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Vestas cuts more than 2,000 jobs

Danish wind turbine maker cuts 2,335 jobs in a bid to reduce costs

Danish wind turbine maker Vestas will cut 2,335 jobs in a bid to restore profitability after rising costs wiped out its 2011 earnings.

The company said on Thursday that the cuts, which represent about one-tenth of its workforce, would help reduce costs by more than €150m by year-end. Another 1,600 jobs could go at US units later this year if a tax credit for renewable energy is not extended.

The world’s biggest wind turbine maker is battling fierce competition, including from Chinese rivals, as well as the threat of subsidy cuts for renewable energy by hard-pressed governments forced to tighten budgets.

Formerly a darling of investors, the wind industry has been hit in the crisis by overcapacity and sliding turbine prices.

Late in 2011, Vestas was hit by cost overruns in product development and delayed revenues which last week forced it to issue its second profit warning in just three months.

It will shut a tower factory with 350 workers in the town of Varde in Denmark, but 1,600 of the total redundancies would be salaried administrative workers and 735 hourly paid employees.

“We have no plans to shut more plants,” Engel told Reuters.

After the planned layoffs, which were in line with analysts’ expectations for 2,000-3,000, Vestas will employ about 20,400 people globally, including 5,300 in Denmark, Vestas said.

Vestas shares, which dropped as much as 7%, traded down 6.3% by 1509 GMT, against a 0.8% drop in the S&P Global Clean Energy index. The stock is trading at 8-1/2 year lows after losing two-thirds of its value in 2011 .

“We believe investors were hoping that there would be more changes at Vestas, in terms of both economical and managerial consequences,” financial services group Nordea said in a note to clients.

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