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Vestas Must Reduce China Turbine Cost to Be Relevant: CEO

June 13 (Bloomberg) -- Vestas Wind Systems A/S must reduce the cost of its wind turbines so the world’s top supplier is more relevant in China, the industry’s biggest market, said Chief Executive Officer Anders Runevad.

Vestas is planning to include more local content in turbines sold in China, Runevad said in an interview at the company’s headquarters in Aarhus, Denmark, yesterday. The company also will remove some features used in more regulated and mature European markets such as lighting, noise minimization and de-icing capacity, he said.

“We need to have a cost-out variant of our turbines for sure to be more relevant; we need to lower the cost,” Runevad said. “You start with a very basic model and then you add on features. You have a cost penalty if you try to sell a high-end spec product in a low-end spec market.”

In the next three to five years, Vestas is targeting growth in China, India and Brazil, three emerging markets that make up about half of world turbine demand. The Danish manufacturer now has less than a 5 percent market share in those countries, compared with more than a fifth in Europe and the U.S.

“We want to grow faster than the market” in the three nations, Runevad said, declining to give targets. Vestas has hired new managers to head up its efforts: Ruben Lazo in Brazil, Chris Beaufait in China and John Hammer in India.

“We are in a fairly early stage of the journey and the first step is to get the right people, the right leadership in place,” Runevad said.

To contact the reporter on this story: Alex Morales in Aarhus at amorales2@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Tony Barrett, Ana Monteiro

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