Vestas: Expanding the International Service Business

Vestas faced difficult times in the aftermath of the financial crisis partially caused by a bleak market outlook and partially due to internal challenges with project delays and quality issues. The waning investor confidence was reflected in a historical dip in the share price where the stock almost halved in value over the five-year period 2008-12. After restructuring and cost cutting with employee layoffs, the company engaged in a “Profitable Growth” strategy in 2014 focused on operational excellence to capture the potential of supportive service business. The first attempts to enter the service business were taken in 2008 to reach full focus by 2014. For the first time in three years and under new leadership, Vestas reported profits again and returned to the top ranks in the wind turbine industry. Vestas planned to expand the service business by 40% over the coming years expecting an annual growth rate in the service market of around 9%. From 2014 to 2015 revenues from service activities increased by 18% setting positive prospects for the future. Vestas extended the in-house competencies for the service business and acquired two external service providers to back it up. In late 2015, the company took over UpWind, a US-based service provider for turbines and acquired the European service provider Availon in 2016. Vestas extended the service offering further to not only include its own turbines but to also comprise the customers’ full portfolio of turbines regardless of their origin.