A wind-turbine-blade factory in Southwestern Ontario that Siemens Wind Power Ltd.'s former parent company called "a key part of our global supply chain" just last September is winding down operations, leaving 340 employees in Tillsonburg, Ont., without work by early next year.
Employees found out about the impending shutdown at an all-staff meeting at the plant on Tuesday morning, and more than 200 lost their jobs immediately.
The Canadian-based wind-power company, formerly a part of the German industrial conglomerate Siemens AG, said falling prices, growing competition and changing demand forced its hand. Six years after the plant first opened as part of a provincewide effort to boost Ontario's reputation as a renewable-energy hub, one of Tillsonburg's biggest employers has become a casualty of continued growing pains faced by the wind-energy industry.
Siemens's wind-energy division merged with Gamesa Corporacion Tecnologica SA earlier this year to form Siemens Gamesa Renewable Energy SA. The company called the closing a "difficult" decision undertaken after assessing all other options. It said employees would receive severance packages, that it would make career counselling and résumé preparation available to them, plus work with other companies to recruit the workers.
"On one hand, it's good news that the market is moving that fast and we're competing with other energy sources, but I think the way renewables is progressing, it's accelerating at a rate that I think very few people could plan for," David Hickey, Siemens Wind Power's chief executive, said in a phone interview.
Demand in Eastern Canada has fallen, and global competition has driven down prices by more than 66 per cent in the past seven years, he said; that would make it untenable to ship turbine blades to farther markets. "The price pressure is constantly ongoing. It's a very steep decline."
Combined with this is growing demand for larger turbines – with blades bigger than the Tillsonburg facility can physically handle, Mr. Hickey continued. "We can't go any longer than 55 metres without significant investment," he said, further noting the industry's price pressures. The uncertain future of U.S. tax policy, he also said, has stifled U.S. exports.
In February, before the Siemens-Gamesa deal closed, a Siemens blade-making plant in Denmark was shuttered for similar reasons.
Executives from the Canadian Wind Energy Association were not available for interviews on Tuesday, but in an e-mailed statement, Jean-François Nolet, its vice-president of policy, suggested the market's evolution can be tough for some businesses. "As wind energy markets and wind energy technology rapidly evolve in Canada, and around the world, to meet the goals of transitioning to a low carbon future, competition for opportunities will continue to intensify," he wrote.
Ontario now has more than 4,700 MW of installed wind capacity – the most in Canada, according CanWEA. In 2016, the province began to pare back on renewable-energy projects, cutting a major renewable-energy procurement plan in a bid to save the province and rate-payers billions. Mr. Hickey did not comment on this directly when asked how it might have affected demand, except to say that the region's outlook "played a factor in this decision."
In 2010, Siemens began investing $20-million in the 253,000-square-foot facility after Ontario's Liberals signed a $7-billion deal with a Samsung Group-led consortium to develop a green-energy cluster in the province, as part of a 600-megawatt wind-energy commitment.
Touted at the time as one of Canada's biggest-ever green-energy bets, it drew criticism from other energy developers and provincial opposition members as both costly and potentially stifling to competition. The deal was renegotiated in 2013 after Samsung missed production deadlines.
In an e-mailed statement, Energy Minister Glenn Thibeault said that despite the closure, the province would continue to invest in clean technology. "While we are saddened by the news out of Tillsonburg, we are confident that as Ontario looks towards the future, green energy will remain an important part of both our electricity supply mix and our economy, supporting jobs and growth all across the province," he wrote.
In June, the Ontario Society of Professional Engineers said it had calculated that the province was over-producing energy from clean sources including wind – to the tune of $1-billion worth in 2016 alone.
Tillsonburg, home to 16,000 people, is 60 kilometres southeast of London, Ont.
"We're a very resilient community here, and that comes from the men and women who make up this community," Tillsonburg Mayor Stephen Molnar said by phone. "Some of them have had their lives changed today by an announcement. It's incumbent upon us to make sure they have every available resource to continue to contribute the way they have been, because they've been key contributors to the stability and growth of Tillsonburg."