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Wind Energy Update: Far East manufacturers will be the major winners from the rapid growth of the offshore wind sector according to the Offshore Wind Supply Chain Strategy Report 2011.

London, 22.09.2011. The challenge for component manufacturers in the more established markets of the West will be to increase their focus on quality and reliability to drive their own costs down in the years ahead.

On the basis of a wide-ranging industry survey of offshore wind turbine manufacturer OEMs, the new report finds that of the new component suppliers taken on each year 67.4 per cent are based in Europe, 30.4 per cent in Asia, 13 per cent in the US and 6.5 per cent in the UK.

When asked where these new suppliers were likely to be based in 5 years time, given expectations that the offshore sector is on the verge of significant global growth over that period, the picture dramatically changes.

OEMs declared that 50 per cent will be based in Europe, 47.8 per cent will be based in Asia, 13 per cent in the US and 10.9 per cent in the UK.

The report's authors found a range of reasons for the switch away from mainly European component suppliers to those based in Asia. The most pressing factor was cost.

OEMs looking to respond to the expected ramp-up in offshore projects in Asia, particularly China, described their strategies of 'globalisation' and 'localisation'.

In essence this meant OEMs securing turbine manufacturing work on Asian offshore projects and manufacturing those turbines in near-by factories.

To supply those factories OEMs said they would seek to increase the number of local suppliers and reduce the number of worldwide suppliers to save on logistics costs and lead times.

Far East manufacturers were also seen as being less costly than other worldwide suppliers, considering factors such as cheaper labour costs, for supplying materials for offshore projects based in Europe and the US.

"We go for the best supplier and can't be restricted by national boundaries," said one OEM. "Our customers have no country loyalty when they put money on the table."

Another said: "Asia is where the majority of the contracts are."

Another consideration in choosing more suppliers from Asia and the UK was the attraction of strong Government subsidies in these areas to help develop the offshore wind sector.

Indeed 46.7 per cent of OEMs said the existence of Government subsidies played a major role in their decision to manufacture in a particular region.

But established European and US suppliers should not despair. The report raised concerns from both within and outside Asia that the quality of component suppliers there was far below the level of established component manufacturers in the West.

OEMs also told the report's authors that suppliers, no matter where they are based, would be judged for selection on technical reliability, quality standards, logistics management, commitment to global development and a solid industry track record.

In fact this was one of the major themes of the report - that in the new high-growth offshore sector OEMs supply chain strategies offer numerous opportunities for component manufacturers to secure new work and long-term strategic relationships.

To learn more about how to access a copy of the Offshore Wind Supply Chain Strategies 2011 report please go to
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