The global wind power blade industry pattern of a major impact
What is the intention of GE acquisition LM
Recently, GE (General Motors) for $ 1.65 billion acquisition of the world's largest wind turbine manufacturer LM. This major move by GE has left people unaware of the motives behind the deal. Is this in order to increase the price competitiveness of GE wind turbines, or is it easier for GE to penetrate emerging markets, such as India and Africa, or GE wants to build defensiveness in an increasingly intimate relationship between LM and Siemens / Gamesa ??
In recent years, the blade field has basically become the outsourcing pattern
The global wind power market is expanding, and by 2025, demand is expected to exceed 67 GW. While this raises a high level of concern, it is becoming increasingly difficult to turn this demand into a market quickly and profitably, and the pressure on losses from the newly created auction system complicates the situation. Latin America is a good example of a study of global wind power demand in emerging markets, where the bid price is about $ 30 to $ 40 / MWh. Obviously, wind turbine manufacturers have to find ways to reduce their overall costs.
The performance of modern wind turbines peaked at 200 W / m2 (specific power). This technical limitation is one of the factors driving the power of the wind turbine to exceed 2.0 to 2.5 MW and shift to more than 3 MW. If the simplicity of manufacturing a larger fan this approach tends to decline, then to promote the reduction of existing design costs will begin to play a role. GE's way to success is through its own leaves, remove the LM's profits, while in the manufacturing process using LM's inherent cost advantages, cost-effective. The question in this process is whether the LM fixed cost will outweigh the benefits of variable costs, which will increase due to the reduction in the volume of the vanes (for competitive considerations).
In recent years, the competitive landscape has been quite different in the blade sector, and has basically been outsourced to independent blade manufacturers for production. TPI has also joined the global wind power market in the past 24 months, with operations in Mexico, Turkey and China. TPI's customer base is also growing rapidly. The company now supplies Vestas with state-of-the-art blade products all over the world, and its own strength is increasing in the market. Aeris, a Brazilian blade supplier, is also helping Vestas transition to outsourced processing while achieving increased domestic production. Aeris has also increased its capacity to meet GE's demand in Brazil, and plans are likely to change in the future with the acquisition of LM (LM has production facilities in Bahia). LM is working to maintain the same pace as TPI and Aeris, as well as investing in Turkey and Brazil, and has diversified its customer base following the recent supply agreement with Siemens for a 69-meter blade jointly developed by Siemens. Blade supply strategy seems to have a very clear trend, but in this case, GE is against the trend, causing a great deal of concern to many manufacturers.
Whether the success of the transaction depends on the future which prevails
GE's blade supply will no doubt be shrinking, the blade production will gradually from TPI, Tecsis, MFG to LM. At the same time, LM will lose its source, although the emphasis LM and GEWind "distance", but no one will recognize the independence of the LM. Given Siemens' long-term commitment to Winergy gearboxes and their global reach, they have proven their strategic competitor's "quasi-competitor" approach to be effective. However, this example may be just a case, because the major wind turbine manufacturers in the blade design on intellectual property rights there is a mad obsession. GE also risks venturing away from its existing supply base, as it positions itself as a major competitor to companies such as TPI and Tecsis. Joint development of blade design and manufacturing processes may not be sustainable because GE / LM will learn everything quickly.
The success or failure of this deal lies in the future which of the following considerations prevail:
First, in the other fan machine manufacturers to accept GE / LM as an independent company's case, GE / LM market capacity will remain stable share. At the same time, GE's existing suppliers to maintain a stable relationship with GE will be subject to its pressure from the price.
Second, the wind power machine manufacturers to give up GE / LM, the basic LM as GEBlades, with the formation of competition rather than the business to GE before the supply base, GE will be placed on the island.
Asian energy grid power grid prospects
The blade market has matured, and all wind turbine manufacturers are increasing the amount of output outsourced to independent blade manufacturers. The advantages are obvious, including increased flexibility to respond to regional demand changes, increased capacity to meet local regulatory requirements in emerging markets, leveraging the impact of economies of scale on raw material supply, and ultimately the leading production and processing technologies in the industry. GE / LM does provide these advantages, but its competitors are closely followed, and this may not be available as an independent supplier of all the benefits.
The real test will come from Siemens / Gamesa's response. After the merger, as one of the world's leading manufacturers of wind turbines, they are very important links with the LM, Gamesa is a long-term customer onshore wind power market, while Siemens is through the acquisition of Adwen occupy the maritime market (AdwenAD8-180 LM blades). Considering that Vestas and Acciona / Nordex have a heavier business share with TPI in the current situation, it will be more likely to push the results to the second scenario, with a vote of no confidence and a change in bulk supply for firms such as TPI. And LM have business dealings with China's machine manufacturers, may also turn to regional giants, such as Sinoma.
The end result is likely to occur in the two extremes described above, while the second is likely to be more likely. The uncertainties in the talks were the technical positioning of LM and the subsequent impact on GE's competitiveness as a wind power supplier. If LM technology and manufacturing process is excellent, especially its structural design, load optimization and existing intellectual property around the pre-bent structure to bring technical and commercial benefits to GE, it will be better than the loss of economic losses caused by customers. Want to maintain the desire of multi-source supply, LM will also increase the viscosity of existing customers. (Source: China Electric Power News)
16.5 billion US dollars! GE heavyweight acquisition of global wind turbine giant LM!
After the failure of bidding for ADWEN, GE again generous. GE announced yesterday that it has reached an agreement with LM owner Doughty Hanson, will be 1.65 billion US dollars acquisition of the world's largest wind turbine manufacturer LM. The acquisition is expected to be completed in the first half of 2017, GE hopes to 2018 will be added to the GE business income statement GE.
"With the acquisition of LM, GE will become more local, more flexible and more sophisticated in wind turbine design and manufacturing, and will also enhance our ability to innovate and reduce product costs." The acquisition also demonstrates GE's commitment to wind power "Commented Jérôme Pécresse, Chief Executive Officer of GE Renewable Energy.
GE acquisition LM is not accidental, but there is a certain historical inevitability.
LM is GE's largest supplier of wind power blades, both of which have a long history of cooperation. As early as the 1940s, LM furniture from the glass fiber business transformation when the two cooperation began. LM began in 1978, fan blade manufacturing business, in 2001, Doughty Hanson White LM, the two have maintained close relations of cooperation.
LM and GE are strong and into trouble, the need to join forces hand in hand.
LM is the world's leading manufacturer of wind turbine blades and the only company in the world that integrates the design and production of blades and has now produced more than 185,000 blades of wind power. LM and GE bid object ADWEN as well as competing opponents also quite paternity. LM produced the world's longest 88.4m fan blades for the ADWEN 8MW-180 offshore wind turbine production, and an agreement with Siemens - Siemens latest models SWT-3.15MW-142 to provide 69m fan blades. In addition, after several failed attempts to market, LM investment fund owner Doughty Hanson in 2015 interested in selling its stake, once the outgoing US blade manufacturer TPI is its potential buyers. Recently, LM offshore wind global vice president Alexis Crama said, LM new strategy will vigorously develop offshore wind power market, regional China, the United States and emerging markets outside Europe is LM's strategic focus. This coincides with GE's global wind power strategy.
LM launched the world's longest blade LM88
GE is the world's top three wind turbine manufacturers. In the acquisition of Alstom wind power business, GE has been seeking to further enhance the strength of offshore wind power and onshore wind power, with Siemens, Vestas and other wind power giant's competitive strength. After the acquisition of Siemens in the United States Songsa, ADWEN left to become a powerful force to enhance the rapid "chips." In mid-September, the bid was rejected GE, Siemens won the ADWEN, this time in Siemens and the "battle of wits" GE lost a while. In order to cope with the strong competition from the global competitive pressure, GE need new "chips" to enhance the global competitive strength.
The acquisition of LM on the extension of GE wind power industry chain, developing Asia and Europe and the emerging markets, reduce manufacturing costs to enhance global competitiveness of wind power are of great benefit. LM will be acquired by the original team will continue to operate, the headquarters is still in Denmark.