MIDDLEBOROUGH, Mass. — Carl Horstmann strode around the floor of his factory here, passing welders honing head-high metal tubes as sparks flew. He is one of a dying breed: the owner of Mass Tank, a steel tank manufacturer in a down-at-the-heels region that was once a hub of the craft.
Four years ago, having heard of plans to build a $2.6 billion wind farm off the shores of Cape Cod, he saw opportunity. Much of the work, the developers and the politicians promised, would go to U.S. companies like his, in what would be the dawn of a lucrative offshore wind industry in the United States.
Now, after Horstmann has spent more than $500,000, much has changed. Cape Wind, the wind farms developer, won a court case over an important approval Wednesday but is still caught up in legal and financial wrangling and faces a tenuous future. And even if the project is completed, most of the investment and jobs for supplying the parts will go not to U.S. companies like Mass Tank but to European manufacturers.
Horstmanns company lost a bid to build support structures to a German company it had brought in as a partner, and last month Cape Wind completed arrangements for other major components, including the giant blades, towers and turbines, to be built in Denmark.
Those deals have provoked a strong reaction from suppliers like Horstmann, but they also illustrate the difficulty of creating a new energy industry from scratch, even one that has financial support from the government.
Weve seen this in other industries. We dont have the volume and the guaranteed market that China, for example, or some of the European countries that keep those jobs in their countries, can provide to investors, said Thomas A. Kochan, a professor at the Sloan School of Management at the Massachusetts Institute of Technology.
Its a catch-22, he said, because without a steady flow of projects, companies would not build plants, and therefore, we dont get the jobs.
For Horstmann, the issue is personal.
As Americans, we are really upset that all this money is going overseas, he said at the factory.
As a ratepayer to a utility, he added, Im going to be getting my monthly bill, and if Cape Wind goes through its going to have this premium on it.
Offshore wind farms are inherently risky ventures, requiring enormous investments not only from developers and financiers but also from governments and, ultimately, ordinary citizens.
And none is riskier than Cape Wind, whose plans call for 130 turbines slowly spinning on Horseshoe Shoal of Nantucket Sound, supplying 75 percent of the power for Cape Cod, Marthas Vineyard and Nantucket.
The project has been a source of bitter resistance since it was proposed in 2001, with opponents, who include billionaire William Koch as well as local fishermen and business owners, saying it would increase utility rates and spoil the pristine view.
But proponents say that offshore power plants like Cape Wind are worth the gamble, because they deliver cleaner, more efficient electricity and also spur economic development.
The potential economic impact of a new offshore wind industry is enormous, supporters say. The Energy Department estimates that the Atlantic coast could support as many as 70,000 jobs by 2030.
Cape Wind was to be the catalyst, leading to the first 1,000 jobs, with equipment from General Electric and other domestic suppliers.
But a major setback came around 2009, when GE decided to back away from the offshore wind business, saying it was still too expensive to compete with land-based wind power. In response, Cape Wind turned to Vestas and Siemens, dominant players based in Northern Europe with factories in the United States that make onshore wind machines. In December, Siemens and Cape Wind completed the contract, in time, executives said, for the project to qualify for a federal tax credit valued at 30 percent of its cost.
Not enough orders
Siemens plans to make the giant turbines in Denmark, although it is arranging for some work to be done with a company based in Maine. Offshore wind development is not yet far enough along to justify the expense of building a factory in the United States, industry executives say. Because of their size, the turbines and support structures require different factories and equipment, and are generally too heavy to transport over normal roads.
Aside from Cape Wind, there are only two projects off the Atlantic coast that could come to fruition soon, both relatively small, with just five turbines each: a project by Deepwater Wind, which would rise from the waters near Rhode Island, and one by Fishermens Energy, near Atlantic City, N.J.
Its very difficult to build a new factory on the back of one order, said Mark Rodgers, Cape Winds chief spokesman. He said that the original estimates of creating 600 to 1,000 jobs still held, even though those included the manufacturing work as well. We may have been overly conservative initially in our forecast.
Despite the disappointment, Horstmann and his team are pursuing other possibilities. There is interest in New Jersey, they say, in their participation in a factory planned for the Fishermens project. But their chance to put Mass Tank at the forefront of serving the Atlantic coast offshore industry may have slipped through their fingers.
We tried to hit a home run with this, Horstmann said. And we didnt.