The wind industry was stunned by the Siemens Energy announcement of $1.1B in unexpected costs to correct design issues with Siemens Gamesa onshore turbines. All the OEM engineering groups are under extreme pressure to control costs while delivering exceptional turbines. Joel, Rosemary and Allen discuss the Siemens Gamesa issues and how engineering organizations can be successful in difficult times.
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Uptime 172
Allen Hall: This Week’s episode of the Uptime Wind Energy Podcast is pretty exciting because Joel, Rosemary and I take a, a deep look into the Siemens Gamesa issues. Obviously, they’re going through a little bit of turmoil at the moment, and. We have a discussion about what, what that means for engineering and, and for the company in, in a larger context.
The discussion is not necessarily focused on Siemens Gamesa. I think we really get into a lot of good discussion back and forth then maybe a little bit heated at times about how engineering should function. And wind turbine companies have had some real significant design issues and, and some manufacturing issues to go along with it.
Those are really tough to overcome. But Rosemary, Joel and I have worked at a lot of different companies and we’ve seen a lot of different engineering management styles and organizations, and we, we think sometimes those have a big influence on the quality of the product that goes out the door. So this discussion is really interesting and good.
And it, it’s, it’s meant to pick off a lot of discussion in the, in the industry of how to run an engineering organization, how to create a quality product. And to avoid some of the, the costly decisions that Siemens Gamesa is going through. So it’s a good episode, so stick with us. I’m Allen Hall, president of Weather Lightning Tech, and I’m here with the Vice President of North American Sales for Wind Power Lab.
Joel Saxum and International renewables expert, Rosemary Barnes, and this is the Uptime Wind Energy Podcast.
So the big news this week, if you haven’t seen it already, is that. Siemens Gamesa had an eternal review to look at the status of their existing onshore and offshore fleet, and during that review it was identified about $1 billion in offset, which means that they, they’re gonna have to set aside about a billion dollars to take care of some of the, I think, design issues is what I’m hearing, and some manufacturing issues.
And these are just coming to light after having about a half billion dollar write down in early this year, like January, the same sort of thing had happened. Preparing for warranty claims and repairs they’re gonna have to happen in the, in the near future. This, of course set Siemens stock tumbling.
About 25, 30% by the time you hear this podcast. It may have recovered some because I do think there, obviously there’s value in Siemens and Siemens Gamesa but it does set everybody in the, in the wind energy space to become really concerned because you don’t want to hear that a large player, such as a Siemens Gamesa, is having the stock drop and Siemens stock drop.
That kind of drop is dramatic and can. Really injure a company, not in the short term, but really in the long term. And Joel, I know the other players, the Vestas, the GEs, the Suzlons of the world didn’t seem to get too rocked by that. It seemed to be almost solely sort of a Siemens event.
Joel Saxum: Yeah, and I mean, when, when a company comes out, no matter what space they’re in, and they have to basically retract their guidance for the next year.
That’s, that’s a shockwave, right? That’s, that’s nuclear. Doesn’t matter if you’re in healthcare, you’re, you’re whoever it’s going to be. A big issue. If you look at the, the stock ticker, so June 21st is when this report came out. They were trading at $25 a share us. The next day they were down to 16. Since then, it’s the 28th now, so a week later they’ve recovered to 17.
So 35% down in the last few days. That’s, that’s
Allen Hall: brutal. But when it comes to investor advice, right? So they give quarterly reports and they have PR suspect, uss, and everybody makes their decision investment wise. And you’re talking about global, invested in a company like that. All the advisors are, are reading those portfolios and looking at what’s going on in the marketplace and trying to predict the future.
Obviously they didn’t predict that right, because the stock price wouldn’t have dropped like that because usually the market’s about six months out in front of current status, right? And so that’s, that’s a trouble. So the, the market’s saying six months out, Siemens is gonna be really
Joel Saxum: crushed. Yeah. You know, like you said it d it didn’t really affect anybody else in the market stock too much.
And a lot of times when something falls like that, you will see, you know like when the, when back during Covid there was a chip ou, a chip chip company. I don’t remember which one it was, that they made an announcement similar to this. And across the board, all of this, people that were in that same semiconductor manufacturing, all of their stocks started to drop.
So this one was specific to Siemens, it was warranty issues. But we also know through watching this, like they all have it, right? Vestas has issues. Vestas had the same thing happen to them about two years ago. When they had to sink a bunch of money into. And, and to be honest with you, like we said, we were actually talked about this, I think last week I, or two weeks ago when we were talking about the TPIs investment stock.
You and I Allen, and when people were saying like, oh, it’s a little bit it’s positive to invest in TPI right now, cuz their, their future looks like it’s kind of bright. I follow this, the mark, these markets and I have for a long time. And to be honest with you, the manufacturers. Stocks haven’t been doing good for a while but to see this is a pretty big blow.
Allen Hall: Rose Mary, I think part of this got triggered because as Siemen is requiring all of Siemens Gamesa, that somebody in management thought it’d be wise to do a, a technical review, basically critical design review of the existing turbines. What’s going out at the door right now? See where they’re at. And my guess that would involve talking to customers, looking at warranty claims talking to repair people about what’s happening in the field.
And that triggered a couple of alarms. Now, early indications are from a number of various sources that it’s blade related on onshore for the five x, maybe a little bit on the four x. But also they’re having bearing issues related to blade issues in a sense. Not a lot of specifics because they have so many bearing suppliers.
There’s four or five different bearing suppliers and nobody was talking about which one it was. It was it a manufacturing issue with a specific one. That was a early indication, but it seems to be a little bit wider than that. And Rosemary having worked for a large blade manufacturer, Isn’t some of these design reviews part of sort of built into the system that normally you would be having sort of critical design reviews of an existing product or obviously of a new one, but of an existing product to make sure that you are tracking the way you think the design should be going?
Yeah,
Rosemary Barnes: definitely. And I mean, I’m sure that they were doing design reviews. I don’t think that, you know, five years ago they stopped doing design reviews and now they realize that’s a bad idea. I mean, Were doing design reviews and there must have been some process or some new material or some new design feature that has somehow made it through, you know, the end of its its project Lifetime to now have rolled out to, you know, all the blades or a lot of the blades are saying 15 to 30% affected.
I don’t know if they’re expecting 15 to 30%. Failures, or there’s 15 to 30% that have the feature that may fail or one of the features that may fail. But it sounds much less contained than most of the issues that I deal with. So maybe it’s a good idea to explain how the development cycle works for yeah.
A technology project. So, you know, let’s say that this is related to something like a, a new. I don’t know, a new sandwich core material or a new resin, or you know, a new material of some other kind, a new manufacturing process, whatever it is. They’ll start out, they’ll do a. You know, some, some tests in the lab and some component tests.
And assuming that that all goes well, then they will implement it into a single, a single new blade. They will make a test blade of, of that blade, you know, you have to do that, the certification test that and then roll it out. And along the way there are different reviews often called stage gate reviews.
So there might be five gates. You know, the first one is, We’ve done a business case and this looks like it’s a smart project to do. Second, we’ve, you know done all of the desktop engineering that you could do to make sure that this is likely to succeed. Third, we’ve done tests in the, the lab and it’s all looking positive.
You know, we’ve talked with the factories and they think that we can incorporate in there. Fourth, we’ve made some blades and everything went fine. And, you know, the test blade is good. And then at, at the end of the process, however, they line up those numbers and the milestones. At the end of the process, it will have been in several factories and maybe in several blade designs as well.
And everything’s fine. They’re like, okay, great. This is a new technology that we can roll out at, at will across new, new designs. And it sounds to me with such a large effective population, it’s not just a few blades from, you know, a new product they, that they knew was was, was new, was untested.
It sounds like it’s made it all the way to the end and they’ve been rolling it out on mass before, before they realized there was something wrong. The fact that they thought to do a comprehensive design review and then were okay to publicly say the results is huge, you know, so it would’ve started out the occasional failure here or there.
And this is the kind of thing that I get involved in a lot when I’m helping clients with like root cause analysis or. Defects cuz you know, at first you have one or two defects and the manufacturer’s like, oh, that’s a, that’s a freak occurrence. And then the, you know, the asset owner is like, oh, seems like, you know, we’ve got 5% of our population affected.
And then, you know, a couple of months later it’s like, oh, now we’re up to 10%. Like, this doesn’t really seem like, you know, that many freak occurrences. It’s something that would’ve happened. And then eventually the manufacturer is like, okay, yeah, there’s something, some serial issue going on here. We need to go back and like really get the, the smartest, best engineers on the case.
Do some tests you know, like really go through with a fine tooth crime, everything that’s happened in the all the factories where this issue is coming out of and, you know, figure out what’s going on. And so they must have gone through that process. To now realize, oh no, this is something that is, you know, there’s a feature that turns out to be wrong, that’s in so many blades.
So there’s, yeah, that sinking feeling of, okay, this is a large affected population. And then there’s the next part of that where it’s like, what’s it gonna take to rectify this? Cuz you, you know, you need to know what’s the effect of this failure going to be. And, you know, if it’s a a, a big impact. You could see in some kinds of defects, you might see blades just falling off, off the turbine every now and then.
That’s kind of, you know, like the, the maximum most catastrophic impact that there could be. And in that case, you need to be pretty cautious about making sure that you get to every blade before that that happens. And yeah, I don’t know if it’s. If it’s that bad for them, it, it, it might not be based on how much money they’re saying, you know, they’re not gonna be preemptively shutting down every turbine and replacing every blade.
But it’s, it’s somewhere along the line in severity where they know that they’re gonna have to get service personnel out to, you know, 15, 30%. And these numbers never go down. They always go up on these these kind of campaigns. As you realize, you, you know, the extent of it is worse than you thought.
Let’s
Joel Saxum: do some backwards math on that. So it says 15 to 30% of 132 gigawatts. So if we were say 132 gigawatts, right times a thousand, 132,000 megawatts. And if we say these are five megawatt machines, Times 30% of ’em, that’s 8,000 machines that need to be looked at
Rosemary Barnes: and times by three to get the number of blades.
Yeah.
Joel Saxum: So that’s, but I mean, that’s 8,000 site visits. Right. And and, and, and again, those are arm, that’s armchair math, so I don’t, you can’t really say, but I, but the, the problem here, one of the problems in the market, right, or in the as Wall Street and investors are looking at it as this. If you read through all the, in between the lines and in, you know, Reuters and everybody else that’s talking about this electric and all the different places, they’re saying one of the trouble troublesome things is they’re saying it may cost around this, but they can’t actually put their finger on it because it’s such a big problem.
They don’t know. And that’s the troubling thing for investors is saying like, yeah, you’re, you’re looking at a possible billion dollars, but it could be more, right? Because they just don’t, they don’t, they don’t know.
Rosemary Barnes: And an article I read said that they expect it’s gonna wipe out their profit on all of their service agreements potentially.
And I mean, I, I don’t know, Siemens Gamesa specific business model, but in general, a lot of manufacturers are selling their turbines at a loss in the expectation that they make their profit on the service agreement. So, They are potentially saying that, you know, everything they’ve done in the last five or so years is going to have cost them money rather than made them money.
And it could get, it could get bigger. So, I mean, I’ve, it’s a huge, a huge issue.
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Allen Hall: news. I think this sounds like an engineering escape, right? And that’s what I read between the lines, that there there is a engineering oversight that for some effect they weren’t planning on happening.
It’s like a secondary harmonic or some weird vibration that’s been induced into the blades that’s causing a problem. Or it may be something really as fundamental, like a core splice, right? You got something that maybe you change the material and, and you, it didn’t perform as you expected. Variety of different reasons.
Hot, cold, who cares? But it, I think the design of the engineering system internally is really key to catching those early, right? It isn’t, everybody has a slightly different engineering group and way of managing engineers. Are they testing themselves hard enough? Right? I, I think that’s, engineers are not a bunch of people to take criticism lightly.
It’s almost like you have to build in a system of criticism internally to vet out these weird problem
Rosemary Barnes: areas. Yeah, and I mean that’s something that I did see a few times in my career, cuz you know, when I went into the wind industry, I had been outside of it. You know, I’m not, not European. I I worked in a lot of other kinds of technologies before I you know, for about 10 years before I went into wind.
And so I would often. You know, see risks that people in the industry are like, oh no, that will never happen. You know, trust us, we’ve, we’ve been working on a long time that that did happen, but never on something this, this major. So, I mean, there is a system in place where you have design reviews and you do something that what my company called it D F M E A, the design failure modes, effects analysis.
Where you go through every single design feature, every single way that you can think of that it could fail. And you get a bunch of engineers involved that have, you know a lot of experience and have seen a lot of failures and can think of a lot of things that can go wrong. And, you know, you spend hours on new designs going through all that, and then you, you know, you prioritize them.
So you assign weights to, how bad would it be if this failure happened? And so, you know, the worst kind of failure is something that might make a blade fall off or might make a turbine catch on fire or could kill someone in some other way. And then you think, how likely is it that this would happen?
And then you multiply those two numbers together and something that is, you know, very likely and very bad. Then you spend a lot of resources trying to test that to, you know, the maximum extent and be really sure that it’s not going to. Not gonna happen and come up with, you know, multiple levels of safety on something like that, so that you would need, you know, like several kind of un unexpected failures before you would get that outcome.
But you can only, it’s, it’s human based. It relies on people thinking of what could go wrong. And so when you get like a truly new failure mode, It’s highly likely that nobody has seen it before. Wind energy companies are pretty good at sharing workers amongst them. You know, I had heaps of colleagues who had spent three years at Vestas, then three years at Siemens, then three years at ge, and, you know my go all the, all the way like through, through all of them, or at least through all the Danish ones.
But they’re not as good, in my opinion. They’re not as good at getting people from outside the industry. So, you know, I guarantee that this failure mode isn’t, it’s not the first time in the whole world of all engineering that a failure like this has been seen. But I would, I. Be pretty willing to bet that it is the first time it’s been seen in the wind industry, because otherwise I feel like it would’ve been, it would’ve been caught.
It would’ve been, you know, noted as something that was likely to happen and it would’ve been tested for and it, it wouldn’t have happened. Yeah.
Allen Hall: But history indicates that most of the failures that happened in sort of larger engineering projects were. Had plenty of warning that were ignored by engineers or ignored by mechanics at the time, or particularly management wants to ignore it because it’s not on the high priority list, and it just gets not enough oversight for it.
I. You can name thousands
Rosemary Barnes: of those. I, I think it’s really easy to say, oh, you know, there were all the warnings and this was ignored. But the fact is that, you know, you come up with a very, very long list of things that could fail on any project you do and any project that you do. If you were to test the maximum every single risk on your list, you would never have an economic project.
So you absolutely have to prioritize. And you know, like if, just cuz this risk was on the list kind of towards the bottom with a low expected likelihood of failing that way and a low consequence, you know, that’s different to being ignored. If, if it was high high risk and higher likelihood, then the system should be set up that you can’t ignore it.
You can’t pass, you know, the gate that you need to, to move to the next project phase. And. I mean, if that was the case that that had happened, then management would be getting fired. Well, that’s
Joel Saxum: what’s happening now. Now they’re saying like basically they’re coming out and saying after the merger, they’re realizing some stuff is saying, wait, too much has been swept under the rug here.
Right, and that’s the, that’s the, the words right from the press script. Too much has been swept under the carpet. So there’s actually like a cultural problem, it sounds like from some of these reports at Siemens Gamesa. So in the ideal world, Rosemary, like you’re saying, absolutely all these engineering concepts, processes and things would be in play.
But if there’s somewhere along the line, someone sweeping under a rug or they’re not paying attention to it, or they’re doing something to. To disguise this, which I, I’m not saying they are, but the, the reports from it say too much has been swept under the rug. We’ve got a cultural problem. I’m gonna expect that there’s gonna be some, some director level heads rolling from this myself.
After an internal
Rosemary Barnes: investigation. I mean, it could be pushing things through to the next level when it wasn’t ready for it. And which does happen from time to time. If you’ve got, you know, you’ve got an order of a thousand turbines and you have one or two things to check off before you’re actually supposed to go through to serial manufacturing, then yeah, certainly sometimes that gets pushed through.
But then the really common one that I see, like that is where people won’t accept that it’s a serial defect until w way past when it’s obvious. You know, I see this time and time again when I’m getting involved in root cause analysis. I’m like, your root cause analysis shows that it was, you know, a freak one off.
And it is just not plausible that this same thing has happened, you know, on five or 10% of the blades of this wind farm. And you’re just saying that we’re unlucky. Like the statistics just say, no, that’s not possible. Yeah, but it can take a year or you know, longer before it’s management at the manufacturers don’t seem to accept a serial defect until there is literally no other explanation and any idiot could see it, you know I guess is a strong incentive to, to, to hope at least that You know, defects, a one-off flu occurrences.
Joel,
Allen Hall: I, I mean, we just went through this a couple years ago with a, this lightning issue with a single manufacturer. Right? How, how, how long did they push off denying this is a solo event? Doesn’t happen anywhere else. Meanwhile, you’re hearing about it in other countries. Same, same thing. They’re still
Joel Saxum: trying to push it off.
That’s a cultural thing. If this was a, if this was a merger that was company X, Y, Z and company A, B, c, you, you’re gonna be looking at that. But when it’s essentially Siemens eating themselves and then finding the issue, right? They made their own dinner and now they’re getting food poisoning from it, and they’re like, oh, well this sucked.
You know, that’s what, that’s what’s happening. So their stock, their par, the parent company took a dive too. Their stock and not, not as extreme, right? They went from like 84 or $87, like 83. They lost 5% value or something. All one party. Now. Yeah, somewhere along the line, there’s gonna be some, there will be some systematic changes within how they either.
Culturally, people at the director level how they do what we’re talking about here, engineering review, these kind of things. Because I mean, we have seen serial defects and this, what, this is what this screams serial defect, right? When they’re like 15 to 30, 15 to 30%. So that’s a design issue in my mind.
Right? And Rosemary, correct me if I’m wrong, but I would say 15 to 30% of the fleet, you got a design issue, you got a big problem, you’ve gotta go check this out. So there’s something there that got through. A billion dollars is hard to swallow. And I would say that that’s gonna take, that will take profit from all their services or service work from more than even just this
Rosemary Barnes: year.
Not to mention sales going forward. I mean, if I was advising someone of which turbine they should be buying for their upcoming project, then. You know, if they were considering Siemens Gamesa, then there’s a few key bits of information that are missing that I would need to know before I felt comfortable recommending any of their turbines.
Going forward, I would wanna know, one, what the problem slash problems were. It’s probably several. And what, what they’re doing to fix it. How they missed the old thing and how they’re gonna be sure that the fix, design fix has been tested better than the old one was. And I mean, it took years for. For this previous problem to be discovered, I’m not gonna be convinced with, you know, some desktop engineering that Okay.
The new fix is all fine. I’m gonna be wanting to see test results and operational results from a statistically significant number of of blades or turbines, depending on what the issue is. So that means, you know, tens of turbines, not just you know, one test blade. And, and that’s fine. Yeah. And we’re, and we’re good.
Yeah, exactly. So I mean that’s years before people are really gonna start feeling comfortable about this product again. Yeah. And, and didn’t we
Joel Saxum: just see an article not too long ago that said like, Siemens order book is starting to surge a bit like, so they’re just starting to come up. Oh,
Rosemary Barnes: brutal. How would you feel if you had just signed on the dotted line for a wind farm full of Siemens Gamesa turbines?
You know, you’d be trying to back out of that as you would Yeah. I mean, you, that you, you would, the only thing that might save them is that it’s impossible to get to get turbines fast at the moment, so, You know, if you are about to have some Siemens Gamesa turbines delivered, then you, you may well be convinced in, okay, yeah, well this is what’s coming and this is what we understand and this is what we’re gonna do about the, the blades that are and other turbine components that are already installed.
But my goodness, this is. Not gonna be
Joel Saxum: good. I would classify it as a force majeure event. If I was, if I had just signed for a wind farm, I would, I would try to go. In fact, cuz there’s always that backdoor clause in every contract, especially when you’re talking big industrial cash like this. In capital, if you’re I would say you know, because it being, okay, so Rosemary, you’re in the blade world.
I’m in the blade world, Allen, you play in the blade world as well. I’m going to, you know, I’m gonna say right now I believe I know which one of the models of this thing for sure. I’m not gonna say it on, on air because I don’t want to be wrong and I don’t wanna say something into, to cast. But if I, if I, I mean that’s a, a barroom whisper.
Everybody knows what model one of these is, and if you are, if you had just ordered some of these, you’re definitely backing out of this. I would like to see. So, so in a couple of these articles and, and because of what we know quarter three, coming up August 7th, they’re due to do a report, a filing for, for quarter three.
So I’m gonna tell you right now, I would say that’s not gonna come on August 7th. They’re gonna file for an extension. It’ll be mid-August, end of August before anything comes out. And when that report comes out you’ll, you’re, you’re gonna see some answers. Hopefully us as an, as an entire industry will hopefully get some answers out of it.
Financially. Yes. And then hopefully, you know, within those, there’s a lot of, there’s qualitative data and quantitative data. So we’ll see some numbers. We’ll see some changes, but hopefully they’ll outline what the issue is, what model it is. Models. Models. It has to be, yeah. Does that mean
Allen Hall: Rosemary, that from an engineering standpoint, let’s just sort of break this problem down a little bit.
I think they have an engineering issue. They have a. Clearly a management disclosure issue internally, and, and, and then they have a, a third a customer issue they gotta go figure out on the engineering side. What happens,
Rosemary Barnes: Rosemary? Well, I think it’s really easy in these cases to say, oh, they’ve got a management issue.
And in a way that. In a way they do. However, everybody has that same management issue, which is the tension between sales and engineering. And you know, the engineering never gets done to the extent that the engineers want it done. And it’s always done more than what the sales team might like to see, you know?
So if someone was. Deliberately hiding or, you know, deliberately ignoring no problems then, I mean, heads definitely deserve to roll, but I feel like I would’ve, we would’ve heard more about that aspect of the story, if that’s what it was. I suspect that it’s more like just the regular. Everyday mismanagement of saying, yes, we know that these issues are a risk, but it’s worth the risk for the sales.
You know, if we if we were to halt everything to address all these risks adequately, then we would miss out on these sales and the company. Would you, you know, Cease to continue without sales. That is like a routine everyday management dilemma. And, you know, a fight that every engineering company I’ve ever worked in, in my whole, you know, nearly 20 years now of career, that’s an argument that gets had on every single project between engineers and and management.
So that’s, I mean, engineers would say that’s mismanagement and they’re right. But on the other hand, you know managers think that engineers are just so naive that, you know, in terms of the business world,
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Rosemary Barnes: I wanna know, what do you guys think about. Other companies because like I mentioned, you know, in the wind industry, and especially in these you know, wind manufacturers in Denmark, they churn through their staff.
They get, you know, they get spread, spread around ev everybody has worked at you know, a, a lot of people have worked at a lot of different companies. So if this issue happened here, and I, I think it must have legitimately surprised some, some people. Are we gonna see this, the prize or something similar in other companies as well?
Or is it gonna be a feature? I mean, are there really that many features that are so unique to Siemens ga mea that it couldn’t possibly spread to someone else? I think that this
Joel Saxum: could be, this could raise hair and raise tensions a little bit more along this same, the article that we saw, like Vestas came out with the other week that was like, Slow down to increased speed, right?
So the, the OEMs have been, you know, we’ve been talking about it for the last year and a half on this podcast about, so that we’re basically building prototypes in the field as production units. And it’s because of the demand of the market, right? They want the next best thing, biggest, baddest, blah blah, blah.
But that has created this snowballing effect of, of issues where all of a sudden the OEMs are. You know, calling billion dollar loss here. We had Vestas the other, I think it was 700 million for Vestas two years ago. Like when, when these things start to snowball and get worse and worse and worse if you, if it continues that way, then we’re gonna end up in no OEMs.
To build these things and that’s, that’s not where we want to be either. Right. I remember
Rosemary Barnes: when we had that conversation about best and you know, I was I was criticizing them saying how, you know, you can’t just halt technology development or you’ll lose sales. I guess that that’s the good good management in the sense that engineers would, would see it, you know, so maybe they are coming down on the side of.
Yeah, maybe investors will be the last, the last turbine standing Now, because they’re the only ones whose management I’ve prepared to say, you know, these issues are big enough that we need to, we need to, to stop and pause and take care of them before we move forward.
Joel Saxum: I would be willing to bet you that if we took a, if we dug through some data and figured out, okay, hey, say since the year, let’s go, since year 2010.
How many new mo models of turbines were introduced from each of the major manufacturers? We’ll see this increase, increase, increase. And I would be almost willing to bet you that this event, when we look back 2, 3, 4 years, when we’re in the future to now, will flatten that off because I, I can see people, the whole industry and, and, and one of the other things I’m thinking about here is at what level?
At, at what? At what? Level of disruption to the market. Does a government step in, right? Does, does FERC or, you know because you then you start talking about energy security and things like that, right? Are some of these guys gonna have to go sit in front of the, the EU chancellor and explain themselves when EU is trying to move forward with a lot of, you know, like green New Deal type things?
Like we are, or I know like if this was a US manufacturer, this happened, they may have to go sit in front of. Congress and explain themselves because it’s then you’re, you’re talking facts of energy security and that’s, I know I’m using that as a buzzword, but it’s, it is, it’s a problem.
Allen Hall: GE has already cut down the number of turbines, right?
So months ago they were on this plan to reduce the number of models. It towers everything to sell every, everything. They’re gonna just gonna slash that down. I mean, they, what Vestus was saying, GE was implementing, Siemens was headed that way anyway. Right. The question is, Siemens got caught up in an engineering snafu that they’re trying to unwind.
I do think they have to, having gone through these situations and seen it on the aerospace side several times, they’re gonna have to try to provide a different sort of structure. Right. I think organizationally, management wise, they’re gonna have to provide a different structure, otherwise the market won’t buy into it.
They have to show us when, Joel, you’re absolutely right. When you, they get to August and they start having quarterly report again. They have to come with some sort of adjustment saying this is why going forward, this is not gonna happen again. If they don’t do it in August, they sure heck have to do it by the end of the year to, to show that there’s been a change.
And Rosemary, I, I think you’re right also on in terms of the, the way that the engineering is constructed and people hopping from sort of place to place to place, but. Joel, what’s the first rule of fight club? Don’t talk about fight club, but that doesn’t mean there’s not a fight club, right? So we talk, we talk about engineering, like there’s no, no combat combative situations happening in the engineer, inside the engineering areas.
There 100% are and they, they, they have to, right? And then those combative episodes happen mostly between engineers and management. Those things need to happen if they stopped happening, cuz the engineers went passive, which what they tend to do, they go passive aggressive and say fine. All right. Sure. If you want to put that wind turbine out, sure.
We’ll sit here and drink coffee and do our thing. And, and I think Rosemary’s seen it. I’ve seen it in, in the engineering world. You can’t give up on the fight club. The fight club still has to exist or you gotta get, get the hell out. I think engineering wise, you need to do
Rosemary Barnes: that when there’s things that, you know, at some point engineers do feel ethically torn o over over something.
If they’ve raised concerns and it’s not being taken seriously, then engineers will start quitting. And, you know, I’ve seen engineers quit over their concerns not being taken seriously. I haven’t, I don’t, maybe you guys can tell me if you have, but I haven’t anecdotally heard of. Heaps of people quitting Siemens cesa compared to normal.
You, you have Allen. Yeah. Yeah, I have. Yeah, I mean I think that would be an indicator of a real cultural problem more than just the normal tensions and I was describing before.
Allen Hall: Right. I’m not saying there’s anything, my indications are not systemic, right? It seems to be one-off here, one-off there. But again, it’s respect to like the serial defect thing, and it’s always a one-off.
It’s always a one-off until there’s dozens that are walking out the door. With concerns, and I’m not sure, I’m sure Siemens cesa is different than other OEMs. Just like in the aerospace side, you hear people walking out of Boeing and Airbus all the time for disputes that they have engineering wise. That I think is fine.
But I think you have to build in a fight club into your en engineering organization, right? You have to, you have to have. To suss out what’s real, what’s not, get to get to a higher level. And the only way to do that is to sort of internally challenge yourself. That doesn’t go over well in a lot of engineering organizations.
That’s a, that’s a tough working environment because you’re always feeling like you’re being attacked at some level or being criticized. But only what it comes about at the end of the day, and maybe Rosemary’s experience is different than mine, is that we seem to have. A little bit of better product and maybe build a little weirdly camaraderie.
You have to be willing to challenge what’s in front of you to make a better product. So
Joel Saxum: here’s a question for you, Allen then and Rosemary as well. Siemens game Mesa is a German Spanish company. Two very, very, very different cultures. Do you believe that some of this could still be stemming from the Ga Mesa mergers and stuff from years past?
In the engineering
Rosemary Barnes: side. I, I don’t know, you gotta throw Danish in there too. The, you know, blade design that the, it is, it is one of the Danish companies. Even without that being in its heritage, it’s, I don’t know to what extent they ever really properly meshed. Certainly the impression that I got from working with them was, it was Danes and a few Germans, I guess for onshore and Spanish for offshore, and I don’t think that they ever really, Got the one, one culture across everything.
I mean, certainly they would’ve had processes standardized across factories and stuff, but I would be surprised if that was the cause of the, the issue.
Allen Hall: I’m, I’m with Rosemary on that. I don’t think that that is a driver as much as if you’re tasked with running that organization and you know you have two separate companies, two separate cultures, it is your job to fix that.
And to make it one company
Joel Saxum: change management is not easy. It’s
Allen Hall: not easy, but that’s why you get paid the big bucks. Right? It’s fight Club
Rosemary Barnes: guys. Like you said, it’s a really hard. Thing to try and get on with your colleagues, but also to fi fight with them. And I mean, I certainly had plenty of fights in design reviews and you need to see more of, more of that.
Yes, I agree with you, Rosemary. You should, but it’s career limiting to be that person. I’ll tell you that now. Yeah. Hey, I’ve been
Joel Saxum: there before too, but here show. Here’s, here’s, here’s, let me give you a ta not a tale of caution, but a a case study m hhi Vestas. What happened there? Vest’s, Danish company, MHI comes in.
MHI is Mitsubishi Heavy Industries is a Japanese company. They came in, they said, we’re gonna take over the offshore world by storm. It lasted, what? Two, three years Culturally couldn’t work back out. Now it’s Vestas again, right? So same kind of thing with two very different cultures. They saw the issue and said, this isn’t gonna happen.
Let’s split it back up.
Rosemary Barnes: No, but like trickle, trickling of, of changes, you know, individual hires from different people, recognizing that people from other industries have something to bring. And I’ll be honest, I think that Europe in general is bad at this. They tend to see like really linear career paths and they want you, if you’re gonna apply for a new role, you better have done that exact role before.
Otherwise they don’t think that, you know, you can You’ve got anything to bring. I see that with the automotive industry in Europe as as well. And you know, all try and try and get a job outside your industry in Europe. And it is incredibly challenging because I. I don’t think that they really respect diversity of, of the right kind.
You know, like diversity doesn’t just mean that everybody doesn’t physically look the same when you’re in a meeting room. Diversity means people have different experiences, so they’re going to see different potential problems and think of different potential solutions as well. So, I think that, you know, like, hi, individual, hire by individual hire is the best way to do this.
But that’s not fast. You know,
Allen Hall: if you’re, if you’re leading human resources, decide who your engineering team is, you are screwed. That is, I think that is what’s happening in some of these places where I, again, yeah, you want to try to pick people from different industries. You wanna have different experiences.
You wanna put them together and lock ’em in a room and let ’em battle it out, I think. But sometimes what’s happening is we’re having. Big companies, HR makes a lot of decisions, right? And maybe that, maybe they don’t have the right
Rosemary Barnes: mix. No, but I think that the management needs to believe it. That’s the problem.
You know, like HR kind of diversity is much more of the like box ticking kind. But this is a level deeper than that. It’s where the management would need to not pick people who are just like them and telling them how great their decisions are, which is, you know, the really comfortable, nice way to do things.
And that’s the way if you want to, you know, progress through your career quickly, you know, you find a, a manager and you know, become just like them. And, and people tend to promote people that, you know, remind them of themselves. That’s an excellent way to end up with huge, huge company-wide quality problems.
Yeah. If, if you just do that. So instead you gotta say, okay, I’m a manager and I am gonna end up with a better, stronger company if I am a bit uncomfortable. And I recognize that. You know, different experiences that I don’t have are gonna be valuable. You will sometimes make mistakes, you know, that’s not the safe thing to do.
You’re not as well equipped to assess how good that person is. But overall, over time, I mean, the, if you look into the, the data on diversity, it, it does improve things when you have that, that real kind of diversity of, of thought. So we’ll
Joel Saxum: see. We’ll see if that happens within Within Siemens Game Mesa, right?
There’s gonna be a, a deep investigation into this because nobody has a billion dollar possible loss and doesn’t dive in, right? And, and of course we’re probably not gonna hear all the results. We’re nobody’s gonna publish a report that says, here’s where we messed up. But something will come out of it.
We’ll get more news on this as it develops.
Rosemary Barnes: We should take the time to plug at at least. Pad Alert Consulting and Wind Power Lab. But if, you know, if you have a fleet of these blades and you, you are you are feeling worried, then you know you’re gonna need somebody who knows the industry to get in there and have those conversations to make sure that things are taken, taken care of
Joel Saxum: and get a, get a lawyer before you sign anything.
Yeah. For, for retrofits, repairs, whatever they’re gonna say they’re gonna do to these turbines, have a third party, someone independent, review that contract before you sign it. No matter how much you like your salesperson or how, how many dinners they’ve taken you out to this, this is it’s not a small, small issue here.
Allen Hall: That’s gonna do it for this week’s Uptime Wind Energy podcast. Thanks for listening. Please give us a five star rating on your podcast platform and subscribe in the show notes below. To Uptime Tech News, our weekly newsletter, and check out Rosemary’s YouTube Channel Engineering with Rosie. We’ll see you here next week on the Uptime Wind Energy Podcast.
