The new Vestas operating model is designed to maintain Vestas global footprint and increase customer proximity, which remains one of Vestas’ greatest strengths, while at the same time reducing costs to deliver solutions through functional consolidation.
Consequently, Vestas has decided to organise the company in accordance with the five main elements of the Vestas value chain. A notable change to the current organisation structure is the separation of Technology R&D into two dedicated units, allowing Vestas to exploit the increasingly diversified nature of Vestas business and revenue streams. Moreover, the separation of research and development into the two units described below will strengthen focus and improve time to market through dedicated attention to turbines and services, respectively, while simultaneously enabling better performance management through clear end-to-end responsibility for products and solutions.
The five main units in the line organisation will be supplemented by global and centrally led support and staff functions and competence centres within, for instance, Finance, People and Culture and IT. These functions will now have dotted reporting lines to management in the functional units. Additionally, Global Sourcing and Global Supply Chain and Planning functions will now be established.
CEO office
The CEO will be responsible for the overall management of the Vestas Group. Five staff functions will be reporting directly to the CEO. The functions are: Group Marketing and Communication, Group Government Relations, Group Quality, Group People and Culture and Corporate Secretariat and Strategy.
The CEO office will also be staffed by an Executive Vice President and COO (deputy CEO). Offshore and Global Sourcing will be reporting directly to the COO.
Manufacturing
The four current production units are consolidated into two units reporting to the COO. This reflects the fact that Vestas now has a global and fully established manufacturing setup, allowing the company to focus on capturing cost synergies and lowering the invested capital across the company’s factories. While the four previous separate Production Business Units (PBUs) have been instrumental in the rapid build-out of a high-quality global footprint, Vestas now plans to create significant value through consolidation of factories and manufacturing support functions. The two manufacturing units will continue to rely on their own Quality, Production Excellence and Production Engineering resources, but all other support functions and services will now be centrally managed.
In addition, the creation of Global Sourcing reporting directly to the COO will further enable Vestas to focus on the opportunities created by an increasingly mature supplier base and facilitate increased use of outsourcing and more efficient use of external suppliers, thus reducing the need for investments.
Turbines R&D
Turbines R&D will be headed by a Chief Turbines Officer (CTO), who will lead development and industrialisation of cost efficient wind turbines in a simpler and more focused operation. The Turbines R&D product unit will continue to be responsible for the development of Vestas’ turbine platforms and upgrades. The formation of a dedicated Industrialisation department within Turbines R&D is expected to strengthen Vestas ability to bring products and platforms to the market more efficiently. The Turbines R&D unit will also be responsible for global product management. Finally, the Turbines R&D unit will be responsible for Vestas Global Research.
Global Solutions and Services
Global Solutions and Services (GSS) will be headed by a Chief Solutions and Services officer (CSSO) and will develop and support delivery of advanced pre-sales services, after-market services, SCADA systems, wind and site services and spare parts. Also, GSS will develop solutions and new offerings supporting further integration of wind power into the grid.
Services already form a significant part of Vestas’ business. Based on the recent entering of very large 10 to 15-year service agreements with globally leading wind power operators, Vestas is taking a significant step to further consolidate the company’s position in services and solutions. Vestas also works to secure continued high margins based on consistently high performance of the fleet, as evidenced by a Lost Production Factor (LPF) of only 2 per cent. Service execution will remain in the sales business units and countries, but can now rely on consistent, global, high-performance support and solution development. In 2011, Vestas introduced SiteHunt®, SiteDesign®, Electrical PreDesign, PowerPlant Controller, VestasOnline Business® (SCADA). Similarly, Vestas will introduce a number of new services in 2012.
Finance
Finance will be headed by a Chief Financial Officer (CFO) and will focus on providing business infrastructure and other business support services (such as IT, Shared Services, Legal and Contract Review and Treasury). The CFO will to a larger extent increasingly engage in Investor Relations activities.
To reflect the changed need for a more efficient performance management setup, Vestas will increase the scope and responsibility of the central Group Finance function. Instead of each BU having its own finance function, Group Finance will now be fully responsible for all finance processes and activities worldwide, and local finance functions in the units will report globally to the Group Finance function. Performance and financial management, including oversight of cost reductions, will be controlled centrally and in more detail than previously through a stronger central financial management.
Vestas believes this is a necessary step to capture cost synergies as well as improve the oversight of the Group. In addition, Investor Relations will now report to the CFO function, which in turn will allow the Vestas’ Executive Management to further improve the quality of its dialogues with the financial markets.
Sales
Sales will be headed by a Chief Sales Officer (CSO). The creation of a dedicated CSO function with full oversight of sales will strengthen sales performance management while at the same time allowing Vestas to continue the close collaboration with customers on developing tailored financial structures to enable large wind power plant investments, including new contractual structures and financing arrangements. Vestas believes that continued innovation in this area is a necessity for continued investments in wind power in a capital-constrained environment. Secondly, by consolidating support functions Vestas will ensure that sales staff can spend maximum time on sales and service activities, that sales unit Presidents have direct line of sight to key sales and service units, and that Vestas can cost-effectively maintain and establish presence in all markets in a more flexible and rapidly scalable sales model.
Six geographically structured sales units will report to the CSO. These are Americas, Asia Pacific, Central Europe, China, Mediterranean and Northern Europe. They will to a large extent remain structurally unchanged, but will increasingly be relying on central support functions as described above. Supply Chain and Planning will also be reporting to the CSO.
To reflect the importance and complexity of the offshore segment, Offshore will now report directly to the COO as a global function. The increased executive focus on offshore reflects the requirement to have an integrated view of the value chain and business development. Planned cost savings also leave room for the company to proceed expeditiously with offshore product development – even in light of the more demanding industry environment and competitive dynamics – and at the same time to engage with potential strategic partners at the right level.
Executive Management
As a natural consequence of the reorganisation of the company along the five primary value chain elements, the Executive Management will be reorganised and expanded to now include six members.
Ditlev Engel will continue in his current capacity as Group President and CEO, and will be responsible for the daily management of the Executive Management team.
The position of Executive Vice President of Turbines R&D (CTO) will be taken up by Mr Anders Vedel, who is currently Senior Vice President of Plant Operations in Technology R&D and head of the Technology R&D office in Chennai, India. In recent years, the Plant Operations area has been home to some of the biggest improvements for the customers like e.g. the VPDC monitoring system. Mr Vedel has been employed by Vestas for more than 15 years and has previously held senior positions in the company within R&D, production and service in Denmark, Italy and the United States. Mr Vedel will also head the Global Solutions and Services unit on interim basis until that position has been filled.
The position of Executive Vice President of Sales (CSO) will be taken up by Mr Juan Araluce, who is currently President of Vestas Mediterranean. Before joining Vestas, Mr Araluce held several senior positions in the BP group in both Spain and the UK from 1988 to 2007. Mr Araluce has led the successful transition of the Mediterranean business unit from being very reliant on the domestic Spanish market to now successfully operating on markets in the broader Mediterranean region and South America. Also, Mr Araluce has successfully closed Vestas multiyear turbine and service agreements with some of Vestas largest customers in Spain, France, Italy, and Latin America – most recently in Brazil.
The CSSO and CFO positions are currently vacant. Recruitment processes have been initiated, and Vestas will disclose company announcements as soon as the positions have been filled.
Detailed CVs of the two new members of the Executive Management, see CVs of the new members of the Executive management.
The changes to the Executive Management team will be effective as from 1 February 2012.
