Wind Farm Deal Assures Major Parts to Be U.S. Made

WASHINGTON — The United Steelworkers and two Chinese companies announced Friday that they had signed an agreement assuring that major components of machines for a $1.5 billion wind farm in Texas would be made in the United States.

The deal potentially defuses a conflict over American stimulus dollars being used to subsidize foreign companies.

Without releasing full details, the union said that the steel for the wind towers, enclosures for working parts atop the towers and reinforcing bars for the bases would be sourced in the United States. So will the blades, which are not made of steel but are often made by steelworkers, the union and the two companies said.

The agreement was brokered with the Shenyang Power Group, known as SPG, and a subsidiary that it partly owns, A-Power Energy Generation Systems, which have entered a joint venture with the American investment firm U.S. Renewable Energy Group to build the wind farm in West Texas.

United Steelworkers officials did not say what fraction of the machines’ value would be from domestic manufactured parts. The Chinese companies will also work to develop a domestic American supply chain for wind machine manufacture beyond the Texas project, the union said.

Word last fall that million of dollars in federal stimulus grants and loan guarantees for clean energy projects money might flow to the project led to calls from members of Congress for the Obama administration to deny federal aid.

Their chief worry was that the turbines would be manufactured in Shenyang, China, rather than in the United States. Friday’s announcement seems likely to allay some of those objections.

Senator Sherrod Brown, Democrat of Ohio and among those who had objected to the use of American stimulus money on a foreign-sourced project, welcomed the announcement. “We must continue to develop the manufacturing supply chain to meet our demand for clean energy,” he said.

The two Chinese companies anticipate buying 50,000 tons of steel from unionized American mills for the 615-megawatt Texas project, the announcement. said.

Leo W. Gerard, president of the United Steelworkers, said his union had been prepared to initiate antidumping actions against Chinese manufacturers on imported steel for wind machines, as the union has in the past for tires, paper and steel for other uses.

“The initial plan on this project was to import the turbines and assemble them here, and that would have meant hardly no jobs for us,” he said in a conference call with reporters. “What we won’t support is any company, Chinese or otherwise, flooding our market with cheap, subsidized goods.”

The Chinese companies had initially estimated that the project would create 2,000 steelworker jobs in China, Mr. Gerard said, but about only 1,000 jobs in the United States.

In a statement, Jinxiang Lu, the chairman and chief executive of the Shenyang Power Group, said that its partnership with the U.S. Renewable Energy Group had enabled his company to meet Mr. Gerard “and understand his vision for win-win relationships between manufacturers and workers.”

The announcement reflects the expanding globalization of the wind machine industry, with parts made in scattered countries. Robert E. Gramlich, policy director at the American Wind Energy Association, said that the “big heavy stuff” like the towers and the blades, were generally the most likely to be locally sourced and that smaller, higher-value components were more likely to be imported.

In the case of the Texas project, however, the gear box, a high-value component, was always to be manufactured by General Electric.

To some extent the flow seems to run in both directions. In May, the American Superconductor Corporation of Devens, Massachusetts, said it had received a multiyear order worth $445 million from Sinovel Wind Group Company of China, with shipments to begin in early 2011. The company is already shipping components under an earlier contract.

Mr. Gramlich’s group has been lobbying for greater federal support for American companies that could build wind machine components. The Commerce Department has identified wind technology as a major potential export industry, he said.

See the original article in the New York Times. By Matthew L. Ward. August 6, 2010.