vestas_win[d]_no._12_-_2008

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Win[d]W I N D , O I L A N D G A S

No. 12 Ye a r 0 5 8 May 2008

Boosting productivity

Offshore opportunities A safety incentive Technology transfer Keeping executives excellent Customers speak out Heading for Four Sigma The art of nding fault Industry takes the climate battle to a new level

On to the next stepIt was disappointing for us all at Vestas to read the results of the latest customer satisfaction survey. Because although the survey shows progress on a range of key issues, we still face major challenges with regard to working relationships with our customers. Challenges that we take very seriously indeed. Nevertheless, the results have not knocked us down for the count, because even though we have a long way to go at all levels at Vestas, the results conrm that the initiatives we have launched are right on the mark as regards the requirements our customers are making. We are committed to focusing intensely on these central challenges in 2008. Our managers are completing development programmes designed to improve professionalism and the ability to perform faultlessly in all parts of our organisation. Our production processes will undergo comprehensive changes and we are working concertedly to improve working relationships with our customers. It is also clear that requirements on us as a partner, on our products and on our professionalism are growing naturally in step with the industry, and in line with the increasingly central role that is being accorded to wind energy in different countries all over the world. That is why we are making higher demands on ourselves and on our suppliers. And as the articles in this issue of the magazine make clear, we are on the right track. It is with satisfaction that we can note that many of our suppliers have welcomed the challenge and have already made a good deal of progress in the work necessary to ensure appreciable improvements in quality and an expansion of capacity. As the market leader, we have simultaneously taken on responsibility for expanding familiarity with the indisputable benets wind power provides in relation to other sources of energy, and we can see that our messages have met with a very positive response. However, the industry alone cannot raise wind power to the next, essential level. In the same way as all other forms of energy, wind power demands long-term planning and a stable political framework if it is to develop. All the conditions are in place to enable wind power to play a key role in the solution of energy and climate challenges. However, the necessary political decisions must be made now not in ve or ten years if the ambitions are to be achieved. The opportunity to take a whole new approach to energy is here today all that is required is the courage to seize it. Or as a well-known sports company says: Just do it. Ditlev Engel, President and CEO Vestas Wind Systems A/S

Content

4 8 12

Expanding inwards Improving productivity at existing factories has a key role to play in Vestas growth over the coming years. Offshore opportunities As the V90-3.0 MW returns to the market, offshore business is booming.

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Global economy 2.0 When Lars G. Josefsson, President and CEO of the Swedish energy company Vattenfall, talks about climate issues, the politicians listen. Read about the industry leader who is special climate advisor to Angela Merkel, the German Chancellor.

42Challenges at IJmuiden How Vestas overcame a serious setback to get the Q7 offshore project in the Netherlands back on track.

Taranto technology transfer The Italian factory gears up to produce V90-3.0 MW turbines, while transferring V52-850 kW know-how to China.

46 16Down but still determined Some praise, much criticism: the 2008 customer loyalty survey reveals a hard road to satisfy customer needs, but Vestas is resolute.

A framework for loyal relationships Vestas Mediterranean turns the spotlight on partnerships with suppliers.

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Training to stay at the top Fast-paced business growth makes growing demands of Vestas executives. A sophisticated development programme is optimising their skills

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Rewarding safety Safety targets are part of a new incentive plan that lets Vestas employees earn an extra months pay. A holistic approach Improving the performance of installed wind turbines is the job of the Operations division of Vestas Technology R&D.

and keeping performance tip-top.

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Prediction is better than cure The Vestas Performance and Diagnostics Centre makes an art out of predicting turbine faults before they happen. The result is a new global service culture.

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62Global warming in the boardrooms If the climate battle is to be taken seriously, industry must take the lead and many companies are already well under way.

Well on the way towards Four Sigma At 63 of Vestas strategically important suppliers, work is well under way on a range of quality initiatives with a common goal: to raise the Sigma level to at least four.

Expanding inwards4

Increasing capacity has to do with more than simply building new factories and taking on additional staff, so while Vestas is investing around EUR 500 million in new facilities in 2008, productivity from the existing factories has to skyrocket. And there are plenty of options from the smallest electronic components to the biggest tower sections.

We are removing whatever does not generate value for the customer, explains Sren Husted, President of Vestas Nacelles, with regard to the process that Vestas production system is currently undergoing. The goal is clear: to make optimal use of the factories resources and to boost productivity signicantly. The tool to be applied is a switch to ow-based production, which involves making considerable reductions in run-through time, i.e. the time from receiving the order to completion of the product in question. You can compare it to having to draw ve sets of lines on a piece of paper, using ve different colour pens held by ve different people. The traditional solution is to have each person draw ve lines, one by one. However, if each person draws a line and then passes on the pen to the next person, it is possible to reduce the time from the rst to the last line appreciably typically by 3040 per cent. At the same time, this approach increases the likelihood of the result being the same every time. This is a simplied image of what the process entails, explains Sren Husted.

Sren Husted is the sponsor of the Group initiative targeted at accelerating productivity improvements throughout the Vestas organisation. Production Excellence is one of the 12 highly prioritised Must-Win Battles at Vestas. Focus on shorter run-through times and reduced costs by removing waste factors are key elements of Production Excellence, as Sren Husted explains. Faster run-through Reducing run-through times and minimising waste opens the door to a range of obvious advantages. For example, we can manufacture more products at our existing factories rather than having to build new ones, he says. Firstly, standardising the work processes and minimising waste factors such as internal transport, waiting time and unnecessary movements will reduce production costs and thus improve our competitiveness. In this context, we are working with a goal of moving from index 100, measured in 2007, to an index of less than 80 in 2012, so there is appreciable potential.

5

Secondly, we can postpone or even obviate a number of investments in new facilities by reducing the run-through times at our factories, thus increasing capacity, says Sren Husted, who has already seen in several areas of the Group what an individual factory can actually achieve by implementing improvements. Back in 2002, we were considering expanding our factory in Viborg, Denmark, which had an annual capacity of 200 units at that time. The expansion would have doubled the size of the factory. However, we decided instead to remodel production using the Lean principles, and today the same factory manufactures 700 units a year without our having to expand the production area, he relates. A rule of thumb states that if you reduce the run-through time by 50 per cent, capacity will increase by 25 per cent. Experience from our assembly facilities demonstrates that this calculation certainly applies at Vestas, says Sren Husted. In different ways, all Vestas four production units have already started focusing on improving productivity. For example, Vestas Blades has been working with the Total Production Management (TPM) system for many years. This move is intended to increase productivity and makes sense for two main reasons:

Blade production is still a craft that takes time to learn, and it is not usually possible to ll all the positions with new employees who have experience with the processes. So even though the ramp-up time has improved for a new factory, we still anticipate that it will take several months before production reaches full capacity, explains Nina Skovby Lundkvist, Director of the TPM & Lean Competence Centre at Vestas Blades. In addition, the production equipment at a blade factory is extremely expensive, so there are major nancial gains to be made by optimising production at the existing factories, she continues, and adds that experience from Vestas Blades indicates that the introduction of TPM can help increase productivity by around 30 per cent. Eliminating waste Vestas Towers, too, is focusing on ensuring the best possible utilisation of the factories large and cost-intensive production equipment, as Bo Michel, Manager, Production Development, explains: We constantly differentiate between value-creating and non-value-creating processes, and optimise the production process step by step. We identify the bottlen