Fan manufacturing enters the era of low profit

“First, we must survive. Then we can talk about development.” At CWEE 2011 held on April 8, Yue Zhihong, Minister of Supply Chain Cooperation of Xinjiang Goldwind Technology Co., Ltd. (hereinafter referred to as “Jinfeng Technology”) stated that wind power in 2011 The pace of market development is still very fast, not inferior to that of 2010. However, the market competition for wind power equipment has entered a white-hot trend and the industry shuffles.

Market crowding effect will be significant

In recent years, China's wind power market has maintained rapid growth. In 2010, the cumulative installed capacity and new installed capacity were the top two in the world. The fixed on-grid tariff policy has also made developers earn money. However, in sharp contrast to this, the market price of wind turbines has continued to decline, and the profit margins of the entire machine suppliers have been compressed step by step, and the overall situation has entered the low-profit period.

“At present, the price of 1.5 MW wind turbines in China is about 3,600-3,700 yuan/kW, which is half of the peak period.” said Liu Qi, deputy general manager of Shanghai Electric Wind Power Equipment Co., Ltd.

Since 2008, the average price of 1.5-megawatt wind turbines in our country has dropped at an average annual rate of 22%-23%. At the end of 2010, the average price reached 3,900 yuan / kW. According to news, Dongfang Steam Turbine Co., Ltd. has the lowest offer price and its 1.5MW unit price has dropped to RMB 3,200/kWh. In the tender for a project in Shenneng Inner Mongolia, Dongfang Steam’s 2MW model is reported. A staggering 3,650 yuan / kilowatt.

Sun Lixiang, deputy general manager of Guodian United Power Technology Co., Ltd. bluntly stated that under the current market price system, wind turbine companies must rely on scale advantages to not lose money. “The individual wind turbine suppliers’ so-called profitability often only considers the cost of equipment procurement and manufacturing. But neglected the later service and maintenance work."

Min Yang, chief operating officer of Mingyang Wind Power, believes that excess capacity is one of the main causes of irrational competition in the current market. “In recent years, a large number of investors have flocked to the field of wind power equipment manufacturing and accelerated the development of wind power industry in China. The problem of excess production capacity of domestic wind power equipment has become increasingly prominent."

It is understood that in 2010, the newly installed capacity of wind power in the country was nearly 20 million kilowatts, and the production capacity of only five companies, including Sinovel, Goldwind, Dongqi, Mingyang and United Power, exceeded the above capacity. At the same time, international wind turbine manufacturing giants such as Vestas of Denmark, Spain's Gemini, and GE of the United States have established production bases in China. The wind power market has experienced unprecedented competition.

Faced with the profit crisis that swept through the entire industry, parts suppliers are strategic partners of complete machine companies and are also in dire straits.

Chief Technical Expert Li Hui of Chongqing Keke Avant-garde Wind Power Control Equipment Co., Ltd. stated: “The cost pressure of the whole machine company will inevitably be passed on to the parts suppliers, and upstream of the parts and components companies, such as the price of electronic device market, is basically transparent and stable. Therefore, we will bear the most pressure for downward pressure on prices."

Another person in charge of the domestic first-tier converter converter company also frankly stated that although the company's orders have increased significantly in 2011, the profit margin has been declining. Currently, it can only be supported by volume. The most important thing is that in the long run, it will also affect the future R&D investment of the company.

Not optimistic, industry experts generally believe that in the current market environment, price competition will continue to exist, the next three years may be the wind power equipment industry reshuffle stage.

Policy shift accelerates reshuffle

In addition to the increasingly fierce market competition, policy changes from the developers and the grid side have also aggravated the anticipation of reshuffling of the wind power equipment industry.

Recently, it is reported that the National Energy Administration is studying and formulating regulations on regulating the approval system for wind power projects. For the first time, this method proposes that local governments must obtain a reply letter from the National Energy Administration before approving wind power projects with an installed capacity of less than 50,000 kilowatts. Otherwise, they will not be passed.

Yang Xiaosheng, chief engineer of Longyuan Power Group, expressed that he has participated in the discussion meeting for the formulation of the plan several times. According to industry analysts, currently wind power equipment companies have high production capacity. Once the speed of approval of projects slows down, it may aggravate business risks caused by excessive operating expenses and insufficient cash flow.

Compared with the policy impact of the developer side, the upcoming new national grid standard will bring more cost pressure to the wind turbine manufacturing companies.

It is reported that, led by the SERC, the national standards for wind power grid-connected technologies jointly drafted by the China Electric Power Research Institute and the Longyuan Power Group have been reported to the Electricity Regulatory Commission. Compared with the current “Technical Regulations for the Integration of Wind Farms into Power Grids” promulgated by the State Grid Corporation of China, the new standard adds technical requirements for grid-connected wind turbines, such as dynamic reactive power/active compensation technology and low voltage ride through technology.

"For us, there are no problems with technology, but from the cost point of view, it can be said that it is an impossible task." Sun Lixiang said that according to the new national standard requirements, each replacement of a part needs to be re-tested Certification. This greatly increases the company's technical preparation and manufacturing costs. “Each part purchases 3 suppliers as an example. A complete set has 5 key parts, so that the same series of models can be arranged in dozens. Variety."

Sun Lixiang also took the example of low-voltage ride through detection. “The full-flight test of this kind has a high degree of dependence on the wind conditions, and it may not be able to continue for many days in a row. At present, there are very few units with testing qualifications in China and it is impossible to satisfy more than 80 Testing needs of home companies. If the mandatory testing will inevitably increase the time cost of the company's mass production." This will undoubtedly make many wind power equipment manufacturing companies struggling on the edge of profitability.

Equipment companies hold group heating?

How can we win in this long-term competition? Most wind power equipment manufacturers have adopted such business models as “small profits but quick turnover” and “strengthen management” to enhance product quality and reduce production costs in order to enhance the competitiveness of enterprises.

In 2011, Goldwind Technology put forward the slogan of "Differentiate competition with the goal of cost leadership." “Cost leadership, including technological innovation and design optimization; investment and cooperation to enter the core field of manufacturing; forming strategic alliances with partners to maximize control and optimization to reduce costs. Differentiated competition is based on customer value and appeal, from the design, Differences in procurement, production, installation, sales, and service are various, resulting in a market advantage, explains Yue Zhihong.

According to report, Goldwind is the first company to pull 1.5 MW fans per watt into the following 4,000 yuan. The power lies in good cost control - 3,000 sets of scale effects greatly dilute the cost, while the production process and technology The increase in the level has amplified the effect; secondly, the proportion of domestically produced parts has been continuously increased, which has also directly reduced the cost of stand-alone machines. At present, the localization ratio of Goldwind's converters and pitch systems has reached 40%, and it is expected to increase to 70% or even 100% in 2011.

As a private enterprise, Mingyang Wind Power has inherent advantages and flexibility in the control of cost, and its choice has taken the construction of the supply chain as the most important breakthrough point.

“China's wind power equipment manufacturing enterprise product system is not complete, product technology research and development failed to effectively integrate in the industry chain is the biggest test we face.” Hao Yiguo said that in order to meet the cost challenges and meet the current market demand, Mingyang Wind Power 2011 Established a series of measures for the “333 Project” - three-year strategic cooperation among operators, complete machine companies, and parts suppliers, three-way win-win cooperation, and the construction of a "122" supply chain strategic platform. "It has achieved very good Effect".

In order to cooperate with the entire machine manufacturer for effective development and optimization, high-quality parts and components companies are more likely to reduce cost pressure through technology research and development. "I do not hope that the price will go back, but we will do our best to meet the needs of the entire machine company." Li Hui said, "We insist on focusing on product quality control, while increasing our product development capabilities, such as increasing the status. Maintenance and full life cycle management, fault prediction and diagnostics, etc. In addition, the company's strategic focus has shifted from focusing on product sales to service-centered."

However, the cost reduction space that enterprises bring through management and technological innovation is limited. Therefore, the call for warming up is getting louder and louder.

In this exhibition, Liu Qi suggested that wind turbine manufacturers could form an industry alliance to strengthen self-discipline and avoid vicious competition; Hao Yiguo called for whole machine companies to hold the bottom line of 3600 yuan/kw, and jointly change the current profit distribution formula to promote the entire industry from Price competition to value competition.

However, Sun Lixiang is not optimistic about this: “Industry alliance is unlikely. Due to the need for survival, a single wind turbine manufacturer will destroy the market price alliance. We do not lead the price reduction, but we will still follow if necessary.”