New supply chain study shows wind energy produces more jobs and business growth for Iowa

The Environmental Law and Policy Center has released a new study of Iowa’s wind energy supply chain. According to the study, Iowa’s wind power supply chain comprises 80 Iowa companies with a total of over 2,300 employees in manufacturing alone. The state ranks second nationally in total wind energy generation. With local manufacturers building everything from huge turbine blades to small electrical components, and service firms providing maintenance, legal, marketing and other support to the industry, wind power means business for Iowa.

“Wind energy creates good jobs and business growth across Iowa and across different sectors,” said Howard Learner, Executive Director of the Environmental Law & Policy Center. “Smart policies can bring more wind businesses to Iowa – that’s good for both economic growth and better environmental quality.”

The report states that a commitment to business development combined with tax incentives, a skilled workforce and a central location have helped make Iowa a leader in the wind industry.

The report highlights supply chain companies across the state, from locally owned small businesses to seven international manufacturing companies. In addition to the 80 existing supply chain companies, the study identified more than 30 additional Iowa companies that could supply the wind industry if demand increased.

The report notes that strong regulatory and tax policies are key to growing any industry, and the wind energy industry is no exception. The proposed strong federal renewable energy standard would help grow Iowa’s economy by increasing Iowa’s export opportunities for both wind power and manufactured wind turbines components and professional services.

Iowa manufacturing accounted for 20% of the state’s GDP in 2008 and includes over 6,000 firms. Large manufacturing firms (more than 500 employees) account for 5% of the firms, but employ 68% of the workers. Iowa’s wind energy supply chain is dominated by several large original equipment manufacturers.

The Environmental Law and Policy Center’s (ELPC) analysis shows 80 companies that are part of the Iowa wind industry supply chain, and Iowa is now home to seven international manufacturing companies. Several factors have helped Iowa become a leading wind energy generator and component manufacturer.

Business development resources. Iowa has made a significant commitment to developing and retaining renewable energy jobs through the Office of Energy Independence and its $100 million Iowa Power Fund, which is designed to encourage research and development and innovation. The Iowa Values Fund is a funding source for projects focused on job creation or retention within the state.

Tax Incentives. Iowa has been aggressive in offering tax credits to encourage business retention and development within the state, including the New Jobs Tax Credit, the High Quality Jobs Program and Investor Tax Credits.

Excellent multimodal transportation system. Iowa’s central location and transport infrastructure make the state a good location for manufacturers to ship and receive wind components. The Iowa Department of Transportation works closely with the Iowa Department of Economic Development to attract businesses by streamlining permitting, overcoming transportation constraints, and making staff available to discuss freight movements and logistics.

Educational institutions and skilled workforce. Iowa has high-ranking public schools, colleges and universities. Iowa provides state-sponsored employee training programs for some businesses and is recognized for its skilled workforce.

The wind industry means real jobs and real economic opportunity for Iowa. Iowa is a leading wind energy producer, with the highest percentage of electricity generated by wind farm (close to 20%) of any state. Iowa has almost 80 wind farm installations with over 2,500 wind turbines capable of producing 3,670 megawatts of power, ranking it second among the 50 states in total generation. The Iowa wind industry supports over 2,300 manufacturing jobs, which may be the most of any state in the nation.

Acciona Windpower is part of a global sustainability-focused company. In 2007, Acciona opened a $30 million wind turbine generator assembly plant in West Branch. Site selection was driven by the state’s favorable business climate and support for the wind industry, in addition to optimal proximity to wind resources and good access to inbound and outbound logistics for transportation options. The build-out of a domestic supply chain remains a top priority for Acciona Windpower, which has contributed to the creation of over 1,000 direct and indirect jobs with the company and its suppliers.

Acro Manufacturing has 46 employees in Cedar Rapids and is a CNC machine shop for wind turbine components. Like the rest of the wind industry, Acro has felt the negative effects of a drop in demand, but is preparing for a resurgence.

Clipper Windpower began production at its Cedar Rapids wind turbine assembly operation in late 2006. Close to 500 turbines have been assembled thus far at the plant. “Cedar Rapids offers a centralized location within the United States and major north-south and east-west highway and rail service,” said plant manager Bob Lloyd. “In addition, Cedar Rapids historically has been a community with numerous heavy industries, resulting in a readily available trained workforce.”

Conductix-Wampfler is a French company with its U.S. headquarters in Omaha, Nebraska and a manufacturing location in Harlan. Conductix supplies two components to the wind industry: slip ring assemblies, designed to provide rotor pitch control; and Tower Buss, a rigid conductor alternative to copper cable for feeding power down the tower. The company has 70 Iowa employees and received its first wind industry order in 2004. Conductix has also felt the impact of the overall economic downturn and is facing declining orders for wind turbine components.

Electrical Power Products, in Des Moines, has 80 employees, and the wind sector comprises about 40% of its business. Electrical Power Products provides relay panels and complete control buildings to wind farm facilities. The company also supplies equipment for medium voltage collector stations and for interconnection facilities.

Goian North America, in Ankeny, manufacturers lifts for people and equipment inside wind turbine towers and support systems. Goian is a Spanish company that selected Iowa for its U.S. manufacturing facility due, in part, to the Iowa Department of Economic Development’s responsiveness to the company’s questions about suppliers and professional support services.

Heartland Energy Solutions, in Mount Ayr, designs and builds wind turbines for the moderate-wind-speed market. Heartland’s “Freedom” wind turbine is designed to be easier to repair, more economical and more efficient, while creating electricity at wind speeds as low as 6 miles per hour versus the more typical 8 to 10 miles per hour. Heartland’s management team is committed to source all of its turbine components from U.S. suppliers.

Keystone Electrical Manufacturing, in Des Moines, has been in business for 46 years and manufactures control and relay panels and turnkey control centers for the wind industry. The company has 60 employees, and approximately 20% of its business comes from the wind sector.

Mid-Iowa Tools, in Cedar Rapids, was founded in 1974 to help customers reduce inefficiencies and redundancies in their supply chains and provide technical service and application support to manufacturers in the Upper Midwest. Mid-Iowa Tools provides assembly tools, cutting and abrasive tooling, gauges and calibrations both to original equipment manufacturers and to wind farm operators.

Sabre Towers & Poles is one of the largest tower manufacturers in the world and has the highest volume manufacturing capacity in the tower industry. Sabre’s Sioux City manufacturing plant has 296 employees.

Sector 5, in Oelwein, provides custom fabrication and construction services to wind industry companies. Sector 5 has completed projects including the installation of overhead cranes and jib cranes, as well as manufacturing and installing test stands for gear box vibration testing.

Siemens Wind operates a 600,000 square foot wind turbine blade manufacturing plant in Fort Madison. It has nearly 600 employees, 65% of whom previously worked at companies in the area that closed or downsized. Siemens has made an effort to transport its blades on rail, which the company estimates has resulted in an 80% reduction in its carbon footprint.

Trinity Structural Towers has 140 employees in Newton and was opened in 2008 in a former Maytag plant. Trinity Towers fabricates tubular wind towers and, through its parent and affiliated companies, provides steel turbine components, concrete and aggregates, product transportation and specialized coatings.

TPI Composites, is a leading global supplier of composite wind turbine blades. TPI’s Newton plant opened in November 2008 and has more than 450 employees, making it one of Iowa’s largest employers.

United Equipment Accessories (UEA), in Waverly, manufactures slip rings, which are used in wind turbine pitch control systems or towers-to-ground power transfer. UEA has 90 employees and the wind sector is a significant part of the company’s customer base. UEA has grown significantly since 2003, largely due to supplying the wind industry.

Anemometry Specialists, in Alta, employs 25 staff and has over 55 years of experience installing and maintaining wind assessment meteorological (“met”) towers. Anemometry’s technicians have installed more than 1,700 met towers in 35 states and five international locations. Anemometry Specialists also provides data collection, data analysis, site assessment, tower repair and maintenance, tower relocation and project management services.

Hellman, in Waterloo, is a full-service advertising, marketing and PR agency. Its marketing services division is focused on leading and growing business development for the evolving renewable energy sector. Over the last 11 years, Hellman has developed many wind-related communications and PR programs for wind developers, manufacturers and utilities. “Our focus on helping wind-related companies has helped support our growth at our Iowa office, allowing us to increase our staff by 22 people over the last 6 years,” commented Phil Akin, CEO of Hellman.

Kieck’s Career Apparel, in Cedar Rapids, provides uniforms to wind farm operators. Due to the weather conditions and industrial hazards associated with constructing wind farms, uniforms need to be flame resistant. Kieck’s has seen significant demand for its product from Iowa wind farms during the past decade. Nina Brundell, Kieck’s President, noted, “Kieck’s is proud to support the wind power industry in their attempts to keep their workers safe.”

Shuttleworth & Ingersoll PLC is a national law firm located in Cedar Rapids that employs 45 lawyers and five legal assistants in providing legal services to companies operating in the wind industry.

Wind Utility Consulting provides consulting services for small-to-medium-scale wind development projects. These services include wind resource assessments, construction cost estimates, environmental impact assessments and economic feasibility analyses. These consultants have been involved in the wind industry in Iowa for 20 years. “Iowa is a great and easy place to develop wind generation,” commented Thomas Wind, the group’s principal.

In addition to the 80 Iowa companies currently in the wind energy supply chain, others are positioned to supply the wind industry and see a prospective new market. ELPC identified more than 30 Iowa companies that could also supply the industry if demand increased, including:

Ameritec Machining is a registered machine shop in New Hampton with 36 employees. Ameritec has quoted work for wind manufacturers in the past and has the machining capabilities that would allow it to service the industry as demand increases. The company currently supplies the agriculture industry.

Central Western Fabricators is a 70,000 square foot steel fabrication facility that has been in business (through its predecessor business Venetian Iron Works) since 1922. In the past 20 years, this company has completed over 275 projects in the industrial, educational, recreational and medical sectors. Central Western has the capability to supply the wind industry.

MG Machining is a tool and die machine job shop and production shop located in Bedford. MG Machining has 12 employees and has been in business since 1988.

New Tech Ceramics, in Boone, manufactures a hard, resilient lubricious ceramic material that can be coated onto components to prevent wear and extend their life. The coating allows mechanical systems to operate with greater energy efficiency.

Power Engineering & Manufacturing, in Waterloo, is a 35-year-old company that designs and manufactures custom gear boxes and component parts. The company has 60 employees and is targeting the wind industry as a potential sector for growth.

Policy Makes the Difference

Federal and state policies are key to encouraging investment that can grow the wind industry. Iowa has used tax, job development, and transportation-related incentives to attract and retain wind industry jobs in the state. While Iowa was among the first states to require utilites to initially purchase 105 megawatts of wind power resources, more policy action should support wind power development.

Federal Renewable Electricity Standard: This proposed federal legislation would require all electric utilities, which act as collective power purchasing agents for consumers, to buy a growing percentage of their electricity from renewable energy resources. Creating a federal renewable electricity standard floor – which states like Iowa can exceed – would drive more national demand for wind generated electricity. That would increase export opportunities for Iowa wind power and spur the market for Iowa-manufactured wind turbines, components, and professional services. Iowa would benefit through more job creation and economic growth.

Production Tax Credit (PTC) and Investment Tax Credit (ITC): The federal PTC provides a credit of 2.1 cents per kilowatt hour. In February 2009, Congress extended the PTC for three years through 2012. Wind developers can also opt to take a 30% ITC in lieu of the PTC for facilities placed into service before 2013, so long as construction begins before the end of 2010. The ITC can be converted to a grant that helps developers who do not have a substantial enough tax liability to effectively utilitize the tax credit.

Accelerated Depreciation: Allowing wind generation assets to be depreciated over six years can create additional value. The depreciation credit may be hard for some developers to use unless they can offset it with significant income.
Iowa Programs & Policies

State Renewable Electricity Standard: Iowa’s early adoption of a modest RES helped spur wind industry development in the state. However, Iowa is now ready for a more aggressive standard, which will help the state’s wind industry grow and retain its leadership position.

Renewable Energy Production Tax Credit: Iowa offers production tax credits of 1.0 cent per kilowatt-hour for energy either sold or generated for on-site consumption (not to exceed 150 mw in generating capacity), or 1.5 cents per kilowatt-hour for energy sold (not to exceed 330 mw). The credit can be applied toward state tax payments.

State Sales Tax Exemption: The total cost of wind energy equipment and all materials used to build wind energy projects are exempt from sales tax.

Iowa New Jobs Tax Credit: Corporate income tax credits are available to companies that enter into New Jobs Training Agreements and expand their Iowa employment base by at least 10%. The amount of the one-time credit depends on the wages paid.

Iowa New Jobs Training Program: Businesses expanding their Iowa workforce can receive funding through the Department of Economic Development to meet related training and development needs.

High Quality Jobs Program: Qualifying companies can receive tax credits for locating, expanding or modernizing an Iowa plant. This assistance is targeted primarily toward manufacturing businesses. The business must meet wage threshold requirements and the award amount is determined based on need, job quality, and the economic impact of the project.