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Vestas Nacelles Americas

Global Purchasing and Supply Chain

Gene Cuenot, Vice President

2 | Indiana Presentation, August 6, 2009

Wind Power Supply Chain Challenges

and Opportunities

• Overview of the Industry

• Vestas Nacelles Footprint

• Commodities

• Supply Chain Challenges

• Supplier Opportunities

• Q & A


Overview of the Industry


Facing rising energy demandsFacing rising energy demandsSlumping energy resources


A call for change


Demand for energy

We are facing a dilemma:

Level

Time

Create more energyLower CO2 emissions

CO2 emissions


Growing revenue

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

6500

2363

3583

4861

3854

REVENUE, MILLION EURO

Copyright © 2008 Vestas Wind Systems A/S all rights reserved

6035

2004 2005 2006 2007 2008


Ramping up our human resources

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

22000

24000

9,59410,618

12,309

15,305

EMPLOYEES


20,829

2004 2005 2006 2007 2008


Footprint


DenmarkDenmark

Ringkøbing:

V90-3MW Nacelle

Hubs

Viborg:

V80/V90- 2MW Nacelle

Lem/Skagen:

Machined components

Ringkøbing:

V90-3MW Nacelle

Hubs

Viborg:

V80/V90- 2MW Nacelle

Lem/Skagen:

Machined components

SpainSpain

Viveiro:

V82-1,65 MW Nacelle

Leon:

V80/90-2MW Nacelle

Viveiro:

V82-1,65 MW Nacelle

Leon:

V80/90-2MW Nacelle

ItalyItaly

Taranto:

V90-3 Nacelle

V52-850 kW Nacelleand hub

Taranto:

V90-3 Nacelle

V52-850 kW Nacelleand hub

IndiaIndia

Chennai:

V82 Nacelle

Pondicherry:

V82 Nacelle

Hubs

Chennai:

V82 Nacelle

Pondicherry:

V82 Nacelle

Hubs

ChinaChina

Tianjin Assembly:

V52-850 kW Nacelle

V80/V90-2MW Nacelle

Hubs

Tianjin Generator:

Generators

Tianjin Assembly:

V52-850 kW Nacelle

V80/V90-2MW Nacelle

Hubs

Tianjin Generator:

Generators

Lübeck:

Generator

Magdeburg:

Castings

Lübeck:

Generator

Magdeburg:

Castings

Kristianssand:

Guldsmedhytten:

Lidköping:

Castings

Kristianssand:

Guldsmedhytten:

Lidköping:

Castings

GermanyGermany

Sweden/NorwaySweden/Norway

Overview of Nacelles current global footprint



• Americas’ Sourcing drivers:• In the region for the region manufacturing and sourcing

• Shorter response time to market

• Competitiveness, capability and capacity

• Reduce currency exposure

N. America Footprint


Colorado Production:Blades Windsor

Towers*1: Pueblo

Nacelles*1: Brighton

Blades *1: Brighton*1 not opened yet

3MW gearbox always imported

Foundry

Machining

Gears

Generators

Bearings

Supplier Information

Existing Suppliers

Modeled Location

Top Quartile

2nd Quartile

State Ranking for Potential Suppliers

GE

Gamesa

Suzlon

Siemens

Mitsubishi

Turbine Manufacturers

Clipper

Chicago Offices:

Purchasing and Supply Chain


Commodities


Product Overview


Source: Sterzinger, G. and Svrcek, M., Wind Turbine Development: Location of Manufacturing Activity, Renewably Energy Ploicy Project, Technical Report, September, 2004.

Blades:• Generally glass-reinforced fiber

• Upwards to 50m and greater in length

• Utilizes principle of lift - converts wind energy to mechanical energy

Blades - Overview


Tower:• 60 – 100M in height assembled

• 200 – 400 tons assembled

• Rolled steel tubes

• Connected in series

• Built/shipped in sections due to size and weight

• Hollow structure with ladder for maintenance access

• Flanges and bolts joining each section

• Concrete base providing stable foundation

• Concrete segmented and hybrid towers

Source: Sterzinger, G. and Svrcek, M., Wind Turbine Development: Location of Manufacturing Activity, Renewably Energy Ploicy Project, Technical Report, September, 2004.

Towers - Overview


Supply opportunities:• Bearings

• Hydraulics, pumps

• Lubrications systems

• Plastics

• Wires and Cables

• Transformers

• Castings

• Weldings

• Fasteners

• Machined components

• Sheet metal work

• LiftsV90/3MW

V82/2MW

Nacelles - Overview


Supply Chain Challenges


• Extreme growth - (~25%+/year)

• Economic Downturn - Suppliers are readily visible to OEMs

• Critical components – Some capacity bottlenecks

• Commodities: Volatility to stabilization

• Credit Conditions – May prevent capacity investment



• Demand for High Quality and Delivery – Vestas working

towards 6 Sigma

• Competition – Major OEM’s competing against LCC’s,

mainly China. Suppliers must be competitive

• NA Sourcing - European standards can be difficult to convert

• Conferences and workshops - Enable connection to OEMs

• ISO9000 baseline and solid work practices



Supplier Opportunities

21 | Indiana Presentation, August 6, 2009Copyright © 2008 Vestas Wind Systems A/S all rights reserved

Opportunities for Suppliers

ROW


• Extreme growth – Opportunity for quality supplier expansion

• Focus on renewable energy – Drive growth

• Vestas offers support to key suppliers - Optimize processes,

etc.

• Vestas Nacelles - Sources a wide range of components,

such as gears and gear boxes - highly specialized for wind

applications



Wind Industry – Moving towards:

• Innovations – V112 Turbine

• Increased co-operation between OEMs and manufacturers

• Increased life of product, and not as in the past, where new models often were introduced every 2 years

• Dual and multiple sourcing of critical components

• Maturity leading to partnerships, long term agreements etc.


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Vestas Nacelles Americas Global Purchasing and · PDF fileVestas Nacelles Americas Global Purchasing and Supply Chain ... •Vestas Nacelles ... •Innovations –V112 Turbine