BOSTON (Reuters) - This year’s downturn in investment in U.S. wind farms had the unexpected effect of pushing United Technologies Corp into the business faster than it had planned.
The diversified U.S. manufacturer this week agreed to pay $223 million to buy the 50.1 percent it did not already own of Clipper Windpower to save the wind turbine maker from a cash crunch.
“This clearly was not the plan when we made the initial investment back in January,” Greg Hayes, United Tech’s chief financial officer, told investors during a conference call after the diversified U.S. manufacturer reported third-quarter earnings.
Indeed, back in March United Tech Chief Executive Louis Chenevert told reporters the Hartford, Connecticut-based company planned to study Clipper, a Carpinteria, California-based company that is listed on the London Stock Exchange, “for the next two years” before deciding on its next move in the renewable energy space.
The sharp falloff in U.S. wind installations — which were down 71 percent through the first six months of 2010, according to the American Wind Energy Association — pushed that time frame up.
When Clipper management approached United Tech about needing more money, Hayes said, “the thought of lending money to Clipper was not nearly as attractive as actually buying the rest of Clipper and controlling this business.”
To be sure, Clipper is not the only wind turbine supplier to have felt the downturn’s pinch. When General Electric Co reported quarterly results last week it told investors that wind turbine sales had fallen sharply.
United Tech’s full backing may leave Clipper better positioned to compete with deep-pocketed rivals that include conglomerates GE and Siemens AG, as well as specialists like Denmark’s Vestas.
“It’s been just a U.S. play for the last few years,” Hayes said. “Step one, after we get our folks there, we have to expand into the emerging markets, find partners in China, India, and grow that business.”
Reporting by Scott Malone; Editing by Phil Berlowitz