In a follow up to our earlier on wind turbine manufacturers, we found that there has been a reversal of the previous trend toward vertical integration in turbine manufacturing.  We also found two of the least vertically integrated players—Goldwind and REPower—have the highest returns on capital.

During this work we also had the opportunity to identify best-in-class manufacturing practices among wind turbine manufacturers, and determined that fewer than half of them do best-in-class supply chain management activities comprehensively:

• Lean and six sigma up the supply chain
• Hands-on supplier quality management
• Evaluate total cost (including cost of quality, working capital), not just landed cost or ex-works unit cost
• Optimize collaboration with strategic suppliers
• Use comprehensive IT tools for supplier evaluation and management

Download a detailed set of findings here.

We recently examined the level of vertical integration of wind turbine firms and compared it with their return on invested capital. Generally, we found firms with lower vertical integration tended to have higher returns on capital. We also surveyed top 20 wind farm developers in the United States to get their impressions of wind turbine vendors. Their answers suggested four clear groups—the “blue chip” players like GE, Siemens, and Vestas, a respected second tier, a few firms that are respected but seen as potential competitors because of their integration into development, and some reputation-challenged players.

Download our analysis here.