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06.03.2020 Growth in the service market – A source of pleasure and pain?

The service market for wind turbines is still evolving rapidly. The trend towards consolidation shows no signs of slowing down, especially with the disappearance of some turbine manufacturers and the unabated appetite of larger companies to acquire smaller and medium-sized market participants. What exactly is happening and what are the effects on the market and particularly on the operators?

Growth per se is a natural phenomenon – many individuals and organisations strive for it. Parameters such as speed, health, market, climate, place, time, resilience and many other factors are decisive for the quality of growth. According to economic theory, a healthy market structure can only develop when there is lively competition between a sufficient number of market participants and enough diversity. For this reason, operators of wind turbines benefit from a dynamic and diverse structure of service providers. For a long time, however, the equipment manufacturers themselves were almost the only ones who were able to provide maintenance for their products. Not surprisingly, the service market showed almost monopolistic structures in its first years. Precisely this development provides a simple explanation why there is a rapidly accelerating trend towards independent service and “self-performing”: the market, and more specifically the operators of wind turbines, urgently need competition and alternatives. These are the only conditions under which significant progress, improvements, price reductions and more diverse solutions can be achieved. 

Why is Deutsche Windtechnik growing so steadily?

Since its foundation in 2004, Deutsche Windtechnik has filled this exact gap and has been able to grow strongly there – first in Germany, then also at European and global level starting in 2012. This growth has often occurred together with its customers. When these companies expanded into new countries during their own growth and opened up new markets with new technologies, Deutsche Windtechnik was happy to be a trusted partner. Accordingly, a large number of new employees were integrated, new country units established, locations opened and service companies acquired.

Deutsche Windtechnik most recently acquired the service provider GFW in January 2020, and this is a good example of external growth because GFW has retained its identity and quality. The two companies had already worked together on many projects with a wide range of requirements, and both companies drove the merger forward in order to be able to develop additional capacity.

Many new smaller, valuable start-ups with a focus on specific areas of expertise also repeatedly help to promote the necessary competition in the service market. They and Deutsche Windtechnik form an important counterweight in a market that is still very much dominated by manufacturers. 

Artificial barriers prevent competition  

For this competitive mechanism to function even better, great care must be taken to ensure that manufacturers do not lock down the service market with artificial barriers that prevent access to control systems and data. This approach prevents free competition and drives costs up unnecessarily. Awareness of the negative consequences of locked-down systems is increasing. Other industrial sectors are far more advanced in this respect, and this provides significant benefits for operators.

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