RALEIGH, N.C. (AP) — German industrial conglomerate Siemens AG is consolidating production of gas turbines for electric utilities in North Carolina to position itself for an expected boom in electricity demand in the Southeast and around the world.
A subsidiary of the Munich-based company, Siemens Energy Inc., said Thursday it plans to invest $135 million to build a new manufacturing plant for 60-Hertz gas turbines in Charlotte. The company was promised a package of tax breaks, grants and low-interest loans worth up to $154.75 million to make the move.
Siemens will close a similar plant in Hamilton, Ontario, that employs about 450, though it's not yet clear how many will lose their jobs and how many transfer to North Carolina over the next 18 months, spokeswoman Melanie Forbrick said.
The turbines will be shipped to utilities in the Americas, Japan, South Korea, the Philippines and Saudi Arabia.
"Over the next five years, we expect employment at the Charlotte site to grow to nearly 1,800 people, with more than 1,000 of those positions new to Charlotte. With this move we're pushing ahead with our growth strategy in the U.S., which is our most important single-country market," Siemens AG chief executive officer Peter Loescher said in a statement.
The move is expected to create 825 engineering and manufacturing jobs in Charlotte within five years, paying an average wage of almost $64,000 a year. Production in the expanded plant is scheduled to start in the fall of 2011, the company said.
State and local governments promised up to $35 million in tax breaks and grants. A county development entity is also prepared to lend Siemens up to $120 million in low-interest loans, with funding coming from bonds created by last year's federal stimulus package.
Siemens said the move to Charlotte was in part driven by a need to be closer to customers. Siemens-built power plants supply one-third of North America's electricity, the company said.
"I think that they're seeing that the American market has been slow but will be rebounding," said William Schmalzer, an analyst for market research firm Forecast International Inc. The North Carolina move "also puts them closer to their markets in Brazil, especially, and Latin America, which are probably also going to increase in the near future."
Forecast International predicts that worldwide demand for gas turbines will be almost $140 billion by 2018, with Siemens holding about 18 percent of the market behind General Electric's 43 percent market share.
About 780 Siemens workers in Charlotte already manufacture and rebuild gas turbines. The company last spring announced an expansion of 200 jobs in Charlotte and construction of a 75,000-square-foot office next to its manufacturing plant.
Siemens employs about 64,000 workers in the U.S., including 10,000 in its energy sector.