Innovation System of Reebok Company - Essay Example

? Reebok Company Growth of the French wind-turbine industry Generation of electri through wind power goes back to the late 19th century and early 20th century, when Denmark and the United States pioneered in the development of the first wind turbine that generated electricity. Although the two countries have invested heavily in the expansion and growth of the industry, various countries have joined in the battle for the global market. Globally, the industry has during the past five years grown at an above 40% rate per annum. As the generation of turbine-powered electricity increases countries have recorded up to a double-digit (percentage) levels of electricity consumption. This phenomenal demand and growth of renewable forms of energy has resulted because of the need for finite fuel prices and petroleum reserves. As such, the revolution for renewable energy increases as wind energy is no longer considered an alternative source of energy, but as sustainable, profitable and cost-effective (Spera, 2009). The French dynamic industry has become host for more than 140 companies involved in the construction, foundry, electronics, electric-engineering, and industrial services necessary for the production, commissioning and operation of wind turbine facilities. Onshore and offshore wind resources The French offshore wind power development programme which was commissioned under the "Grenelle de l'environnement" initiative in May 2007 led to the adoption of two important laws in August 3 2009 and July 12 2010 categorized under "Grenelle I" and "Grenelle II" laws. These laws were fundamental for the implementation of the environmental engagements adopted in the initiative. Consequently, it was expected that the Directive 2009/28/EC stipulated the national plan aims for renewable energy development to reach 6,000 MW by 2020 from offshore wind farms generations and other marine energies. To the French consumers, this represents approximately 1,200 wind turbines generating 3.5% of the total grid consumed (Sathyajith, 2006). In order to meet the target, the offshore offshore wind power development programme anticipates a 20 billion investment by 2020, to be covered by a 4% increase of the "contribution au service public de l'electricite" (CSPE) between 2015 and 2020. This CSPE will be an additional charge on the electricity bill that end-customers pay. To the industry, however, the tendering of the offshore projects benefits will be taken into consideration including jobs to be created within the projects sites. As a result, some of the companies that have positioned themselves within the offshore wind power market include Compagnie du Vent, EDF Energies Nouvelles, Nexans and EADS Astrium. Other relatively minor companies in the industry have participated through acquisitions, partnerships and mergers to be eligible for the joint offers required in the 2011 round of tendering. The policies also stipulated the duration over which the offshore farms will occupy the maritime public domain. Once established under a concession, the offshore wind farms will be expected operate within 30 years and provide a financial guarantee for the full duration of the project. Throughout the concession period, the guarantee will enable reversibility of any change to the natural environment through restoration of the site and decommissioning of the facilities of the site at the end of the concession term. The estimated restoration and decommissioning costs will determine the computation of the guarantee amount (Macaulay, 1999). In comparison on the basis of production costs of wind power production, offshore wind farms will cost 3.5million euros per megawatt against 1.5 million euros per megawatt for onshore. The costs are escalated due to the offshore facility installation; masts designed to withstand corrosion, force of currents and waves; as well as the resultant maintenance costs. However, except for the costs, off the coast winds cannot compare to the onshore with the technical characteristics. Offshore winds are highly productive with averages of 5MW and 15GWh annually compared to onshore turbines 3MW production. Although the statistics speak for themselves, the resale price of electricity is a point of contention; with state set prices ranging between 13 cents per KW / h for offshore, and 8 cents for onshore wind. Electricity regulation With respect to the Law no. 200-108 of July 10 2000 enacted on the modernization and development of the public service of electricity, a mechanism was established to promote use of renewable energy sources in the generation of electricity. This initiative was based on the initiative Electricite de France and the local distributors aimed at purchasing such electricity generation at a specific price (that incorporates the feed-in tariff). However, article 8 of the law stipulates that if the national energy production capabilities fail to reach the government determined annual investment programme targets, operators will be chosen by the government through tendering to construct, operate and maintain additional electricity production facilities (Hau, 2006). Once a successful bidder is tendered, the authorization to run the facility allows entering into contracts with purchasers which will be granted in agreement with the terms of the bidder. On December 15 2009 a ministerial order on the annual investment programme energy production capabilities set a development target of 1,000 MW and 6,000 MW of marine and offshore wind energy capacity by December 31 2012 and December 31 2020 respectively. In order for a successful development of the wind power industry well-structured and practical government policies should be in place. Such policies ought to be support the development of local manufacturing considering the relatively bulky equipment required in wind power generation. Turbine manufacturers have thus benefited from such policies as (1) policies that promote locally manufactured products and curtail competition from imported products (e.g., local content standards and excise duties) and (2) policies that foster industry development (e.g., incentives and subsidies for use of locally manufactured turbines, financial support for industry research and development, and tax incentives). Similarly, policies championed by the government should ensure a larger and stable home market especially in the early stages of the industry development. Policies such as fee-in tariffs encourage the local to produce and use of turbine power; in the process supporting the growth of the industry. Other policies include loans and subsidies, renewable portfolio standards, government power purchase contracts, tax credits, and utility power purchase agreements (Sathyajith, 2006). In the case of France, the government through R & D funding supported local manufacturing by favoring the generation by locally made turbines. Through funding wind farms that generated power using domestic turbines, the domestic market benefited from the certification requirements for local producers and stringent measures for local producers (Pfaffenberger et al., 2006). Why the industry became strong The ‘why’ in the development of wind-power industry can be compared to the global factors that prompted the need for renewable source of energy; transforming wind power as the most positive development in the present day. Some of the factors include escalating oil prices, diminishing fossil fuels stocks, environmental degradation, climate change, and reliance on foreign energy supplies. Despite the challenges of cost and technological expertise required for successful harnessing of wind power, a strong wind energy sector translates into a reduced CO2 and secure biodiversity. To the national grid, the sector contributes to economic growth, sufficient high quality jobs, reduced energy import reliance, technological improvement, industrial research leadership and global competitiveness (Porter, 1990). Globally the initial interest in wind energy waned after the World War II, but in most European countries, a new interest developed during the early 1970s energy supply crises. Although it was anticipated that there would be lack of oil and coal after the World Wars, the 1960s decrease in the prices of oil and increased consumption by expanding population amounted to the necessary energy crises. The Middle East war erupted in October 1973 when the Egyptians crossed the Suez Canal into Sinai in pursuit of the Israelites; oil becoming the weapon throughout the conflict. Israel and pro-Israel countries had to contend with the increased prices and embargo imposed by OPEC having gained control of its oil resources in the 1950’s and 1960’s. Consequently, the resulting problems in addition to negatively affecting the market also outlined the dependence of western countries on import of energy. It was at this point that manufacturers, politicians, researchers and the public refocused their desires on wind energy; which having been on experimental phases in the 1970s, gained ground in the 1980s and has been commercialized in less than thirty years (Miller & Blair, 1985). Wind energy and job creation In 2007, the European Union experienced an increased energy capacity than any other power generating technology. And with the growing share of Europe’s electricity demand dramatic expansion in the industry have been evident. As such, the conflicting imperatives to secure energy supply while combating climate change are attainable with the adoption of the turbine technology. In addition to addressing the historic need for sustainable generating capability and combating climatic change, wind energy has also contributed to economic welfare and stimulated growth of economies. Generally, economies that have embraced this technology have benefited from greater energy independence, reduced fuel price risks, increased technology exports, lower energy costs, improved competitiveness, and major employment opportunities. For instance, the EU in the past five years have recorded 60,000 newly created jobs by the industry; translating to 33 people employed everyday for the past half decade (Macaulay, 1999). In 2007, 108,600 people were employed by the energy sector, which translates to 150,000 people including those employed indirectly. The ‘direct jobs’ in this industry refer to employees involved in the supply of wind turbine facilities within the turbine manufacturing companies. Others include wind power project developers, utilities selling the electricity and major R & D in wind energy services. Similarly, companies that provide services, produce components or work in wind-related activities are sources of indirect employment. Among the EU economies, three quarters of direct employment is available in Denmark, Spain and Germany. According to Kulisiket al., (2007), a nation’s industry structure is dependent on the proximity to the three leaders in the industry, size of the market, and labour costs as new employment opportunities have resulted from new wind energy markets. France boasting of 2,454MW installed capacity cumulatively, with 888MW added in 2007 provides 7,000 direct employment opportunities in the wind energy sector. The sector is also host to small developers, engineering and legal companies, and consultants participating in the operation of the large turbine manufacturers that have set up branches throughout the country. According to a survey conducted in the industry, 78% of the work is male-dominated; but 55.7% across the EU countries. This predominance reflects on the roles in the building, production and engineering sectors, which would sideline their female counterparts. On the contrary, women take up the other sectors of the labour market such as retailing, social work, education, and health jobs that are indirectly linked with wind energy (Council of the European Union, 2008). Ranked sixth globally in terms of national installed wind energy capacity, France has experienced a rapid growth of wind turbines industry led by varied-sized developers, manufacturers of components (masts, transformers, electric equipment, cranes), consulting and engineering companies. Furthermore, the focus on offshore wind farm installation has made France a leader in manufacturing anti-cyclone wind turbines that can be installed without cranes. Other players in the industry and national power company through their international groups have identified France as a favorite destination and have opened up factories and offices. These gestures have yielded an estimated 16,000 direct jobs by 2012 both within and beyond the French market (Kammen, Kapadia & Fripp, 2004). Although the wind energy sector has reported phenomenal job creations throughout the EU, the last three years have experienced acute shortage of workers in the energy companies. With the increase in the growth throughout the European economies, filling of job vacancies across all sectors has become a daunting task. Furthermore, turnover of skilled and non-skilled workers in the wind sector and strong economic growth pressures on the human resources have been worsened by the exponential performance of the sector. The position that have reported major shortages employ highly responsible and skilled workers. Manufacturers are short for engineers and site managers; wind energy promoters lack project managers skilled with negotiating skills, and are responsible for acquiring licenses in the construction destination; sales managers and financiers; experienced researchers for the R & D centers (Lehr et al., 2008). To counter the workforce shortages, measure have been suggested to balance the supply and demand for labour in the wind energy sector. First, employee mobility can be promoted by offering attractive manufacturing opportunities for skilled employees from other states that face the challenge of finding suitable opportunities. In order to bring such workers into the industry, the governments and the European Commission should coordinate through creation and promoting suitable programmes. On their side, wind energy companies should constantly inform the public of available position and place advertisements for vacancies (Hau, 2006). Secondly, the education system should be attended to right from pre-university and university levels in such areas site management, health and safety rules, O & M, and heavy material transportation. Furthermore, establishing a qualification profile through an EU-wide certification system and opportunities for the unemployed should be championed through vocational training. Thirdly, the younger population being the potential workers should be made aware of the opportunities available in the wind energy sector while in the secondary levels. Potential candidates can be reached through training centers, job fairs, and university employment offices (Algoso & Rusch, 2004). Manufacture of wind turbines According Burton et al., (2001), the technological knowhow necessary for the generation and distribution of wind power has improved since the inception of wind-generated power. Leaders in the wind power market have also been home to the major turbine companies; with Denmark hosting most companies. The other wind energy producers such as the United States, Spain, France, Germany, India and Italy have gained in the market in the similar manner; hosting foreign turbine companies and increasing the global presence of home companies. Therefore, without a substantial market, countries will not succeed in wind turbine manufacturing, as the generation involves installation of heavy and massive equipment. As such, production is cost-effective and sensible only within the proximity of the market; and within reach of turbine companies. Some of the French companies operating in foreign destinations include EDF. GDF-Suez, Veolia, Alstom, Areva, VErgnet, Meteodyn, Nheolis, and Leosphere. Challenges in the wind energy sector The environmental effects of wind power are relatively minor compared to the effects of other traditional energy sources. Unlike fossil fuels, wind power has zero pollution effects and consumes no fuel. Within a few months of operation, a newly installed wind power plant generates enough energy to compensate the energy consumed in the manufacture and transportation of materials. However, animal activists have raised concerns over the danger posed to birds and other flying animals. Studies in similar cases have established that the number of birds killed by turbines is negligible compared to deaths resulting from other human activities, specifically through the environmental effects of using non-clean energy sources. For bats, the increased number of deaths have been reported during movement periods, though statistics to that effect have not been documented. List of references Algoso, D. & Rusch, E 2004, Renewables work. Job Growth from Renewable Energy Development in the Mid Atlantic. NJPIRG, Law and Policy Centre. Burton, T., Sharpe, D., Jenkins, N & Bossany, E 2001, Wind Energy Handbook, John Wiley & Sons, New York. Council of the European Union 2008, Brussels European Council 8/9 March 2008. Presidency conclusions. Hau, E 2006, Wind turbines: fundamentals, technologies, application, economics. Birkhauser, Germany. Lehr, U., Nitsch, J., Kratzat, M., Lutz, C. & Edler, D 2008, “Renewable Energy and Employment in Germany”. In Energy Policy, 36 (2008) pp. 108-117. Kammen, D., Kapadia, K. & Fripp, M 2004, Putting Renewables to Work: How many jobs can the clean industry generate?. Renewable and Appropriate Energy Laboratory report, University of California, Berkeley. Retrieved March 6, 2011 from http://socrates.berkeley.edu/~rael/papers.html Kulisik, Bl, Loizou, E., Rozakis, S. & Segon, V 2007, “Impacts of biodiesel production on Croatian Economy”. In Energy Policy, 35 (2007) pp. 6036-6045. Macaulay, D 1999, New Way Things Work, Houghton Mifflin Company, Boston. pg. 41-42. Miller, R.E. & Blair, P.D 1985, Input-Output Analysis: Foundations and Extensions. Prentice Hall, Englewood Cliffs, N.J. Porter, M 1990, “The Competitive Advantage of Nations”, MacMillan, London. Pfaffenberger, W., Jahn, K. & Djourdjin, M 2006, Renewable energies – environmental benefi ts, economic growth and job creation. Case study paper. Bremer Energie Institut. Sathyajith, M 2006, Wind Energy: Fundamentals, Resource Analysis and Economics, Springer, Berlin Heidelberg, pp. 1–9. Spera, D 2009, Wind Turbine Technology: Fundamental Concepts in Wind Turbine Engineering, ASME Press, New Zealand. Sathyajith, M 2006, Wind energy: fundamentals, resource analysis and economics, Birkhauser, Germany. Read More