Vestas Launches $100 Million Consumer Ad Campaign In U.S.

Reprinted

Dow Jones - August 25, 2008: 10:45 AM EST

NEW YORK -(Dow Jones)- Maker of wind turbines Vestas Wind Systems A/S is advertising in the New Yorker magazine, but the company doesn't expect you to put its hundred-ton machines on your shopping list.

Instead, the world's largest seller of wind turbines sees the need to raise Americans' awareness of wind energy's potential. To that end, Vestas budgeted $ 100 million for the next two years to bring its "Vestas, No. 1 in Modern Energy" campaign to U.S. living rooms, company Chief Executive Ditlev Engel told Clean Technology Insight.

(This story also appeared in Clean Technology Insight, a daily newsletter published by Dow Jones & Co.)

This is the first year that the company has come out with consumer-targeted ads that will run in print, online, on the radio and on television.

"We want to show people: Here's technology you have but don't use," Engel said.
At a time when the renewable energy industry is hoping to secure favorable legislation, aiming ads to the public makes more and more sense. Congress hasn't extended what many in the industry consider critical federal tax credits to alleviate the tax burden for wind-energy producers, which expire at the end of the year.

"Being in the hearts and minds of the public can make a big difference if you're in a political fight," said Julia Bovey, media director at environmental nonprofit Natural Resources Defense Council.

In addition, the 2007 Energy Bill didn't go as far as some in the industry hoped because it doesn't have a nationwide mandate to source a specific proportion of electricity from renewables. Finally, many expect a debate over regulating climate change to enter the political fray soon.

"Consumers aren't going to run out and buy wind turbines, but they do influence government and politicians," said Seth Farbman, managing director at advertising firm Ogilvy & Mather. "If politicians feel that constituents support alternative energies like this, they're more likely to support legislation that allows these technologies to grow more quickly," added Farbman, who heads the firm's Greenery group, which advises clients on marketing sustainability efforts. He said that he has no investment or business relationship with Vestas.

Overall, the renewable energy industry is getting better at sending its message across to politicians, according to Steve McBee, president of McBee Strategic LLC, a Washington consulting and lobbying firm that works on behalf of clean-technology companies.
American Wind Energy Association ran radio spots last year asking voters to contact their representatives about specific issues relevant to wind. But the campaigns from Vestas and T. Boone Pickens, who also just started a consumer effort and is reportedly spending $58 million on it, have a broader message. "We want people to take wind into the equation," Engel said. At the same time Vestas and Pickens are singling out wind out of a broader theme of climate change that has been tackled by such media events as Al Gore's "Inconvenient Truth."

"We all understand there's a need for renewable energy, and wind is one of them. But we don't know yet which companies will fulfill that need," said Ogilvy's Farbman. "It's still early enough in the game where a company can gain some of that leadership, in the sense of influence over regulation and better visibility when they're selling in this space."

Other companies that have created similar consumer-focused campaigns are DuPont and General Electric Co., the latter with its Ecomagination theme. Farbman, whose team created DuPont's sustainability ads, noted that although most readers of The Wall Street Journal, where these ads run, will probably not buy the company's energy-efficient material used in building construction, the campaign "reinforces [the idea] that DuPont is innovating against these big problems" like hunger and energy. That's no small matter when people make investment decisions, as well, Farbman noted.

There's a big gap between European and American awareness of wind energy, said Ditlev. Denmark, where Vestas has its headquarters, generates 20% of its electricity from wind. "All Danes know what a wind turbine is," said Engel. "But in the U.S., wind is just 1% of the total and the turbines are in select areas."

To boot, Ditlev has the impression that solar energy is discussed much more than wind when people talk about renewable energy in the U.S.

Vestas, which holds 23% of worldwide market share in wind turbines, is eager to influence people's ideas of wind energy from a young age. In Europe LEGO has a set already on the market whith which children can make toy Vestas turbines. Vestas has "mentors" affiliated with teams of children participating in Lego tournaments. In addition the company has set up displays of its turbines made out of Legos, as well as play tables, in U.S. airports like the Los Angeles International Airport and the John F. Kennedy Airport in New York.

The U.S. campaign coincides with Vestas' push to expand in the country. The company, whose headquarters are in Randers, Denmark, is investing EUR200 million into additional turbine and component manufacturing facilities in Colorado. The move is driven by several factors -- a belief that the U.S. wind market will grow rapidly, the opportunities created by the cheapening dollar, and the rising freight costs that make shipping large machines across the Atlantic more expensive.

Vestas currently employs 1,220 people in the U.S. and expects to increase staffing to 4,000 by the end of 2010.

"We want to create a borderless organization," said Engel, who joined Vestas a few years ago, when about half of the company's employees were Danish, he said. Now, with a total of 18,000 people working for the company, two-thirds are non- Danes. About 70% of the company's shares, traded on the OMX Nordic Exchange Copenhagen exchange, are foreign-owned, he said. And about 99.8% of its revenue comes from sales outside of Denmark. "So is it really a Danish company?" asked Engel.

The ad campaign is then also about promoting Vestas and wind energy industry as an employer. The growing industry is short of skilled labor, whether to run the factories or to install the turbines on wind farms. Large developers of wind projects, like Horizon Wind, have said in interviews that recruitment and staff retention are top priorities.

The campaign is "about promoting wind, Vestas and thus our job offerings," said Peter Wenzel Kruse, Vestas' senior vice president for group communications, said in an email.
People started responding, said Engel, by calling and mailing the company. Their basic question, he said, is "What is this?"

Vestas is also opening a research-and-development center next year focused on wind technologies in Houston, where it plans to collaborate with Texas and other U.S. universities. The center will house about 100 researchers.

Concurrently with its expansion in the U.S. the turbine company is actively trying to build up a component supply business locally. It has set up a sourcing office in Chicago for that purpose, said Engel. Some in the industry have said that it makes sense for manufacturers of automotive parts to switch their lines to make components for wind turbines, for example.

"Our biggest problem is to get our European suppliers to join us in the U.S.," said Ditlev. European component makers are poised to open manufacturing in the U.S. but not until the picture on the production tax credit and other long-term legislation in support of renewables becomes clear, said Engel.

-By Yuliya Chernova, Dow Jones Newsletters; 201-839-3493; yuliya.chernova@ dowjones.com