Nordex USA, Inc. Wind Turbine Supply Chain Characteristics, Challenges and Opportunities GACCoM Renewables & Energy Efficiency Roadshow 3 Sept 2009 Page 1 1
Agenda 1 2 3 About Nordex Current situation OEM perspective Supply Chain Characteristics, Challenges & Opportunities Page 2
Nordex Group: Key Facts Nordex at a Glance Installed base as of Feb 2009 Global manufacturer of wind energy systems with a focus on turbines in MW Class Founded in 1985 in Denmark IPO in 2001 Germany 35 % Africa 1 % Geography Other Europe 51 % Exceptional revenue growth track record and strong future growth potential 2004 revenues: 214m / $ 289m* America 3 % Asia 10 % 2008 revenues: 1,136m / $ 1,533m* Main manufacturing facilities Germany (Rostock), China (Dongying, Yinchuan) since 1998 USA (Jonesboro, Arkansas) in 2010 1 MW Turbines (0.75-1.49 MW) 30 % Segment MW Class (1.5-2.5 MW) 65 % Headquartered in Germany (Hamburg) 2,153 employees as of December 2008 3,700+ wind turbines installed in 35 countries Small (<0.75 MW) 5 % Total: 4,918 MW * based on exchange rate of USD 1.35 / EUR Page 3
Nordex USA, Inc.: Key Facts Bear Creek Local production / installation in USA 800 700 Chicago Highland Output nacelle Output blades 600 500 400 Jonesboro 300 200 100 2010e 2011e 2012e 2013e 2014e 2015e First N90 2.5 MW 60Hz installed in Minnesota in 2007 First major project (62.5 MW) in 2008, followed by 200 MW secured for 2009 (2010 build) Product focus: N90 and N100 (2.5 MW) 90m & 100m rotors US Headquarters in Chicago, IL Production Facilities including Training Academy in Jonesboro, AR (nacelle assembly in 2010 and blade production in 2012) Investment of ~ $100 million (1/3 nacelle, 2/3 blades) Headcount by 2013e: > 700 Organizational Set-up: Project Management, Service, Engineering, HSE, Supply Management, Administration are established in the US Page 4
Current Situation US Wind Project Value Chain Source: EER Page 5
Current Situation Wind Farm Ownership Top 25 = 90% Installed Wind Power Base Long Tail of New Entrants Forming Source: EER Page 6
Current Situation Ambitious growth potential fueling the interest Page 7
Current situation OEM Impact US Wind Power Annual Additions Average Pricing Trends, $/kw Iron Ore and Copper Pricing, 1yr Page 8
Supply Chain Key Wind Turbine Components Key Wind Turbine Components Generator Gearbox Generator Frame MS Bearings & Supports Blade Main Frame (Casting) Yaw bearing Yaw drives Main shaft (Forging) Cast Hub Pitch bearings Tower Page 9
Supply Chain Breakdown Tiers 1-4 Tier 1-2 OEM & Tier 1 OEM Raw Material Part Fabrication Component Manufactur e Wind Turbine Assembly Steel Gears Towers Design Copper Shafts Blades Engineering Fiberglass Castings Gearboxes Certification Epoxy Metal Fabrication Generators Software Aluminum Plastics Rubber Fasteners/ Hardware Cables/Wiring/ Connectors Electrical components Converters Control System Transformers Drives Bearings Assembly Testing Erection Logistics Commissioning Subassemblies Hydraulic Units Service Commodity Critical to Quality Engineered Systems Custom Designed Solutions Page 10
Supply Chain Vertical Integration Decision Control of Capacity, Technology and Quality all Key Decision Factors Page 11
Supply Chain Vertical Integration Status by Top OEMs Page 12
Supply Chain NA OEM Manufacturing Investments Source: EER Page 13
Supply Chain NA Supply Chain Status Unable to meet demand Source: MAKE Consulting Page 14
Global Supply Chain Will European capacity shift to US or China? Source: MAKE Consulting Page 15
Supply Chain Challenges Global Sourcing Required to meet capacity needs Sourcing Challenges Very tight links provide large risks to disruption in assembly Longer planning, order cycles, more buffer inventory Large working capital requirements get larger Requires a global team; need to have people on the ground at suppliers Development of a competitive local options Mature European supply base with excess capacity Exposure to global currency risks Technology transfer Many designs based on EN standards and specifications US requirements for UL, OSHA, NEMA compliance New supplier designs may require re-certification Page 16
Supply Chain Challenges Logistics challenges continue to grow Source: MAKE Consulting Page 17
Supply Chain Opportunities US Supply Chain Opportunities Pending legislation would ensure the US wind market will be the largest in the world for years to come Leverage ARRA to attract European investment to fill the gaps in our supply chain Build multi level tiers to suppor the Tier 1 supply base Leverage skillbase from industries in transition Page 18
Thank You dmcdevitt@nordex-online.com Page 19