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Movers & Shakers in Wind Power: Ditlev Engel, Vestas

It all began over 100 years ago in 1898. Vestas was founded by a blacksmith, H.S. Hansen, in the town Lem, Denmark, manufacturing steel windows for factories and commercial buildings. After the Second World War HS Handen’s son, Peter began to produce agricultural equipment. During the 1970’s oil crisis, Vestas began to examine the potential of the wind turbine as an alternative source of clean energy and by 1979 delivered the first wind turbines. A boom in the early 80s followed. This was not sustained; in 1986 Vestas suffered a serious decline because special tax legislation in the United States that had provided advantageous conditions for the purchase of wind turbines stopped. Non wind energy parts of Vestas were shaved off and their company was streamlined for wind.

-Vestas V47-660kW wind turbine at the American Wind Power Center in Lubbock, Texas

 

From 1987 onwards  things began to improve and Vestas developed from a small-scale pioneer in the industry with a staff of around 60 people to become a global hi-tech and market-leading company employing more than 20,000 people. But Vestas’ enviable position was not secure and its financial performance was poor.

 

 

 

 

Ditlev Engel

 

In May 2005  Ditlev Engel, then 35, became President and CEO of the company after spending two months travelling the world getting to know the business, and particularly his employees to see what they thought was needed to develop the Company and maintain a global leadership in the wind industry. He once described Vestas as an “unpolished diamond”.

 

Engel called his plan “The Will to Win” to represent the willpower, passion and strong commitment he had met everywhere in the organisation during his trip around the world. When this plan was introduced to company employees, he said that he wanted them to benefit personally from their hard work and so introduced a bonus package open to all employees, regardless of responsibility or location. With employees on-side, Engel produced a snappy, memorable and apposite vision statement: “Wind, Oil and Gas”. By this he indicated that he wanted wind power to be mainstream, and on a complete par with oil and gas, not a poor man’s substitute. “Failure is not an option” became a key mission statement, to ensure special focus on commerciality and quality. Engel then began to polish the unpolished diamond and has been doing so ever since!

Turning to the senior executives, Engel wanted them to be able tio make quick and robust decisions. He brought about a very narrow Executive Management structure. He established what he called “The Vestas Government” to ensure clarity and oust ambiguity. You are either in the Government or in opposition to it. There would be no middle way. He would not tolerate members of the Government blaming each other for mistakes, and required his managers to take a corporate and holistic view of what was best, not just focus on their own area of responsibility. To reinforce this, the bonuses were payable to all based on the performance of Vestas as a whole, not individual areas.

At the same time, Engel put communication at the top of the agenda. ’That is my most important management tool’, he said. Internally in Vestas, communication was given a high priority. For example there were live transmissions of information with simultaneous interpretation from English to five other languages to enable colleagues around the world to follow the publication of quarterly reports on the Internet.

In 2010, a new tagline was introduced: . This was to emphasise the passion and the continued focus on the one thing that has given Vestas its global leadership position: Wind power. Engel is also very aware of the potantial fragility of customer loyalty and one of his personal success criteria is to meet as many Vestas customers as possible during each year.

Vestas Headquarters

 

 

’As Green as it Gets’ is another statement for the Company, representing a total commitment to sustainability: Their new Group headquarters which is in Aarhus, Denmark and was constructed to the requirements of the highest degree of sustainability according to the American LEED standard.

 

From 2005 to 2009 with Engel at the helm, Vestas achieved revenue growth of more than 85 per cent – from 3.5 to 6.6 billion Euros. In 2008, he was appointed ’Executive of the Year’ by the Danish Association of Managers and Executives and in late 2009, he was admitted to the list of the hundred ’Best-Performing CEOs in the World’ as no. 91 (and the only Scandinavian in the list). In 2010 Engel introduced his ’Triple15’ which is a detailed and ambitious roadmap towards 2015.

 

Completed wind turbine blades are stored at the Vestas blade factory in Lem.

And now? At the end of this Summer (2011) Engel said that the company is “doing quite well,” in an interview with Bloomberg Television. Vestas maintained its 2011 revenue forecast of 7 billion euros ($10 billion) with a margin for earnings before interest and tax of about 7 percent. This year’s order intake is expected to be in about 7,000 to 8,000 megawatts. He said “We are not talking to anybody, we are focused on organic growth,” when asked about the prospects for consolidation in an industry that’s been buffeted by the European debt crisis and financing issues. It seems that while the Vestas diamond may have lost many of its rough edges, there are still those that need to be polished going forward!

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