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Wind tax credit extension could benefit ZF

Some in industry want fixed tax incentives

POSTED: January 6, 2013 11:30 p.m.

As part of the New Year’s “fiscal cliff” deal, Congress extended the wind production tax credit another two years, a move that could help the environmentally conscious industry get back on its feet.

“We’ll just have to wait and see how the market recovers,” said Elizabeth Umberson, ZF Group North American Operations’ vice president of materials management.

ZF Wind Power, which is at 1925 New Harvest Drive, off Calvary Church Road, in the Gainesville Business Park, opened in 2011 amid international fanfare.

The tax credit, only valid on wind turbines after they’ve been erected, was set to expire Dec. 31, along with a wide gamut of other tax measures.

Congress ended up passing a package that, perhaps most significantly, extends most of the tax cuts enacted under President George W. Bush for individuals making less than $400,000 and married couples making less than $450,000.

But while ordinary Americans kept spending until the deadline, the looming deadline for the wind production tax credit chilled orders long ago.

“We were supposed to be at full production levels, with a staff of 250, and we’re at 160 today,” said Umberson in a September interview. “And we’ve capped that.”

ZF Wind supplies gearboxes to Vestas operations in Colorado, which, at one point, cut jobs because of the tax credit expiring.

Vestas released a statement last week praising Congress and President Barack Obama on the tax credit extension.

“The short-term ... extension is critical to ensure projects move forward and orders are placed that will support U.S. manufacturing and the domestic supply chain,” the statement says.

The “late timing of the extension” will result in a significant reduction in 2013 installations, but the U.S. market will be stronger overall, the company states.

The tax credit “has been successful in attracting private-sector investment,” Vestas officials said, adding that wind energy projects represent about one-third of all new power plant capacity added in the last five years in the U.S.

Umberson said that “because of the time horizon for new projects is, at a minimum, six months, (the tax credit extension) won’t have any impact the first half of 2013,” Umberson said.

“But it should definitely improve the order book situation starting in the second half of 2013, not just for us but for all wind-related industries.”

Future hiring is unknown at this point, Umberson said.

“We’re in a fairly low state of orders due to the expiration of the (tax credit),” she said.

Umberson said she believes the extension also “will give the wind industry a little time to ramp down the expectations of having that production tax credit (beyond two years).”

In the September interview, she said she would like to see a permanent incentive in the industry.

“That’s what coal has, that’s what nuclear (energy) has — their incentives are built into the tax code,” Umberson said. “Absent that, what I’d like to see is a longer-term incentive that phases out over time.

“This all-or-nothing one day to the next is crazy. If you want companies like ZF to come and invest $100 million — which we did and now we’re sitting here watching our investment dry up — that’s not a very good picture to paint to (try to attract) other companies.”



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