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Brevini Wind USA's Jacopo Tozzi Speech at IndustryWeek's Best Plants 2012 Opening Reception

Brevini is a worldwide specialist in planetary technology. After 50 years of experience we developed a product range of gearboxes which goes from very small applications to >2,5 million N/m.

We needed a new manufacturing location for the upper range (above 1 million N/M) where we could deploy the best possible technology. We focused on the wind market because it is one of the biggest for planetary applications. The US was, until two years ago, the biggest wind market in the world and there were plans for expanding the renewable sources ten folds by 2025. What a great chance for Brevini!!! We carefully selected the right equipment for the manufacturing of large gears up to 8 feet in diameter, in house heat treatment and the largest test rig for wind applications in USA with 6,4 MW of rated power. We also enjoyed the strong support of the local community: both the State of Indiana and Delaware County helped us in funding the project and in selecting the right people with the right education and training.

The initial conditions were excellent but we also encountered a number of significant challanges. The problems originated from the deep financial crisis which erupted in October 2008, few weeks after the project start. All credit lines had to be renegotiated, a long process which took more than 18 months. Following execution of the financial agreements the project was started in April 2010, . The factory was ready to begin manufacturing in the last quarter 2011. The plant consists of 130,000 sq.ft. on 20 acres with many possibilities for expansion, when and as the market requires. However, no expansion is planned at this time as the renewable markets are depressed requiring us to find alternative planetary applications to fill the plant.

As the CFO of United Technologies recently said "there is not a renewable energy mandate in this country". I put it in other words: no national Renewable Portfolio Standards, no plan to improve the transmission lines and grid, no further Production Tax Credits (PTC). Some other contingent developments have added to the difficult market for renewable: shale gas and presidential elections in 2012.


Brevini remains committed to wind as an energy source, but it doesn't look the same for the rest of the country. Installed capacity was at 10 GW in 2009 but estimates for 2013 are down to 3, maybe 4 GW; with such a perspective the entire industry is going to shrink significantly.

We sell our main drives to the assembly plants of the Wind Turbines OEMs where the nacelles are built. There are nine (9) such OEMs in the US with 14 GW of nacelle assembly capacity. With the market plummeting to 3GW there will be a disruption in the existing industry structure: knowhow and jobs will be lost forever or at least for a long time since the investments which would be lost are big and the rate of return in the wind OEMs market, even in the best years, hasn't been so good.

For the moment no one cares about the renewable markets since the shale gas is giving the illusion that energy will be cheap forever. This is unfortunately not true, as a history of the European energy market shows. Take my country as an example: Italy opted for natural gas in the 80s because it was less expensive than oil but market conditions have changed dramatically over the past 30 years. Today we buy gas from several sources; Russia, the Caspian area, Norway, Great Britain, Algeria, Libya and we can buy also LNG; so we have a lot of alternatives but the cost of energy which Brevini pays in Italy is almost three (3) times higher than the price we pay in Indiana. This is the case for every hydrocarbon; the trend is always upward because of the increasing cost of extraction. New technology allows for deeper wells and extraction of oil and gas from shale and tar sands BUT always at greater cost! It would be wise to build viable alternatives!

In contrast to that trend the cost of the fuel of wind turbine, wind, is zero! This is true today as it will be in 20, 30 or 40 years: long term power purchase agreements between wind farms and utilities stabilize the cost of power over the broad energy market. The full cost of the wind produced by KW/h is declining as well, as the technology improves (higher towers catch more wind, better drive units increase the wind curve generating wind at lower wind speeds) all as the cost of wind remains the same.


Let me go back to the PTC issue which is becoming a kind of tipping point: without PTC the wind industry in the US won't be able to push wind energy in the short term. An unintended consequence of this will be that the US wind market will lack the resources for paying leases to the farmers and for contributing to the local municipalities which accept wind turbines. More significant is the 75.000 manufacturing jobs placed at risk, Or the 500.000 jobs which will not develop by 2030. A target which i is now very unlikely, but remember these were the accepted assumptions in the global marketplace when we started the project.

What is Brevini doing to offset these difficulties? Adapting to these unfortunate realities. Darwin noted that the "...success of any species is dependent on its ability to adapt..."

Brevini remains committed to the wind business. We enjoy the most modern and powerful equipment in North America for the manufacturing and testing of main drives; our power range currently goes up to 3,5 MW, and theoretically up to 5 MW, which gives us a significant advanatge. For people at this meeting who are not familiar with wind turbines may be helpful to know that the biggest "on shore" turbines range to max 3 MW, whilst "off shore" installations (still a rarity in North America) require 5 to 7 MW turbines. Therefore Brevini is equipped to supply the market now and at least for the next fifteen years to come.

But adaptation requires the pursuit of additional opportunities. We are also working on projects in other renewable markets such as ethanol from sugar cane and power generation from the sea tides. These technologies are not present in the US but are quite developed abroad (Mexico and Brazil, among others, are large manufacturers of ethanol; U.K. is quickly becoming the largest market in the world for the power generation from sea tides). And to augment these renewable pursuits, we have found business in the fields of heavy duty applications where our planetary technology is widely used (cranes, mining, and cement, steel). All markets enjoying significant activity.


In conclusion, Brevini Wind is committed to the success of the Wind Industry in North America. With that said, Brevini Wind is also part of the largely diversified Brevini Group and therefore is prepared to offer our high quality design and manufacturing skills to clients with different application needs. Our plant in Indiana, like our plants in Italy (including the new Head Quarters and main manufacturing plant in Reggio Emilia), in Germany (with the plant close to Frankfurt where we manufacture PIV helical gearboxes) and in China (with the new facility close to Shanghai), are designed and built to be centers of excellence and offer to our clients the best available technology in the gearbox business.

A world of opportunities!

We thank you for the opportunity to present our North American operations at this event and we invite you to visit our plant at your earliest convenience.

(The aforementioned speech is provided as a courtesy, for which its opinons are not intended as being reflections or beliefs held by Machines Italia and/or its affiliate partners)