Economy & Politics

Dangerous doldrums at Enercon

In the East Frisian district town of Aurich, the site of the wind turbine manufacturer Enercon and its previous suppliers almost make up its own district. After many years of boom, the company has been struggling with massive problems for monthsTomas Engel

On the last day before the planned end, the huge factory site in the north of Aurich already looks like someone has flipped the switch. At the end of February, the rotor blades stacked like gigantic Mikado sticks in front of the plant of the company KTA, a supplier for the wind turbine manufacturer Enercon. The windows of the factory are dark, no one can be seen. Only when you stand in front of the fence a little too long does a man pull up in a white car: Enercon’s security service.

Outside of the East Frisian company, no one knows what is going on in the building, in which more than 1000 employees built rotor blades for Enercon’s wind turbines, and how it will continue in the good times. Not even the employees of the EEZ energy information center in the city of Aurich, right next to the factory premises. “Enercon tells us nothing,” they say there. It is no different for them than the employees of Enercon themselves: “They also only know what is in the newspaper.”

At least the old reflexes still work at Enercon, one of the most closed large companies in the republic. Even today, the group is ticking like its founder Aloys Wobben, a brilliant engineer and inventor, but an autocratic company boss. But otherwise the company, which over the years had spurred the energy turnaround into a colossus with an annual turnover of EUR 5.6 billion, was not much before the start of the corona pandemic, as it was in the good times. The fact that wind energy is in a severe crisis in Germany is hardest for any company than the country’s most important wind turbine manufacturer – and with it an entire region.

Since 2017, the last boom year, Enercon’s sales have fallen by far more than EUR 1 billion. For the first time in its history, the icon of the German green electricity industry made losses, 2019 according to its own statement a “high three-digit million amount”. Last autumn, Enercon even threatened to run out of liquidity. There will also be a loss in 2020. The Enercon management recently announced at the beginning of June that they would once again tighten up their plans for a far-reaching restructuring of the group – including the sale of parts of the company.

In public, CEO Hans-Dieter Kettwig likes to blame the misery on politics. In fact, the federal government slimmed down the lavish remuneration for green electricity in 2017 and switched the funding to an auction model, which initially had problems implementing it. Missing permits and lawsuits prevent the construction of new wind farms on land. For this reason, only 282 new turbines were put into operation in Germany last year – 91 of them from Enercon, which can be recognized from afar by their egg-shaped nacelles designed by Sir Norman Foster. In the record year of 2017, the Aurich company alone installed 711 new systems. A historic slump.

But the crash of the domestic wind market is only partly the cause of Enercon’s imbalance. In truth, the roots of the crisis also lie in a sect-like corporate culture: an authoritarian leadership that wants to decide everything itself, an impenetrable, difficult to control corporate network, clique economy, lack of external control and dealing with employees that no employer can afford anymore can. In an internal memo that Personal-Financial.com is available, Kettwig admitted last autumn that the crisis was “partly homemade”.

The consequences of this management failure, which goes back to the early days under Wobben, are now pulling Enercon down even more: an unhealthy dependency on the home market, wrong products, much too high costs, a disrupted communication with politics. In addition, there are massive quality defects in some systems. The gearless and therefore low-maintenance turbines developed by Wobben enjoyed the reputation of being “Mercedes among the wind turbines” worldwide for many years – which is why many customers were also willing to pay the higher prices. In order to survive as an independent manufacturer in the long term, the group must not only change its structures, but also its culture.

“The fair is read”

Beginning of November 2019, Hanover State Chancellery. It has been known for a few days how the Enercon management wants to prevent the worst: up to 3,000 of the approximately 18,000 jobs across the group are to be cut, and several exclusive suppliers such as the Aurich company KTA are to be closed completely. The manufacture of the rotor blades, which Enercon has practically produced in-house like almost all large components, is to be relocated abroad, where wage costs are much cheaper and the East Frisians want to open up new markets for their systems. A shock for Lower Saxony.

Now Kettwig has to report to Prime Minister Stephan Weil – one of the appointments that the CEO doesn’t like. Enercon has never been talked into, least of all by politicians. After the crisis talk, Kettwig grimacing next to Prime Minister Weil and complaining about politics: “We have been unplugged.” All attempts to exert influence come too late, the job cuts cannot be changed. Then a sentence follows, cold as ice: “The mass has been read.”

After all, Kettwig, who has served as multi-managing director in Wobbens Reich since 1991, has appeared at all – not a matter of course at Enercon. In the summer of 2018, when a first round of layoffs started with direct suppliers to the company, the top management refused to talk to top politicians. Kettwig even left Federal Minister of Economics Peter Altmaier at that time – a remarkable strategy in an industry that depends more than any other on the drip of politics and state subsidies. The company is damaging itself if it does so, says Lower Saxony’s Minister of Energy Olaf Lies.

When the outrage broke out, Kettwig declared on the intranet that they did not want to give the impression that there was room for negotiation “where there is really no one”. In addition, the group claimed that the suppliers concerned were independent companies – although many of them worked exclusively for Enercon and belonged to owners who lead into the environment of company founder Wobben through complicated company structures with the help of tax havens and foundations. In the case of the rotor blade manufacturer Aero Ems in Haren, Emsland, for example, the top of Enercon was only ready to talk about job cuts when Mayor Markus Honnigfort threatened to make public who signed the contracts for the site: Wobben and Kettwig. “That’s not how you deal with employees,” says Honnigfort.

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