Windpower plans to cut 100. DMI Industries will release 167 Oklahoma workers. LM Wind Power in Arkansas will let 234 people go.
One big reason for the layoffs is uncertainty over the renewal of the wind energy production tax credit (PTC), which expires at the end of the year. The brinksmanship over the fiscal cliff is holding reauthorization hostage.
Jobs are driven by wind energy producers’ confidence about investing in capacity. Reducing the cost by means of the PTC makes the ROI sweeter. Taking away the sugar causes a swing in capacity expansion, and a whipsawing level of demand for wind turbines and their components.
History shows a seesawing number of jobs related to the PTC expiration-reauthorization cycle, which has taken place three times between 1999 and 2004. Typically, in the year running up to the year the PTC ends, there’s a scramble to build new facilities. In the year the renewal is debated, the number of new installations falls off and jobs disappear. That is exactly what happened between 2008 and 2012.Wind energy generating installations grew like crazy in 2011, then producers held off on new investment this year. Thus began a year of layoffs, with 10,000 jobs lost according to the American Wind Energy Association (AWEA).
Should the PTC fail to be renewed, a new AWEA study tells us, total wind supported jobs* will drop by nearly half, from 78,000 in 2012 to 41,000 in 2013. Direct employment by manufacturers of wind energy equipment will decline by a third. Supplier manufacturing jobs will disappear too. With the extension of the PTC, however, the number of total jobs would grow to 95,000 by 2016, and increase direct manufacturing employment by a third.
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Even Karl Rove has spoken out in favor of the PTC, “My hope is that after the election people say, look, let’s start making some priorities and find some things that we can agree on, and maybe one of them is the production tax credit,” Rove said at last summer’s Windpower 2012 conference. “It is a market mechanism, you don’t get paid unless you produce the power, and we’re not picking winners and losers, we’re simply saying for some period of time we will provide this incentive.”
After the rhetoric and disappointment, what are the lessons learned? First, don’t believe everything you hear in an election year. Second, incentives like the PTC do encourage investment and manufacturing jobs, though, as I said in Hiring Technology Rather than People, automation is the choice of many manufacturers when it comes to growth. And third, political wrangling over industry incentives causes demand surges and dropoffs, inducing variability that wreaks havoc on businesses and people.
If the PTC is renewed (which it may have been by the time you read this story), will any of those lessons be taken to heart? Or will history repeat itself in 2016?
* Total manufacturing jobs include: Direct manufacturing jobs (turbines, blades and towers), indirect jobs (suppliers to direct manufacturers), and induced jobs (resulting from economic activity supported by direct employment)
Karen Wilhelm has worked in the manufacturing industry for 25 years, and blogs at Lean Reflections, which has been named as one of the top ten lean blogs on the web.