The US Department of Energy’s goal of obtaining six percent of US electricity from wind by 2020 is not simply a necessary and relevant objective but a huge business opportunity for the organizations in the wind energy industry. Siemens recognized the gap between this aim and the capability available in the market and hence launched its first wind turbine manufacturing plant in Iowa in 2007.
Innovation
Growing concerns about greenhouse gas emissions and volatile fossil fuels prices all point toward the dire need to use other clean and emission free sources of power like the wind. Siemens’ overall innovation in the market for clean, renewable energy, especially in the United States, emerged from the recognition of this current and potential global demand for clean energy systems.
Thus, on September 21, 2007, the company established its first wind turbine manufacturing facility in Fort Madison, Iowa. With a total investment of more than EUR20 million, the facility’s capacity is pegged at 600 wind turbine blades per year. This strategic business move aimed at serving the North American market has helped Siemens increase its market share while promulgating the use of renewable energy in the world.
Because of the massive size of the turbine blades, the proximity of the Fort Madison location to water, rail, and road transportation helps in keeping the logistics seamless. Before the set-up of the manufacturing plant, Siemens created partnerships with stakeholders in the state of Iowa for financial and other support. The state of Iowa, Lee County and the city of Fort Madison pooled resources to provide an attractive incentive package to assist with the start-up effort. The Iowa Economic Development Board approved direct assistance from the Economic Development Set-Aside program and tax incentives from the High Quality Jobs Creation program as part of the agreement to locate the project in the state.
Impact
Siemen's already had a presence in the wind energy sector, ranking second in market share in 2006. With more than 550 MW in orders, clean power is being supplied to 140,000 homes. In fact Siemens has been awarded one of its largest wind turbine orders ever. FPL Energy has ordered 218 Siemens wind turbines slotted for delivery in 2009. Together with this order, Siemens has received USD2.4 billion in wind turbine orders in the U.S. to date this fiscal year emphasizing the brilliant move that the company made by establishing its Iowa plant.
In addition to the environmental benefits of increased use of wind energy, Siemens’ decision to build in Iowa has given a long-needed boost to an area that has lost 20 percent of its manufacturing jobs over the past six years hiking its unemployment rate to almost six percent. The recruitment of local population to work at this facility has created ripple effects to bring prosperity in the community.
Inspiration
Siemens’ strategy to build its first wind turbine manufacturing plant in Iowa is a new chapter in its wind turbine business history. Iowa has nearly 900 wind turbines and ranks third in the nation behind Texas and California. This move toward bolstering energy sustainability in the US also provides long-term value to the company’s shareholders. As an organization that has successfully leveraged an environmental issue as a business opportunity, Siemens wisely looks upon sustainable energy innovation as a chance for societal improvement and a means of actively engaging society in meeting future energy demands.
The World Inquiry editorial team edited this profile from the original submission of the interviewer or other source. The views expressed do not necessarily represent Case Western Reserve University, the Weatherhead School of Management or the Center for Business as an Agent of World Benefit. More >>
