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STR-81011-009-01-01_Wind-Challenges_v19.pptx
Hamburg, 2009
Using turbulent times to become fit for future
Wind energy manufacturers' challenges
Content
A. Crisis 2009 and beyond − Only a short calm for the wind market
Page 3
B Challenges ahead − Using turbulent times to become fit for future
2STR-81011-009-01-01_Wind-Challenges_v19.pptx
B. Challenges ahead Using turbulent times to become fit for future
Page 15
D. Way forward − How Roland Berger can support you
Page 30
3STR-81011-009-01-01_Wind-Challenges_v19.pptx
A. CRISIS 2009 AND BEYOND− Only a short calm for the wind market
The crisis has brought a calm to the wind industry − Long-termgrowth trend still intact with 17% growth p.a. until 2012
Forecasts comparison – Pre-crisis vs. actualROOT CAUSES
Worldwide yearly added capacity[GW] Slowdown...
> Lack of financing, especially for large projects – Requiredequity share has increased typically in Europe from ~15%
+17% p.a.55
4STR-81011-009-01-01_Wind-Challenges_v19.pptxSource: BTM 2008 and 2009
to ~30% plus additional insurances> Reduced urgency to compensate high prices of electricity
from fossil sources (oil price evolution)> Uncertainty regarding general development of the
worldwide economy, financing and subsidies' volumeassociated to economic slowdown
... but growth trend still intact:> Economic stimulus packages strongly support renewable
energies, especially wind> Strong growth share in countries less dependant on
financial markets (China)> Ambitious government goals for renewable energy share in
core markets (e.g. USA, Europe, China, India...)> Cost penalties for fossil energies in Europe (ETS)
Forecast pre-crisis Actual forecasts
GROWTH SLOWDOWN
25
30
35
40
45
50
55
2008 2009 2010 2011 2012
While the industry is expected to grow healthily, margins ofmanufacturers will come under strong pressure
Medium and long-term investment and growth plans in key markets1Impacton Margin
O
Impacton Growth
+
Key market trends
5STR-81011-009-01-01_Wind-Challenges_v19.pptx
Wind energy costs converge towards grid parity2Large scale entry of utilities is changing rules3Focus on global network of local supply chains4
5 New entrants pressure established players
Source: Roland Berger
–
–
+
–
+
+
+
OPositive+ O –Neutral Negativ
Governments are establishing ambitious investment andgrowth plans for wind energy all over the world
Worldwide actual and potential wind power capacity 2008-2020 [GW]
INVESTMENT AND GROWTH PLANS1
TOP GROWTH MARKETS
EU countries> Proposed target of 20% of renewable energy sources by 2020 – wind
contributing to 11-14% of electrical energy with 180 GW, including 35GW offshore1)
North America+141
202
Europe+136
6STR-81011-009-01-01_Wind-Challenges_v19.pptxSource: EER, EWEA, GWEC
GW offshore> Total investments between 2011-2020 accounting for EUR 120 bnUSA> Proposed target of 20% wind power by 2030> Economic stimulus bill including USD ~80 bn for renewable energy,
including extension of production tax credits and offering of invest-ment tax credits
> Investment plans include initiatives for the transmission system whichconstrains the wind energy growth today
CHINA> 3% target of non-hydro renewable electricity production by 2020 –
100 GW of wind power capacity by 2020> "10 GW Size Wind Base" program planning large scale deployment of
10 GW of wind power in four key regions until 2020India> Government plans for wind power capacity of 40 GW by 2022> Offshore wind, currently untapped in India, has significant potential –
India has 7,000 miles of coast line
28
169
Potential2020
Installed2008
+141
26
189
Potential2020
Installed2008
Asia/Pacific+163
66
Potential2020
Installed2008
16
1
Potential2020
Installed2008
RoW+15
1) EWEA reference scenario
"20-20-20" targets bind EU countries to produce 20% of their powerwith renewables – Wind best positioned to fill the supply gap
Impacts of the EU ETS on utilities – EU Climate and Energy Package, December 2008IMPACTS FOR UTILITIES
> Utilities are responsible for around ¾ of CO2emissions of all branches of industry
> Utilities will be allowed to emit only as much CO
Europe "20-20-20" targets 2020
INVESTMENT AND GROWTH PLANS1
7STR-81011-009-01-01_Wind-Challenges_v19.pptxSource: EU Council
> Utilities will be allowed to emit only as much CO2as they have emissions allowances (certificates)
> From 2013 on utilities will have to buy 100% oftheir certificates1) in auctions and may tradethem afterwards (EU ETS2))
> By 2020 the total number of available certificateswill be reduced by 21%
> A considerable number of coal-fired power plantswill have to be substituted – wind is the mostmature renewable source to fill the supply gapand to reach the national quotas of renewableenergy
1) Utilities in East European countries are exempted and will get 70% of their required certificates for free after 2013 until 20202) Emissions Trading Scheme
20% renewables… share of energy mix by 2020
-20% CO2 emissions… of 1990 levels by 2020
-20% energy used… of 2020 projected levels
Wind energy costs still need to decrease to reach full parity withbulk power costs – Main driver is the price for wind turbines
Historic and forecasted energy cost development in Europe 1985-2030 [EUR/MWh]
GRID PARITY2
REMARKS
> Energy costs account for:– Capital costs– O&M costsSolar PV
150
8STR-81011-009-01-01_Wind-Challenges_v19.pptx
– O&M costs– Fuel costs (not for renewables)– CO2 emission costs (25-30 EUR/t)
> Increase of wind energy costsbetween 2005 and 2010 due toincreased capital costs because ofhigh wind turbine prices
> Capacity constraints and high pricefor wind turbines assumed tocontinue until 2010
Source: EWEA, IEA, RISO, Roland Berger
Grid Bulk Power
Grid Fossil
6875
81
3943
53
0
50
100
2030
Wind – max
Wind – min
1985 1995 2005 201020001990 2015
Wind turbines' cost is the main lever to decrease wind energyprices – strong price reductions expected
Typical life cycle costs of a 2-MW onshore wind turbine [%]
24% 100% > Wind turbine acquisition costs is the main lever forutilities to reduce overall wind energy costs
> Wind turbine suppliers have to plan with strong priceand profit margins reduction in the next years
REMARKS
GRID PARITY2
"Turbine costs will decline by 20% inthe next 3 years" [Acciona Energia]
9STR-81011-009-01-01_Wind-Challenges_v19.pptxSource: EWEA, DEWI, Eon, RWE, Roland Berger
5%7%
57%
Turbine(ex works)
7%
Gridconnec-
tion
Found-dation
Otherup-front
costs
76%
Total capex O&M Total
and profit margins reduction in the next years> For offshore, the wind turbine accounts for 45%-50%
of the total life cycle costs, varying strongly with waterdepth and distance to coast – deployment and O&Mmuch higher than for offshore
> Other up-front costs include:– Land up-front costs– Electric installation– Consultancy– Financial costs– Road construction– Control systems
> O&M account for:– Service & spare parts 26%– Administration 21%– Land rent 18%– Miscellaneous 17%– Insurance 13%– Power from the grid 5%
Six key factors are driving the utilities to increase wind in theirportfolio, broadening their energy mix
> Oil and gas prices and supply uncertaintyincreases the need for utilities to reduce theirexposure
> Wind broadens the energy mix cost-effectively
OIL AND GAS RISK
Utilities' growthin wind energy
> Global energy demand grows by 10-20%each year
> Building a standard wind park takes only3-5 years, a much shorter lead time than thatof a conventional plant
SHORT LEAD TIME OF WIND
ENTRY OF UTILITIES3
10STR-81011-009-01-01_Wind-Challenges_v19.pptxSource: Roland Berger
> Utilities are forced to auction 100% of requiredCO2 certificates after 2013
> Operation with CO2-intensive energies(e.g. coal) will become more expensive
gymarket
> Problems for small and medium wind playersto access financing
> Acquisition of locations, equipment and know-howat low prices relying on strong cash flow fromoperations
CRISIS "WINDOW OF OPPORTUNITY"
EU "20-20-20" TARGETS FOR 2020
> General public increases awareness onenvironmental issues
> Utilities need to promote a green imageopposed to the traditional "polluter" one
PROMOTE GREEN IMAGE
> Support by political initiatives making windenergy production more attractive(e.g. tax incentives, feed-in tariffs)
POLITICAL INCENTIVES
> Strong focus onreliability and yield
> Global supply ofwind turbines
> Own projectmanagement andO&M organizations
Wind turbine manufacturers loose negotiation power – Currentfavorable delivery and price conditions expected to decrease
From a sellers' to a buyers' market
> Fewer but larger orders– Larger project sizes, both for new
parks and repowering activities
> Intense competition for market sharein growth markets and for key clients– Dominance of top 6 wind turbine
manufacturers constantly decrea-sing (market share from 85% in
ENTRY OF UTILITIES3
11STR-81011-009-01-01_Wind-Challenges_v19.pptx
parks and repowering activities– Global framework agreements
> Global reach of main utilities– Main utilities operate internationally
in key growth markets – global keyaccounts
> Strong pressure to reduce renewableenergy costs– Grid parity is one of the key levers
to achieve established renewableenergy targets
sing (market share from 85% in2005 to 69% in 2008)
– Competition from local players ingrowth markets and specialistsintensifies
> Increased capacities and ability todeliver– Major investments are alleviating
supply shortages in critical areas
Loss ofnegotiationPower
Bigger wind park projects and framework agreements are intensi-fying the competition among WTM for fewer but larger orders
Bigger wind park projects and framework agreements
ENTRY OF UTILITIES3
TOWARDS BIGGER WIND PARK PROJECTS TOWARDS FRAMEWORK AGREEMENTS
35
40
70
80
90
Number of farmsAverage number of turbines
Competitors haveentered into major dealswith utilities
12STR-81011-009-01-01_Wind-Challenges_v19.pptx
FEWERBUT
LARGERORDERS
> Average wind farm size increased by 20% in the lastfour years – larger projects over 50 MW are expectedin the next years, specially offshore
> Wind park size is a key factor for theindustrialization of wind energy
> Utilities are allocating large orders andestablishing framework agreements withselected suppliers – partnerships focusing todevelop joint growth approaches
> Number of suppliers to the major utilities isreduced
> Hardercompetitionamong WTMs
> Crucial importanceof partnershipsand key accountmanagement
0
5
10
15
20
25
30
0
10
20
30
40
50
60
70
2001 2002 2003 2004 2009 2010 2011 201220082006 20072005
> Siemens agreementwith Dong Energy for1800MW
> REpower willmanufacture for RWEwind turbinesamounting 1900 MW
Supply chain focus is changing from the ability to deliver to theglobal development of local supply networks
LOCAL SUPPLY CHAINS4
FOCUS TODAY FOCUS TOMORROW
Focus today vs. tomorrow
13STR-81011-009-01-01_Wind-Challenges_v19.pptx
> Ability to deliver – Secure supply of key components> Ways to overcome constraints of oligopolistic markets
for gearboxes and bearings
> Develop clusters with local supply networks in keymarkets on a global level
> Importance of "Buy Local" to participate in governmentaleconomic stimulus programs
FALComponents Manufacturing
Dominance by top six players is decreasing strongly –Intense battle for market share expected the next two years
Overview market shares 2005-08 [% MW delivered]
MANUFACTURERS LANDSCAPE5
REMARKS
6%
9%16%
6%2%
AccionaSinovelOthers
4%4%
3%1%> Market dominated by Vestas, GE, Gamesa, Enercon,
Suzlon, and Siemens, accounting for 69% of delivered MW> Competition for market share intensifies – tougher
85%
100% 100%
14STR-81011-009-01-01_Wind-Challenges_v19.pptxSource: BTM, EER, Companies, Roland Berger
28%18%
18%
17%
13%
11%
14%
9%
6%
8%6%
Vestas
GE Energy
GamesaEnerconSuzlonSiemensNordexGoldwind
2008
3%4%4%
2005Top 6 Rest
p gconditions expected in 2009-2010– Market share of top 6 suppliers decreased from 85% to
69% in 2008– More than 10 other turbine vendors fighting for market
share in regional markets- Offshore specialists: REpower, Multibrid- Local players: Clipper, Dongfang- Others: Mitsubishi, Windflow, Fuhrländer, Windey,
Ecotecnia, Dewind, Unison, Hyosung, Doosan> Strong growth Chinese and American markets strengthen
local suppliers – further market share gains expected– USA: GE from 15% in 2007 to 17% in 2008 – other
suppliers as Clipper emerging (2% in 2008)– China: Sinovel and Goldwind from 7% to 8% together –
other suppliers as Dongfang emerging (3% in 2008)
69%
15STR-81011-009-01-01_Wind-Challenges_v19.pptx
B. CHALLENGES AHEAD− Using turbulent times to become fit for future
To protect the market position and margins, wind turbinemanufacturers need to address four challenges
1 CAPTUREMARKET
2 LEVERAGETECHNOLOGY
3 ENHANCESUPPLY CHAIN
4 RESTRUCTUREOPERATIONS
Challenges wind turbine manufacturers
16STR-81011-009-01-01_Wind-Challenges_v19.pptxSource: Roland Berger
> Benefit from govern-ment incentiveprograms
> Secure access toprofitable key marketsand clients
> Drive standardization,modularization anddevelopment ofplatforms
> Manage complextechnology trade-offsbeyond pure perfor-mance criteria, focu-sing on life cycle costs
> Manage risk of supplierbase
> Eliminate supplyconstraints
> Establish and managelocal supply chains ona global scale
> Manage liquidity shor-tages and adjust ca-pacities in the shortterm
> Further industrializeoperations
> Build up globaloperations footprint
USE CURRENT SLOW DOWN TO PUSH AHEAD INITIATIVES!
The three top markets – Europe, USA and China – haveextensive incentive programs for renewable energy on place
Overview main country markets incentive programs> "20-20-20" targets
proposing a contribution ofwind energy of 11-14% toEuropean electricalconsumption (~180GW)
EUROPE
> Energy production: Different schemes are operating, mainly feed-in-tariffs, fixed premiums, green certificatesand tendering procedures
> Project development: Depending on national and regional governments but basically tax incentives, soft loans,contribution programs and environmental taxes /carbon certificates (indirect benefit for wind energy)
> Equipment manufacturing: No specific programs apart from national and regional schemes fostering industrialgrowth typically based on job creation R&D incentive programs on national and EU level
1 MARKET
17STR-81011-009-01-01_Wind-Challenges_v19.pptx
growth, typically based on job creation. R&D incentive programs on national and EU level.
> Proposed target of 20% ofelectricity supplied by windenergy in 2030USA
> Energy production: Different schemes on federal and state level, but basically based on a production-tax-credit(PTC). Possible introduction of a national renewable portfolio standard scheme
> Project development: Investment-tax-credits and loan guarantees on a federal level and different schemes onstate level (e.g. tax incentives, land acquisition, grants, loans...). Indirect support through specific incentives forinvestment on the transmission network and a proposed cap-and-trade scheme penalizing carbon emissions
> Equipment manufacturing: Programs mostly on state level, typically based on job creation and including taxincentives, soft-loans and low costs for land and infrastructure. R&D funding programs.
> Ambitious targets fixed inthe Wind Base Program,aiming for more than 100GWs until 2020
> Strong willingness topromote domestic manu-facturing of equipment
CHINA
> Energy production: project specific fixed tariffs based on wind resources, transmission and production costs(only for non-concession projects) and a tariff premium pro MW
> Project Development: tendering for national concession projects and low interest loans> Equipment manufacturing:
– Higher taxes for importing wind turbines and key components– Specific incentives (cash subsidies pro MW) for the manufacturing of turbines for domestic brands (>51%
chinese)– National and regional specific subsidies, tax incentives and low interest loans for the establishment of new
companies
Source: GWEC, EWEA, Roland Berger
Each of the top markets require a different strategy andpositioning approach
1 MARKET
Key success factors for WTMs in top markets
USA CHINA> Partnering with > Partnering with
18STR-81011-009-01-01_Wind-Challenges_v19.pptx
EUROPA
glocal and Europeanutilities/IPPsleading capacitybuild-up
> Build up owndomestic capacityand supplier network� Reduce logisticcosts and currencyrisks
> Partner with major utilities, with afocus on offshore, repowering andmarkets in growth phase (e.g. France)
> Reduction of wind turbine costs drivenby industrialization and efficiency
domestic manufac-turers and suppliers� Subsidies for manu-
facturing of turbines onlyfor domestic brands(>51% chinese)
> Build up local manu-facturing capacity tosupply the market� Reduce costs,
including high importtaxes for wind turbinecomponents
Source: Roland Berger
Main challenge is to secure top line growth in the next years –Focused and orchestrated market approach essential
1 MARKET
MARKETMAPPING &ANALYSIS
> Identify and select growth markets to target> Collect information and build market profiles
(structure, volumes, legislation, renewableprograms …)
Overview market approach
Orchestrated marketapproach to:> Secure participation
19STR-81011-009-01-01_Wind-Challenges_v19.pptx
CUSTOMERPORTRAIT &COMPETITORPROFILES
> Identify and map customers and competitors> Collect customer & competitor intelligence,
building-up an in-depth understanding of thetarget markets
ACTIVATIONSTRATEGY
> Define targets> Identify levers and barriers to action> Establish market/client specific actions
strategies and action plans
> Secure participationin the growth of keymarkets (USA,China, Europe)including govern-ment renewable in-vestment programs
> Establish global fra-mework agreementsand gain majorcontracts with keyutilities
Modularization and platform strategy can reap significantbenefits in investment and variable costs
Platform strategy/modularization – Project example
> Standardized torque area for gearboxes> Significant decrease in number of designs and parts> F iti l i t li bl d l
PROJECT RESULTS
2 TECHNOLOGY
20STR-81011-009-01-01_Wind-Challenges_v19.pptx
> Fewer critical variants, more reliable modules> Increased flexibility for more focused product
differentiation
Source: Roland Berger
Unique designs Part numbers Investment [hours]
> Engineering> Manufacturing
– Productionfacilities
– Tools
Variable costs [EUR '000/unit]
> Material cost> Manufacturing
cost> Warranty &
goodwill> Logistics2
6
TargetActual
-67%
3590
-61%
Actual Target
-40%
Target
150
Actual
2503.95.0
-22%
TargetActual
Complex technology trade-offs require holistic evaluations ofperformance, supply chain and life cycle costs requirements
COMPLEX TECHNOLOGY TRADE-OFFS
> Performance and technical challenges– Development of design solutions using CFRP low weight and high stiffness,
e.g. longer blades enabling more efficient energy harvesting– Operating life constraints and environmental damage, e.g., lightning strike
Supply chain> Components and
materials availabilityand capacity
Performance> Design solutions> Yield/costs trade-
offsD i f
2 TECHNOLOGY
EXAMPLE CASE: COMPOSITES
21STR-81011-009-01-01_Wind-Challenges_v19.pptx1) Based on the assumption of 3% CFRP application for blades; aircraft programs A380, A350 and B787
– Design for manufacturing – complex manufacturing processes andtolerances
> Supply chain– Suppliers landscape – three companies, Toray, Tohotenax and Mitsubishi
Rayon, account for >75% of the market– Most of the capacity today focused on high margins industries as
aerospace – secondary players focus on wing (e.g. Zoltek)– In 2015, material requirements for wind turbines would account for 25,000
tons, ~2,5 times the volume of material required for new aircraft programs1)
> Life cycle costs– Material costs – high costs of CFRP, ~350 USD/kg for aerospace high-
grade materials. Lower-grade materials still far from 12 USD/kg target forwing industry
– Manufacturing costs – expensive and complex processes– Maintenance – new methods and processes for inspection and repairs
a d capac tyrequirements
> Supplier landscape> etc.
Life cycle costs> Materials and components
manufacturing costs> Assembly costs> Deployment costs> Operation and maintenance> etc.
> Design formanufacturing
> etc.
Additional regvired future focusMain focus today
Many challenging technology trade-offs expected in the nearfuture – Increasing focus on reliability, costs and yield
2
DRIVE TRAIN AND GENERATOR> Focus
– Reliability and efficiency (e.g. gearbox accounts for ~40%of wind turbine failures)
– Operational lifetime– Service and maintenance
BLADES AND ROTOR> Focus
– Larger sizes for more efficient energy harvesting– Capability to sustain higher loads– Quality (e.g. cracks, delamination, …)– Costs for transport and handling
TECHNOLOGY
Overview key technical challenges - Focus on reliability, costs and yield
22STR-81011-009-01-01_Wind-Challenges_v19.pptx
– Service and maintenance– Installation costs
> Challenges– Lighter and more compact housings (e.g. integration of
drive train and generator)– Simplification and new design solutions for drive trains
(e.g. reduction of bearings and roller parts)– Integration of new generator technologies (e.g.
superconductor generators)
– Costs for transport and handling– Manufacturing costs– Operational lifetime– Low weight and high stiffness of structures
> Challenges– Introduction of new materials (e.g. CFRP)– Manufacturing constraints– Endurance to environmental damage (e.g. weather,
lighting)
GRID CONNECTION & INTEGRATION> Focus
– Adaptation to grid requirements (e.g. stability, voltagefluctuations)
– Integration costs (e.g. due to intermittency)> Challenges
– Industrial customization and modularization of windturbines
– New integration technologies
TOWER AND FOUNDATION> Focus
– Lighter and leaner structures– Material, handling and installation costs– Installation and costs of foundations, specially offshore
> Challenges– New foundations design, construction techniques and
materials, specially for Offshore
Source: Roland Berger
In the light of the current economic crisis it is key to assessand manage the risk along the supply chain
3 SUPPLY CHAIN
PRIORITIZATIONOF PRODUCTS ANDSUPPLIERS
IDENTIFICATION OF RISKYSUPPLIERS
SELECTION OF LEVERS &DEFINITION OF EMERGENCYPLANS
A B C
23STR-81011-009-01-01_Wind-Challenges_v19.pptx
Long-list of suppliers Short-list of risky suppliers Fact sheets, levers &emergency plans for riskysuppliers
Symptoms Causes
Bottlenecks on lower-tier levels are characteristic for thedynamically growing wind turbine industry
CONTEXT CHALLENGESKey questions to be addressed in order to build a comprehen-sive supply chain capacity model to identify hidden bottlenecksare:
> How to structure the supply chain?
> Dynamically growingindustry with CAGR > 20%
> Increasingly qualityproblems of components(quantity over quality)
3 SUPPLY CHAIN
Context and challenges of bottlenecks on lower tier levels of the supply chain
24STR-81011-009-01-01_Wind-Challenges_v19.pptxSource: Roland Berger
> How to structure the supply chain?> How to get suitable data (availability and quality)?> How to challenge tier-1 suppliers (verify what tier-1 suppliers state
about tier-2 suppliers)?
OEM Tier-1 Tier-2
Main challenge for OEMSupply chain ramp-up (quantity and quality) in times of
difficult prediction of own market share
– Traditionally only communication tier-by-tier– Challenge for OEM to understand tier-2 suppliers
> Lack of predictability ofsales plan
> Lack of commitment
> Lack of communicationregarding requirementsand volumes (reactiverather than pro-active)
(quantity over quality)
> "Blame game" betweendifferent parties involved
Bottle-necks in
lowertiers of
thesupplychain
A Supply chain capacity model brings supply and demand to-gether on each tier level allowing for flexible scenario analysis
SUPPLY DEMAND
> In-depth desk research> Extensive interviews with
Bottom-up approach
> Based on market studies> Validated through desk
Top-down approach
SUPPLY CHAIN CAPACITY MODEL
Scenariodashboard
Supply /demand
> Conversion ofinputs into onecommon unit(pieces ship-sets
3 SUPPLY CHAIN
Illustration supply chain capacity model
25STR-81011-009-01-01_Wind-Challenges_v19.pptxSource: Roland Berger
> Extensive interviews withinternal/external partners
> Prioritize components on alltier level
1st tier
2nd tier
3rd tier
> Validated through deskresearch and interviews
> Leverage own internal/external expertise
> Prioritize components on alltier levels
1st tier
2nd tier
3rd tier
Supply Demand
(pieces, ship-sets,MW, etc.)
> Allowing scenarioanalysis throughdash-board in Excel
DELIVERABLES
> Condensed representation using traffic-lightlogic
> Stand-alone and aggregated view on totalsupply chain including "hit list" of bottlenecks
SUPPLY DEMAND
A major challenge is the further industrialization and build up ofglobal operational excellence
4 OPERATIONS
BUILD UP GLOBALIII
26STR-81011-009-01-01_Wind-Challenges_v19.pptx
> Perform diligent liquidity analysis> Work on all levels to improve
cash position: Working capital,investments, financialrestructuring
MANAGE LIQUIDITY SHORT-AGES AND ADJUST CAPACITIES
> Continue establishing solid andefficient industrial processesalong the whole value chain forwind turbine assembly andcomponents manufacturing
> Elaborate comprehensivedevelopment scenarios and workon operational improvementlevers across all of them
FURTHER INDUSTRIALIZEOPERATIONS
> Build up footprint in targetmarkets involving local suppliers– global network of manufactu-ring clusters
OPERATIONS FOOTPRINT
Source: Roland Berger
I
II
Short-term liquidity is ensured via three main levers: Workingcapital reduction, CAPEX reduction and financial restructuring
4 OPERATIONS
WORKING CAPITALREDUCTION
CAPEX REDUCTION FINANCIAL RESTRUCTURING
1 Inventory management 4 Overall reduction of capitalexpenditures
7 Freeze of dividends
I
Main levers to ensure liquidity
27STR-81011-009-01-01_Wind-Challenges_v19.pptx
2 Modification of payment terms(with suppliers and clients)
3 Factoring
expenditures
5 Disposal of non-core assets
6 Sale and lease back of ownassets
8 Equity cure
9 New money restructuring
10 Debt buyback
11 Covenant reset
12 Debt to equity swap
13 Debt to hybrid swap
Source: Roland Berger
A robust industrialization of operations is key to face pressureon profit margins
> Design to life-cycle-costs> Design to Manufacture &
ProductDevelopment
FactoriesFlow & Layout
Organization Equipment Supply Chain
Key levers for a robust industrialization
4
> Planning and scheduling> Internal industrial footprint
> Management of performanceindicators
> Flexibility of machines andtools
> Procurement planning &scheduling
OPERATIONSII
28STR-81011-009-01-01_Wind-Challenges_v19.pptx
gAssembly
> Modularization & complexitymanagement
> Integrated developmentteams
> Standardization of com-ponents and manufacturingprocesses
> Quality and testing programs> Requirements based
development
Focus product develop-ment on life-cycle-costs
pand layouts
> Storage and intralogistics> Balancing flow & production
line design – Pull flow> Batch size and bottleneck
management> Leadtime reduction> Rework management> Production and flow
monitoring
> Organization structure> Team management> Continuous improvement
management> 5S implementation> Quality of manufacturing
support services> Wage policy> Training and skills
management
> Efficiency of test benches> Machine & equipment output
monitoring> Equipment reliability and
maintenance> Work for higher OEEs> Tools spares management> Equipment capacity increase
& new equipmentintroduction
> Procurement management> Supply chain administration> Operational monitoring of
supplier performance> Supplier structure> Lean logistics
Implement excellentindustrial processes
Work for peopleeffectiveness
Optimize overall equip-ment availability & output
Establish a robust andefficient supply chain
Source: Roland Berger
The development of global operations footprint is a must toaccess key markets and keep costs low
> Development on a global level of localclusters for the final assembly and
KEY CHALLENGES TO BE ADDRESSED
Overview development of global operations footprint
4 OPERATIONSIII
29STR-81011-009-01-01_Wind-Challenges_v19.pptx
clusters for the final assembly andcomponents manufacturing in key markets
> Development of own domestic infrastructurein target markets establishing solidproduction clusters partnering with localsuppliers
> Secure access to market growth andgovernment incentive programs bypartnering and establishing frameworkagreements with key utilities anddevelopers
FALComponents Manufacturing
Source: Roland Berger