Good morning, everybody. My name is Steve Lockhart. Sorry. So I'm the CEO of TPI Composites. Bill Siwic, our president, is with me on stage to kick this off as well.
Bill and I'd like to welcome all of you to our twenty twenty Investor Day. We're glad you're here. Appreciate your interest in our company. We'll let you read the legal disclaimer on your own. And let me go through a bit of what we're gonna cover this morning and some of the team members that you're gonna have a chance to meet and hear from as well.
So Bill and I will start this morning with some opening remarks, set the stage a bit, also give you some of the from our perspective, some of the key takeaways that we'd like for you to take away from today's discussion. We're pleased to have 11 additional members of the TPI senior executive team here today. You'll have a chance to hear from each of them. So Christian and Tom will give you an update on the wind market. Our operations and supply chain and HR and technology leaders will give you a sense of just where we stand on our operations in each of those key areas of the company.
We'll do Q and A, and I'd ask you to hold your questions for the Q and A session. And if you do raise a question, please make sure you've got a microphone so we can record those questions as well. We'll do a brief break, a coffee break, and then Lance will talk about our wind development of our service business on the wind side. And then we'll switch gears a bit. So Joe and TJ and Linden will chat a bit about the traction that we're creating in the diversified market space and our electrification of the vehicle fleet space.
Brian Shoemaker will go through our financials. Christian and Bill will give you an update on our ESG initiative, and then I'll follow-up with some closing remarks. We'll do another Q and A session at that point. We'll be joined on stage at that point by Paul Giovacchini, who's here today. Paul is our chairman.
And Jim Hughes, who's another board member that'll join us midmorning or so. And then we'll have a chance for some informal discussions over lunch. So let's jump jump right in. TPI is a mission driven company, and we are really proud to be able to to map our growth in building value and and serving our stakeholders, a variety of stakeholders, mapping on the two major macros, and that is the electrification of our vehicle fleet and the decarbonization of the electric sector. We also have a mission as a company evolving around people.
We're thrilled to be able to put food on the table for 13,000 families around the world. The macros from a market standpoint are pretty undeniable at this point. So the backdrop that we're operating on from a market standpoint, while there's some noise in individual markets from time to time, the fundamental macros are extremely strong. On the electricity generation side, the future is pretty clear, that the future itself is going to be a cost effective combination of wind, of solar, of storage to help firm that power and the need to build additional transmission, in particular for wind, to help us really grow in terms of the percent adoption of these technologies. From a terawatt hours of generated electricity on an annual basis, wind is gonna grow by more than a factor of eight between 2018 through 2050.
We'll grow from 5% of the terawatt hours created in in 2018 to more than a quarter, 25%, 26% of those terawatt hours created in 02/1950. So a lot of the new capacity generated equipment investments that are being made in order for this to play out are in the the wind and solar sector. And wind is competing. If you think about it, it it's not about competing with coal anymore. Coal is going away largely.
It is about competing in some places with natural gas, but the longer term competition is really wind and solar. And the piece of the pie available, half or so of the terawatt hours, will be met by those two technologies. So as we think about the future of wind from a competitiveness standpoint, it's how big of a slice of that pie can wind get relative to solar. We're thrilled from a climate change perspective that both technologies are are winning. We're also really pleased that these trends are driven more and more by economics, by what customers wanna buy, by what investors wanna invest in, and the growing awareness and consensus around the need to make a positive impact on climate change.
Switching to the EV side, what TPI is doing is to build structural composite solutions. The more structure, the better. The more weight we can take out of a vehicle, the more value we'll be able to provide. Taking out weight adds range. We also have durability and performance requirements that need to be met.
And there's a volume, a range of volume applications that we're working on. You're aware of our work with Proterra on the bus body side of things. Thousands of units per year in the bus body space, a certain amount of value of content. We're saving thousands of pounds of weight in this class of vehicle. There's a lot of growth.
Vehicles that come home to a depot every night, so a little more straightforward on the electrification side. But the units in thousands per year in this space with a lot of growth. In the delivery vehicle space, the units are in the millions. And over the next number of years, more than half of the new sales of delivery vehicles be will be electrified. And now we're talking about millions of units, 5,000,000 units a year or more in the 2040 time frame.
And then on the passenger side, it's tens of millions of units. But it's still a similar macro. More than half of the volume is expected to be electrified in the 2040 time frame in terms of new new equipment sales. So from a TPI standpoint, the question we're working on is how far down the cost curve can we go with the technology, with materials, with processes, which will then enable how far up the volume curve can we go. Pretty straightforward for us in things like buses and delivery vehicles.
The question is still more on the passenger side of just how much value can we create in order to make sure that we're growing this business in a profitable way with solid returns on invested capital. From an investment thesis standpoint, our thesis really hasn't changed much since our IPO in 2016. We're still capitalizing on the global growth of wind, more emphasis on the electrification of vehicles than we had in 2016. We're still enabling blades to be outsourced by a number of the big wind turbine OEMs. We're helping them capture markets around the world.
Most of the growth is in emerging markets. We're helping them to cost effectively capture that and at the same time then enabling additional outsourcing. And the economics itself, as we've said, of the technology is just getting better and better. TPI is still the only independent wind blade manufacturing company with a global footprint that matters to our customers. It provides access to markets as we set around the world.
It also provides them some global flexibility that's not matched by any of our competitors at this point. TPI's technology is the best in the world in terms of composite technology, materials, process tooling, inspection methods. You'll hear from Adrian today a bit more about our technology and continued effort to make sure that we're advancing our technology and staying ahead of our competitors. Production expertise, we've built more blades than most all of our competitors, and we do it better. We do it faster.
Our cycle time is less. Our precision is better in many cases. What we do is difficult. Hopefully, of you got a chance to look at the animated video, and it may have given you a sense, if you haven't seen one of our factories, for just the degree of precision that goes into what we do. But think plus or minus two millimeter tolerance is over 75 meters.
Just to give you a sense of the challenge and the difficulty. And we're good at it. It's not easy, thus providing a bit of a barrier to entry to new competitors that might want to try to participate in this growth. We started the business with a dedicated supplier model, a collaborative, deeply collaborative approach with our customers. That continues today.
Our collaboration is getting deeper in many cases with the large wind OEMs. In exchange for us dedicating capacity, what we ask for and receive is long term commitments. Now there's some changes in terms of the flexibility we've been mapping on to in terms of those long term commitments given product transitions, but the nature of the partnership is the same as we battle through as our customers battle through market share, challenges and product transitions, we're working through that with them. Our business is relatively capital light. We lease buildings.
We put in a fair amount of CapEx. Our customers generally pay for the molds. But compared to a solar or semiconductor type model or some that might be more highly automated, it's a capital light model. So reasonable EBITDA drives very compelling returns on invested capital. And lastly, Bill and I just continue to be thrilled with TPI as a destination for top talent.
You'll meet a number of our leaders today. We're continuing to work hard and and being successful attracting top talent around the world. So I'll turn things over to Bill for a few minutes.
Thanks, Steve, and it's nice to see all of you today. A lot of familiar faces, some friendly, some not so friendly at times. But but thanks for being here. Appreciate it. So we're as Steve mentioned, I mean, scale is important.
Having a global footprint is important. We're continuing to build out a world class global manufacturing footprint. Today, we have 13 factories that include both blade and tooling across China, India, Mexico, Turkey, as well as The US. When we talk about world class, that means world class sites, world class facilities, world class technology, and world class talent. So that's what we mean by world class.
Our target over time is to capture a 20% share of the global wind blade market, building 18 gigawatts of capacity to achieve this position, and that's based on about a 70 to 75 gigawatt market on an annual basis. And then finally, we're enabling both wind and transportation technology, composites technology, to improve our competitive advantage. And that's being done throughout our entire footprint at our plants, but specifically at our engineering and technology centers in Germany, Denmark, and in Rhode Island. So our global footprint, again, it's it's important, and it's it's it's very important to capture regional demand, not only for the local country in which we're in, but also to serve a larger regional market. So with our Chennai India plant literally starting up this week, built some fir the the first small parts in that plant this week.
So that started this week. We now have 18 gigawatts of world class manufacturing space under roof or under roof, about 6,000,000 square feet with approximately 15 gigawatts under capacity today. So 18 gigawatts sorry, under contract. 18 gigawatts of capacity, 15 under contract. So we've got a little work to do to fill that up.
In the last eighteen months, we've added nearly 2,400,000 square feet and approximately nine gigawatts of capacity, including blade manufacturing plants in Matamoros, Mexico, in Yangzhou, China, the one I just mentioned in Chennai, India. And then we built a a new tooling and now transportation facility in Juarez, Mexico. As we speak, that's in the process of that footprint being doubled. So as we're talking about the footprint, how important it is, it is global. I mentioned Yangzhou, China.
We do have a a substantial footprint in China. So I'd like to talk a little bit about the coronavirus. As of today, we can't estimate with any certainty what the overall impact may be to TPI in 2020. It's likely to have a bit of a negative drag, primarily in the in the first and second quarters. We're working actively with our customers on how we might be able to recover some of that volume later in the year, but it's a little early at this point.
Our best estimates right now are that our plants will reopen on or about March 1 with limited with limited capacity at that point. The challenge here is that the mobility of our employees as well as logistics around supply chain, a lot of that is being determined right as we speak, you know, by the central, provincial, and municipal governments in China. So as our as our as our employees come back from Chinese New Year, there there are certain quarantine restrictions depending on which city we're in, so we're working through that. We're in daily contact with our associates, with our customers, and our suppliers, and we're all working very hard to to figure out how we get through this with the least amount of damage. It's important to note that some of our suppliers also supply product to our raw materials to our plants outside of China, so we're actively looking for alternative sources to the extent the delays are are longer than we than we may anticipate.
So while we expect the overall issue to be temporary, can't reasonably predict the impact. And so you saw the guidance this morning. If you looked at our eight k, Brian Shoemaker, CFO, is gonna talk about that a little bit later. Our guidance does not take into consideration any impact of of the outbreak. But as we get better information and have a better better certainty as to exactly what the impact will be, we will go ahead and update that guidance.
So a lot of you have probably seen this slide before. It looks pretty familiar. But today, we have 52 lines under long term contract. We'll actually be operating off of 54 lines in 2020. One of our customers asked us to put in two lines for 2020, just given the volume demands that they have.
We had some additional capacity in Yangzhou, so we agreed to do that. The potential revenue under the 52 lines is approximately $5,200,000,000 over the contract term with a minimum take or pay of about 2,800,000,000.0. During the three years ended 2018, the 2019 data will come out here in the next few weeks or months. But our five OEMs that we serve, five of the top five ex China, that include Vestas, SGRE, GE, Enercon, and the Nordex Group, They represented about 90% of the ex China onshore market, 55% of the total global onshore market, and they controlled about 99% of The U. S.
Onshore market. Since our IPO, we've added 14 net lines under long term contract, which has enabled us to increase our market share to about 16% at the end of twenty nineteen. And we still have a very robust pipeline. I talked about 18 gigawatts of capacity, 15 gigawatts under contract, very robust pipeline for both onshore and offshore with existing customers and new new customers. We'll use that pipeline to backfill to the extent we have customers that wanna move geographies or to to grow beyond the 18 gigawatts, if that makes sense economically for us.
So the wind industry has clearly gone through a lot of success. But also as an industry like this matures, as the big players get bigger and try to squeeze out some of the smaller players, there's also challenges that have come along the way. And you've heard us talk about the new product introductions or product transitions, for example, being a way that that challenge then comes back and impacts TPI. The successes have been clearly from perspective. Wind is now the cheapest new form of electricity in many markets if you compare it to installing new natural gas turbines or other new technology.
And even comparing to marginal coal in some places and not yet marginal gas is a very competitive source, unsubsidized, which is key for us. We're still working our way through some of the phase outs in The US and other government policies. But from an overview, we're just not dependent as an industry on those on those technologies on those policies as much as we have been in the past. The yellow line on the left hand chart so indicates to you the product new product introductions that the wind turbine manufacturers have come with over the last number of years. So we moved from an average of about 35 new products or so to last year being in excess of 70, so a doubling of new product introductions.
So the rate of new product introductions of our customers has clearly increased recently. We expect this to continue for the foreseeable future. And I I think rotor diameter will continue to increase. And again, LCOE has come down largely because towers are taller and blades are bigger. The physics of that relative to the cost that it takes to install it ends up with a lower levelized cost of energy.
So it's pretty attractive for our customers then to harvest the wind at higher heights and do a and and build larger rotors, then figure out how to truck them or how to put them on railcars, how to deal with some of the constraints that have come along with that. On the cost side, just an interesting comment made recently out of NextEra to put this in perspective and thinking about wind and and storage as a combination. NextEra recently said by the middle of the decade, they believe wind, a near firm wind product, meaning wind plus some storage, will be in the 20 to $30 per megawatt hour unsubsidized. So as you think about these intermittent resources or nondispatchable resources and just firming up that product, getting us to higher penetration rates, allowing utilities to plan for that electricity in a better way, that's where we're going. And NextEra tends to keep a number of their bold promises.
So we watch that and it helps indicate to us where the future might be going. And just to put in perspective what all this means, again, you might have gotten off the video a bit of a perspective of the physical size of the products that we build. But in 02/2007, the blades were 46 meters long, almost half the length of a football field, and then 57. We're actually starting production this year on some 75 meter blades. The Statue Of Liberty is 93 meters.
Big Bend is 96, just to give you a perspective. And then the right hand side gives you what today's state of the art full turbine at a 150 meter rotor, 175 meter tip height, just the physical size of what it is that we do. These blades weigh 15 to 20 tons apiece, but to manufacture something like that within a twenty four hour cycle is the challenge that that we embrace. Again, back to the EV side. We're gaining traction.
We're going to try and give you a little better visibility today as to what we mean by gaining traction. We've been using those words with you for a couple of quarters, and we're building our team of experts, and you'll meet a couple of them today. We're continuing with a long term target to build a $05,000,000,000 revenue business. Why $05,000,000,000 Well, as we build our $2,000,000,000 wind business, one is if we're diversifying and seeing this as a diversified source of revenue and value, it's got to be big enough to matter. And as we quantify the programs we're working on, this is likely 10 major wins at $50,000,000 a year or five major wins at $100,000,000 in revenue per year.
And that's the scope of the revenue opportunity. Most of programs that we're working on today. There are a couple that could be larger than that on an annual basis and a few that could be smaller, but to give you a perspective of why we've set that target for ourselves. We're investing heavily in this space. In 2019, 2020 combined, all in, we will have invested on the order of $50,000,000 into our diversification strategy.
And this is a combination of new CapEx, product development, process development, pilot line production, and driving cost out of some of the programs that we've been supporting. One of those is the Proterra bus program, and our objective these days is really optimizing the cost structure for composite bus bodies. It's getting better on the production side of building. This product is built a bit more like a wind blade, just a different a different shape, if you will, but more content in Mexico while still meeting the Buy America provision of US transit authorities and just getting better at what we do. We're also announcing, and Workhorse has announced, we've got a pilot production award at this point with Workhorse.
Joe and TJ and the guys will talk with you more about that as well. But in both of these market applications, we're saving thousands of pounds. And thousands of pounds in an EV drives additional range that matters. I mentioned our team of experts. We've added a number of folks that have automotive experience.
Many of us don't come out of the automotive industry, so just making sure that we understand what it's going to take technically and operationally to be a high quality supplier in the automotive space and then composites expertise. And again, if you read generally about what's going on in the automotive space, this is a ripe environment for us to navigate. Our automated pilot line that we announced a couple of quarters ago is on track for installation in our Rhode Island operation. We're spending about $12,000,000 on that pilot line as well. And you'll hear a bit more about that today, but this is a line that will be building structural composite parts in cycle times measured in minutes, not tens of hours.
And we're investing in both product patents, product based intellectual property, as well as process know how. Intellectual property comes in both forms, as you know, product claims and process technology and process know how. We're investing in both areas of that as well.
So with all this growth and our ambitions for the transportation diversification as well. We've we've obviously had to add a lot of associates around the globe. As of the end of the year, we had about just just a little over 13,000 employees globally. As Steve mentioned, we we've, brought on a number of senior leaders, especially since the last time we were here, two years ago at our Investor Day. 40 senior leaders added around the globe.
Steve mentioned you're gonna you're gonna see 11 of those today. Some of them are some some new faces, some that you might recognize if you're here a couple years ago, significant number of years of experience in both wind, technology, as well as automotive, and we still continue to build that engineering team with 300 plus engineers and technicians around the globe. And Deni Ilukowitz, our Senior Vice President of Human Resources, will spend a little bit more time on this later this morning. So significant top line market share growth. So since our IPO in 2016 through 2019, we grew at about a 23 CAGR.
With our updated with our guidance for 2020, that's about a 20 CAGR over the last several years. So significant top line growth, hence the growth in our footprint. We've grown our market share from about 10% around the IPO to nearly 16% this year or in 2019, and we anticipate that going to about 18% on our quest for 20 plus percent over the long term. And then in 2019, we kind of passed through 12 gigawatts of installed blades manufactured since TPI began building blades in the early 2000s. This growth hasn't come without challenges and some setbacks.
So while we've been successful with most of the heavy lifting to get where we're at today, our execution did not meet our expectations in 2019. Specifically, we had some labor challenges in Matamoros, which I'm sure you're all aware of. But I'm happy to to to report today that, number one, the labor situation has stabilized. We've signed a new labor agreement with our with our associates in Matamoros, got that done five weeks early without any work stoppages or interruptions. So I think we're on a very good course in Matamoros to turn that into a world class facility, which is our plan all along.
We talked about we've talked about Yangzhou over the last couple of quarters. Good news is we got a free building from the local government. The bad news was it wasn't delivered on time. So that created some start up challenges for us. And then labor availability in our Iowa bus plant has created some some challenges, which is why last month we announced that we'll be closing that facility at the end of this month and transitioning all of our bus manufacturing capacity into Rhode Island.
So we've learned some valuable lessons in 2019. We're gonna learn from those. And and and I think we're all very confident and we're very well situated to move into 2020 on a very solid footing with our operations around the globe, all in very good shape. So this growth, how did we fund this growth? So the growth in the footprint, senior leadership, technology, start ups, transitions has been largely funded from cash flow from operations.
So since 2016, we've generated a 190,000,000 of cash flow from operations. That's net of almost 200,000,000 that we've invested on start ups and transitions. So again, significant cash flow opportunity from this business. We've maintained through this whole period, we've maintained a very strong conservative balance sheet. We have net debt of about $72,000,000 exiting 2019, and we just dipped into our IPO proceeds from 2016 during 2019.
So again, it just reemphasizes our ability to generate cash, work the work working capital management and the like. Capital allocation plan. So our capital allocation plan has and will continue to be as we move forward continued discipline, robust continued capital discipline through maintaining a robust balance sheet, rigid working capital management and focusing on return on invested capital. Continue to reinvest in the business as appropriate to drive long term growth, to improve our productivity, our technology, and to maintain our competitive advantage. Selective acquisitions align to our core strategy.
An example of that was the Euros acquisition of a number of engineers that we closed in 2019. We'll continue to look for strategic types of acquisitions that may be of benefit to TBI from a longer term standpoint. And then finally, consider the return of capital to shareholders over time. As we as we mature into our footprint, as we reduce our our growth CapEx and it becomes more of a maintenance CapEx routine, if you will, then I think the opportunity for return of of capital to shareholders is certainly there.
So as Bill said, we're we're committed to learning. Right? We're committed to continue to improve each area of the company. And one of the areas that we've been improving and you'll continue to see progress on is building a strong independent and diverse board of directors. Since November, we've added three independent directors, Jim Hughes, who, again, you'll have a chance to to meet later this morning.
Jim brings to us just a wealth of energy industry experience, having been the CEO of First Solar, interacted with many of you as a cleantech public company CEO and is very helpful to Bill and myself and our board in challenging us to think about things with the experience and perspective that he brings. Jayshree Desai is one of the wind industry pioneers in in The US, was the CFO at Horizon Wind, ended up becoming the CFO at EDPR as that business evolved as one of the largest wind developers and owner operators, and spent some time with Skelly at CleanLine on the transmission side. So she brings a perspective of our customers' customer, how the how our customers' customers make choices as it relates to wind turbine supply and decisions as they go forward. And then most recently, TJ Jordan. And TJ brings an automotive and global manufacturing perspective to us as well, having spent decades in the automotive and some time in the aerospace business with General Motors, United Technologies now sits on the board of Oshkosh Truck.
We've been asked at times about some of the labor challenges we've had around the world. TJ's lived a lot of the same challenges that we're dealing with and is helpful to us in that sense as well. And just lastly, in terms of how our Board operates, and again, if any of you are interested, you'd have a chance to speak with Paul a bit later. But we're very concerned to make sure that the compensation strategy of our senior executives is aligned with building shareholder value. We'll continue to fine tune that as we go along, but make no mistake, that's part of how we're leading and governing the company.
So as we move into 2020 and beyond, our operating imperatives include, again, relentless focus on operational excellence to continue to drive quality, cycle time, throughput, cost reductions, and and and by definition, margin expansion. We need to turn speed into a competitive advantage. You'll hear a lot about we've we've talked a lot about transitions and start ups over the last couple of years. You're going to hear from Ramesh, our CEO of WIN Adrian, our Senior Vice President of Technology, on some of the initiatives we have to drive transition and start up time down. We're going to continue to advance our composites technology and our transportation technology, again, to for operational improvement over time and over time, better recyclability of the products that we're building.
That's important for us long term. Steve mentioned the collaborative relationships we have with our customers. We need to continue to partner with them and partner with them even more deeply. So you think about tooling design, design for manufacturability, blade design, service offerings that Lance will talk about a little bit later, and transitions, right? And engaging our customers earlier in transitions is critically important.
So again, on we've talked a little bit about how we're gonna share the cost of our transitions, but it's really about reaching a better balance with our customers on the economics of a transition. And the way that we do that is it's it's more transparency and communication upfront. It's our upfront involvement in what their new design might be. So it's designed for manufacturability. It's basically leveraging our global footprint to minimize the impact globally on our volume and their volume when we go through a transition or a start up.
So all those things are important. They're all in play today. Our customers are very receptive of what we're doing because at the end of the day, they spend all this money on new product introduction. They wanna get that to market as quickly as they can. So the faster we can ramp from start to serial production, the better it is for them and clearly, the better it is for us.
And then we need to continue to leverage our global and regional scale as it relates to our supply chain. We need to continue to drive out costs from a raw material standpoint. And the nice thing about the localization that we're working on, and Jim Shemansky, our Senior Vice President of Supply Chain, will talk about that, is as we localize, we're actually increasing capacity on a global basis, and we get a guaranteed portion of that capacity, if not all of it. So not only are we adding capacity to the industry, but we're then securing a long term supply. We we we reduce significantly the risk of any interruption of supply, which we had some challenges in 2019.
And then continue to build our team. We'll know, Deni will spend some time on this, but we need to continue to develop build, develop, retain in order for us to continue to execute as a world class team. And then finally, drive our ESG vision. Right? It's not only the right thing to do, but we we believe it'll drive improved business performance and value creation in the long term, and we'll spend some time on that towards the end of the morning.
So with that, we've got two pages of biographies of all the folks you're gonna meet meet this morning. We're not gonna go through them in detail. They'll provide a little background or their inner or their inner the person introducing them will provide a little introduction before they go. But as Steve mentioned earlier, we're really excited about the team we have in place today. I hope that by the end of the morning that you'll have the same confidence that we have in this team to take TPI forward.
So with that, I'm gonna turn it over to Tom Adams, our senior vice president of Wind. He handles kind of all the commercial negotiations and interactions with our customers. And Christian Eden, who's our senior director of, I was gonna say, internal audit, sorry, of investor relations.
Thanks, Bill. To meet a 62% increase in projected electricity demand through 2050, global generating capacity almost triples from 7,000 gigawatts to 19,000 gigawatts, attracting 13,300,000,000,000.0 in new investment. Wind draws 40% or 5,300,000,000,000.0 of this new investment and is projected to make up 26% of the power generation mix in 2050. In 2050 in 2050, more than 60% of the global electricity generation is projected to be fuel free. Wind energy is the cheapest form of new generation in many markets.
Global onshore unsubsidized wind power levelized cost of energy has come down to less than $50 per megawatt hour in the major markets. By 2030, the cost is expected to drop below $35 per megawatt hour in most major economies, including The United States. Today, at the best sites, unsubsidized LCOE of onshore can be can be as low as $26 per megawatt hour in Texas, for example. The key drivers that have and are reducing the cost of wind are longer blades, taller towers, increased megawatt ratings, higher capacity factors, lower cost of operations and maintenance, and better siding. Capacity factors have almost doubled in the last twenty years, there's a potential for a further 50% increase by 2050.
Wind has to compete with other technologies, so the industry is pushing to keep pace with the cost out curve for solar and other technologies. New onshore wind is projected to be cheaper than existing coal and gas by 2030 almost everywhere globally. And at the best sites, unsubsidized wind is cheaper than the marginal cost of coal today and approaching the marginal cost of natural gas. I'll now hand it over to Tom to talk about more of the wind market forecast.
Thank you, Christian. So I have the opportunity to talk about the wind market. We'll talk about the global overview to start and then delve into some of the regional markets and see how the metrics that Christian just covered are driving the growth and opportunity that we see. Starting with the headline on the global picture, we see a market that goes from 66 gigawatts installed this year or in 2019 all the way to 89 gigawatts at the end of the forecast period in 2028. This is a large growing addressable market for TPI.
The onshore portion of this market is steady at around 62 gigawatts a year on average over the forecast period, and higher growth is going to be occurring in the onshore markets in emerging and developing markets, as Steve alluded to that in his opening remarks. The offshore market, and we're going see this in the regions in particular as we go through this, is really the growth engine on top of the steady onshore average market that we see over this forecast period, starting from seven gigawatts growing to 22 gigawatts installed at the end of the forecast period in 2028. The offshore market being driven by an expected 40% reduction in LCOE by 2030 and attracting, we think, over $1,000,000,000,000 of investment just in offshore projects by 02/1950. Obviously, we're excited to be participating in this global market, and it's being driven, as Christian alluded to, to wind being ever more competitive on an unsubsidized basis. Going to The US to start as a regional market, we're in the middle of a very interesting and high activity period that we expect will last through 2021.
From 2022 onward, we're more aligned to the UBS forecast on the right side. As you can imagine, there's always a range of forecasts, especially for The US market. The UBS forecast would average about eight gigawatts stabilized from 2022 to 2025. And that's aligned with our thinking based on our conversations with our customers and their customers, which represent utilities and developers in the markets that we serve. The US market onshore is also supported by the one year PTC extension at the 60% level through 2024.
For the offshore opportunity in The US, we're very excited to see significant named projects supported at the state level of The US through policy and funding decisions they're making. And that cumulative amount of installed capacity, we expect to be around 20 gigawatts by 02/1930. Obviously, TPI is well positioned to participate in The U. S. Market with our Iowa facility and our centers in Mexico.
Going into the Europe, Middle East and Africa markets, we see the onshore opportunity growing and then stabilizing at around a 20 gigawatt per year average install through 2028, and offshore growing rapidly at a 12% CAGR over this period, up to 11 gigawatts in 2028, fully one third of the market opportunity in the region. Our facilities in Turkey and our new facility in India, of course, are well positioned to serve this market. For Asia Pacific, we've divided our slide here for onshore and then offshore to follow. Looking at onshore first, India is a really interesting part of this market, obviously, for us, and really is a high growth opportunity with 16% CAGR expected over this forecast period going from two gigawatts of annual installations up to eight gigawatts by 2028. And our new facility in India that Bill talked about opening even this month is, of course, positioned to serve the domestic market in India as well as provide a low cost export hub for the region.
And then looking at the offshore opportunity in Asia Pacific, this is also a high growth opportunity. The key countries for us here are Japan, China and Taiwan, expecting a 13% CAGR over this forecast period, reaching eight gigawatts a year installed by 2028. Particular footprint alignment for us is our facility in Yangzhou, China, which is on the Yangtze River and able to supply the domestic China offshore market as well as other countries. And then to wrap up in Latin America, we see a fairly steady market in the four to five gigawatt installed per year, and we're well positioned to serve Latin America from our Mexico, India, and China footprint outside of Brazil, which, of course, has local content restrictions. So we're well positioned to serve the rest of the Latin American market.
I'll hand it over now to Ramesh, who is our COO for wind, who will give an operational update. Ramesh?
Thank you, Tom. So we'll now cover the operational part of the presentation. So we'll first talk about SQDC, which is an acronym for safety, quality, delivery, and cost. And these are our operational priorities in that order. And then we'll talk about execution on both start ups and transitions because this is critical to TPI's business strategy and financial results.
And all these activities are essentially tied together by a core value, operational excellence. And for us in TPI, operational excellence is execution of our business strategy more reliably and consistently than our competition. So let's start with safety. So for us, safety is not just our first operational priority, but also a core value. And when you talk about safety, you have generally two metrics that are used globally.
They both relate to injuries. The first one is an injury that meets the recording criteria of OSHA, which is The US regulatory agency. It's known as a recordable injury. The second is an injury that sustained that leads to a loss of productive work time, and that's known as a lost time injury. And they're both indexed, so you can compare these metrics across different industries.
Right? And so when you look at the chart here, it clearly shows that in both these categories, we have improved our performance significantly. It's almost 80%, and we are better than the industry benchmark. So how do we do this? First, we basically have focused efforts on prevention because safety is all about prevention.
Right? So we have what we call near miss programs that catch the near misses and also provide solutions. We have good catch programs that identify and correct unsafe behavior. Safety is a mindset. Right?
It's a culture. So we also have behavioral based safety programs that we've deployed across the whole organization. And then finally, we go through a process called layered process audits where we bring in people from different parts of the organization to audit these processes in different levels of detail. And we also ensure that every safety hazard that we have is communicated across the enterprise in a timely and disciplined manner. We want to learn from our mistakes, especially on this critical priority for us.
So as an organization, we strive every day to make sure that every employee goes home safe. For us, safety is not an investment. It's a cost. Oh, sorry. It's not it's it's not a cost.
It's an investment. Flip it around. And now let's move on to quality. So this chart shows a reduction in our nonconformances or defects over the last three years. It's almost a 24% reduction.
So what we used to do traditionally is to conduct process audits, and we've now expanded the scope of this to conduct not just product, process audits, but product audits, system audits, journal audits, and layered audits. Right? And so we're looking at the whole operation holistically, and we are instituting a culture that's based on prevention and not on inspection. Right? And we've also invested in people resources.
Dini will talk about that a little later. We bought functional expertise in various sectors to strengthen our global quality team, but we're also investing in the infrastructure that we need to ensure that we are learning from our mistakes. We are learning from our there's lessons learned that shared, and these are being transmitted across the enterprise in a disciplined and a timely manner. Next, we'll talk about speed. Correct?
And on on delivery, for us, it's all about manufacturing productivity and stable operation. So when you do a value stream map of our operation, right, we have critical pacing items. Like for us, it's it's the molding, which is a critical operation. So our objective is to subsequently minimize the time associated with that operation. We break it up into small steps.
Some of them are labor related. Some of them are process related. Some of them are a combination of both. So depending on what we want to minimize, we could be using technology like lasers. We could be using advanced jigs and fixtures.
We could be optimizing cure cycle times, or we could simply be baselining this operation with one of our world class operations and doing a manpower benchmarking and looking at how we can allocate labor more effectively. And and that really helps us from a productivity perspective. And the chart that you see on the right is really our cycle time evolution with time over the last three years. And what you see there is that's been reduced by 24%. It's a big deal.
Right? Because what we're saying is without incremental investments in capital, without spending more on labor, we are producing more. Right? So when you look at all the KPIs for us, the cycle time is a key metric because that represents how efficient we are. We're essentially producing more with less.
Right? And this helps us reduce our costs and also helps our customer reduce their costs in turn. And now we'll finally talk about cost. So if you look at look at our our blade costs, about 65% of the sales price is basically materials, 10% is labor. And since the materials portion is such a big piece of the pie, we have focused efforts to work with our customers, to work with our suppliers, as well as improved processes to take these costs down.
Right? And Jim will talk a little bit about our supply chain strategy in detail. But in general, we are looking at localization of suppliers. We are looking at value engineering, you know, using different engineering parameters to reduce the materials and also direct material productivity to take these costs down. And you can see we've taken them down about 12% of bill of material cost over the last three years.
Labor is also a key component of our cost structure. Right? Represents about 10% of of the sales. And so we do reduce labor hours primarily through continuous improvement. We benchmark the operation.
We make sure that we can continuously take the labor hours down. And an added benefit is when we take this down, we have a more skilled workforce that we can employ that's motivated and helps the productivity in turn. And as you can clearly see, we've taken the labor cost down by about 11% over the last three years. We'll next we'll next talk about our execution on start ups and transitions, and this is key to TPI's business strategy and also our financial results. Right?
And for us, speed's the name of the game here. It is our top priority. Right? So let me draw your attention to the chart on the top right. That chart represents, you know, at a high level, the five steps that are required to do a typical transition.
Right? And we want to reduce the time taken for those five steps. And and the financial implications are significant. Right? So for example, if we reduce the time required for a transition on one line, right, by one week, right, the impact on the EBITDA is over $200,000, assuming, you know, a sales price average sales price for 2019 and a 30% contribution margin.
So for us, I think the opportunity when we speed these up from a financial person perspective is is quite quite significant. Right? So if we look at the process, we basically baseline it, and then we use continuous improvement or lean manufacturing to shrink it down. And in this process, we might combine or eliminate operations as necessary. And there's another portion that's that's also important, which is consistency.
Right? It's especially important for our start ups and the new factories. And there, we've got a standard stage gate model with checkpoints at every stage. We've got clearly defined metrics and deliverables, a robust mitigation plans, consistent processes, and an operational cadence to ensure that we are executing to this plan. A key element of this is functional collaboration.
So it's collaboration between engineering and supply chain and operations, but it's also collaboration with our customer upstream because the better we can plan, the better we can risk mitigate, the faster we can basically start up. And so we do have, in summary, a pretty disciplined approach to accelerate and execute these startups. And as an example, in the lower right, you can see essentially the progression of the cycle time with time on one of our key startups in the new factory last year, and we took it down from a hundred and seven hours to twenty eight hours over a period of sixteen weeks. So as we do more of these, we are also learning and improving.
And
so finally, we'll we'll basically talk about transitions and and the impact of transitions to to EBITDA, a topic I'm sure all of you are really interested in. Right? And so when you when you when you look at when you look at this curve, right, the blue line is what happens for us typically during a transition. Right? So we start off, and then it's three years.
Right? This is the EBITDA on the year before the transition, during the transition, and after the transition. And what you see is a dip during the transition year. Right? And we have this dip because of three things.
Right? There's a reduction in volume. There's basically an underutilization of labor, and there's an under absorption of over overhead. Right? So the EBITDA goes down.
But as we ramp up and and reach our steady state, you'll find out that the EBITDA EBITDA goes up pretty rapidly. And I I'd argue that if we can get a larger blade in the same cycle time, it could potentially go up even more. Right? And so the blue curve illustrates what happens during a typical transition. And we really need to compare that to the orange curve, which tells you what happens if we don't do a transition.
And if we choose not to do a transition, then the customer can decide, right, to reduce the volume and take it down to a volume, which is their minimum volume obligation that we have contractually. And this is not good for us because not only do you have a reduction in volume for a longer period of time, which which has a tangible impact on the EBITDA, but then you also have other added effects like, you know, underutilization of the facility, the motivation of the workforce, and so on and so forth. Right? And while we do have mechanisms in our contracts to recoup some of the cost as well as the lost margin during a transition, they clearly don't cover the full cost that is needed. But as you can see, once you get through the transition, this financial impact is really small compared to the long term benefit of the transition.
Right? And so for us, although we'd like to reduce the transitions, sometimes wish they go away, they're here to stay. So we we do collaborate with our customers to manage these more effectively. Right? And like I said, we we're learning through every transition.
Transition. We are working collaboratively with with our customers from a planning perspective, from a risk mitigation perspective, to make sure that we are getting quicker and faster at at these transitions. Transitions. Right? This is clearly a focus area for us because it impacts our financial performance.
Right? And so when you look at at the operations in in summary, like Bill said, we got three key priorities. The first one is operational excellence in every facet of what we do, right, across the board. The second one is speed as a competitive differentiator for us in our start ups and transitions. And then finally, as we continue to manufacture these blades, we've got two key enabling functions, which are technology and supply chain, which are helping us get up get better, faster, and cheaper.
And with that, I'll turn it over to Adrian, our technology lead leader, to talk about what we're doing in technology. Thank you.
Thank you, Ramesh.
In TPI technology, we're focusing on three main business drivers, speed and flexibility, cost, and innovation technology readiness. Ramesh mentioned transition. Steve mentioned transition is basically the word that we talk about every day in the company. The industry is evolving, bringing new turbine models every day, and we need to be able to react to the shortened life cycle of the product that we build, the blades. This speed and fix flexibility are crucial to us.
We are the twenty four hour cycle company. We are the best in developing technologies and processes to for blades manufacturing. Now we're bringing even more value to our customers contributing to a shorter time to market with our capability to transition fast from one model to another while still ensuring the quality of the product. We're continuously looking to reduce the cost through BOM optimization and reutilization of the tooling, And we participate in consortiums to develop new blade solutions, materials, automation. In 2,019, we acquired a design group formerly known as Euros that was part of Senvion.
And as a result of this acquisition, we've broadened our collaborative space, and now it includes air design and structural design. Moreover, our team in Berlin has enhanced the collaboration with with our customers and strengthened those relationships. The groups brings deep knowledge of blade design and a vast experience in design for manufacturing. We're now invited by our customers to take part in early stages of the blade design process. All of these leads to a more streamlined design for manufacturing and robust risk mitigation planning.
We're also involved in joint prototyping activities, plays with our customers. And due to all of these, we can talk about a team, customer and PPI that actually has control of the full cycle design, designs for manufacturing, manufacturing, and continuous improvement. And these translate into new products being put into manufacturing faster, reducing the ramp time ramp up time and ensuring better quality. The results for us and for the customer are significant time and cost savings. There are three ways that we develop technologies in TPI.
Internal, by developing new processes, methodologies, and innovative ways of building blades. As many excuse Sorry. As many as as you have seen on the screens when you got in or you know of how the blade is built, we actually add a lot of layers of glass, balsa wood and foam, and some prefabs, root joints, the webs, the spark gas, and we all put them in in a long mold, which can be 60 to 70 meters long. Right? All these items have to be precisely aligned.
You look at the size of the mold, you think that you can throw everything in. We have such tight tolerances that can be sometimes, as Steve also mentioned, plus or minus two millimeters. I like to think about these, if you look at the scale, is to make sure that the eyelashes of an elephant are actually equally distant and the same length. That's what we have to go through in our production. We are using technologies based on a model based manufacturing approach, allowing us to create laser files to project on molds so operators know where to place the pieces properly.
We developed internally an infusion simulation program based on material characterization of glass and resin that allows us to generate the infusion scheme, the position of all the tubes and all the hoses that are needed for the infusion system. We also developed a bonding characterization and simulator that allows to determine the adequate shape shape of the glue and how to calculate the optimal position and forces to close the mold in such a way that we distribute evenly the glue. On the tooling side, we're developing adaptable frames and walkways resulting in reusability and faster transitions. A second way of developing technologies in TPI is collaboration with our clients. Shared IP allows us an open collaboration and faster implementation of solutions in our factories.
The third way of developing technologies is through participation in consortiums. Currently, we put a significant focus on circular economy of glass and carbon composites, and both US and Europe are focusing on recovery of embodied energy rather than low cost materials like the glass. So we are part we participate in several projects addressing this problem. Overall, our focus on developing new technologies and processes led to 13 invention disclosures, five provision application files, and filed five applications drafted just in 2039 alone. These efforts enable us to get products from design phase to serial production volume much faster than in the past while improving the overall quality.
This is a win win situation for us and our customers. Now I wanna introduce Jim Shemansky, who's in charge of global supply chain.
Good morning. Gonna take a little bit of time here to talk a little bit about our supply chain, our costs and challenges and then our strategy going forward, as Ramesh said, for localization to drive cost out and speed. If you look at this chart on the top left here, it's just a quick snapshot of of really where the commodity markets are from a pricing standpoint, and then TPI's performance in in those same areas across our commodities. With TPI's continued expansion, our our strong, global presence and footprint, our our buying power, our diverse supply bay or diverse customer base, as well as our, history of supplier collaboration across the regions, we've really been able to leverage that power to continue to drive cost savings across all of our commodities. Well, if you look at this, there are some, areas where there is significant upward, pressure on market pricing, specifically in areas of glass and carbon.
In those specific areas this year in 2020, we've been able to provide or turn in double digit savings to support our customers and margin improvement for TPI. All of this continues to support us to turn in significant year over year cost savings for TPI in the business. This continued cost reduction is also fueled by very strong relationships with our suppliers, and in many cases, secured by long term agreements and year over year committed savings. In 2019 and early twenty twenty, we did struggle with the rest of the industry with some capacity constraints on core raw materials. And as that capacity increases throughout 2020 with the plans in place, we expect that cost for the core raw materials to come down and reduce to pre 2019 levels.
TPI continues to expand in the low cost regions of Mexico and Asia. We have a number of customers in those regions, and we have a very focused strategy on localization that incentivizes our suppliers to localize for multiple customer facilities. In Mexico, while there is a a deep industrial base, there is limited infrastructure today for the production of raw materials for composite materials. As with our expanded footprint in Mexico, we've been very successful in, getting our customers to localize in Mexico and and, set up and colocate near our facilities. In 2019 and 2020, our customers have completed or will be completing facilities for the conversion of fabric materials, the kitting and conversion of core and fabric materials, as well as the production of foam core raw materials in Mexico with a continued focus going forward on textiles and glass robing manufacturing.
In Asia, we have always relied very heavily on our partners in China to support us, not only in our facilities in China, but also for our other global facilities. There we continue to look at at new suppliers in in China, new and growing suppliers in China as well as other regions in Asia to enhance our portfolio and continue to drive competitiveness in in our materials. We there are a number of growing suppliers in China today that are becoming more and more sophisticated in delivering material to the global markets, And we are also in the process or we have qualified and in the process of qualifying low cost materials for chemicals and core material from Vietnam, Korea, and Thailand. These actions not only, continue to make our material more competitive, it also allows us to minimize the risks of any tariffs that we see and other geopolitical issues in the in that region. And India, as we move into India, as well, we see India as a low cost hub, again, not only for our operations in India, but globally as well.
India has a very, established textiles market, but it's been historically dominated by very few players. In India today, we are working to local, to localize qualify local suppliers for chemicals and fabric conversion and core conversion. We are also working with our global suppliers to localize in India as well as current local suppliers in India to expand and look expand and localize regionally for us, to better serve TPI. Current in 2020 and 2021, there will be significant capacity expansion in India, particularly with the installation of a new glass furnace in India. This new glass furnace will really change the dynamics of that market and the textile industry.
On top of that, there will be significant expansion in fabric, conversion in in India as well as, core foam manufacturing as well. DPI continues to be, really the best, suited to really assess, test, and qualify materials for our supplier for our supply or for our customers, excuse me, with our, strong, technical staff as well as our two DNB GL certified labs both in China and in The US. This really allows our customers to take advantage of our growing footprint in these developing regions as well as take advantage of very shortened cycle times to implement new materials and low cost materials into their blades. Again, localization can certainly reduce the total delivered cost of our materials, but it also will increase overall global capacity, which is very important and enables us to secure long term supply continuity and critical raw materials. With that, I'd like to turn it over to Denis Likowitz, our senior VP of HR.
Good morning. How is everyone? I stand between you and questions. So as Bill as Bill indicated earlier, we've had significant growth in headcount in the last number of years since the IPO, but this headcount growth is honestly scaled with the growth of the business, so it matches. Our most significant growth area population wise is Mexico, which still remains our largest concentration of employees.
We've also ramped our India operation to about 600 employees with the start up that that Bill mentioned earlier. We've really focused since the IPO on adding critical talent at the most senior levels of the organization, and we've added some amazing athletes to our team, some of which you've had an opportunity to listen to, and you'll listen to some more after I'm finished today. Collectively, they have more than five hundred years of experience in their functional disciplines in wind and in transportation. In addition, we have 300 engineers worldwide, and this remains one of our most critical talent segments for the organization. And I really wanna spend a little bit of time to tell you about how we're focusing on their development at TPI.
Improving our technical capabilities is gonna have an immediate and endearing and long lasting impact at TPI. You heard from Ramesh. You heard from Adrian. You heard from Bill about transitions and the critical nature in which our technical community supports that. But we need to ensure that we're both attracting that talent, and we're developing them and retaining them.
And this year, we're really excited to be launching our TPI Academy. This is a cooperation between our organizational development team at TPI as well as our technical community. We're bringing together the best technical minds at TPI, many of whom have grown up with our technology, extracting that tribal knowledge, if you will, from their heads through great adult learning principles. The course curriculum is gonna have 13 courses, entry, mid level, and senior level, and we're really excited to be deploying that globally. It's gonna improve our capabilities.
It's gonna ensure that we can be faster and more effective. Think about the tolerances that Adrian talked about and and Ramesh as well within that two millimeters and ensuring we've got the right technical talent to support that, we view as a critical opportunity and an issue for TPI. It's gonna improve our quality overall. We're driving towards that zero defect. And certainly, the cooperation with the acquisition of the team in in Berlin is gonna help us with that design for manufacturability.
It's also gonna enable us to be more innovative. This team of leaders worldwide that lead the technical talent is also focused on mobility. They wanna ensure that best practices are shared. So while we have different factories all over the world, might have different cultures and way of doing work, they drive to work consistency in the technology teams and ensure those teams are motivated. And we really focus on providing them the right total rewards and retention so that we can protect that talent for the organization.
A lot of what you heard about this morning, we can't do without good people. So this year, we refreshed our people strategy for the organization. I wanna talk to you a little bit about these five fundamental parts of that strategy. With culture and values, you know, as an HR practitioner, I would probably offer that in my mind, culture still eats strategy for breakfast. You can have the best strategy, but without the best people, you may not get very far.
We have the very best people at TPI, and we also have an outstanding culture. We have a culture which focuses on empowerment of the individuals, grounded in core values, our first one, which is safety, which you heard Ramesh talk about earlier. From a cultural perspective, this year, we deployed a program called Values in Motion, which will help our associates understand what our values mean in their day to day lives. In addition, we're focusing on developing leadership at every level in the organization, particularly our frontline leaders. We wanna ensure that our leadership team is creating an enduring associate focused environment for our people, one which we continue to attract, develop, and grow, and for people that we wanna ensure that they wanna stay with TPI.
You heard Steve talk about destination for top talent. We wanna secure that position. Today, we are a destination for top talent, particularly in our industry. With the growth of diversified markets that you're gonna hear TJ, Joe, and Lyndon talk about, we're also becoming a destination for people who wanna get on board with us in that vertical as well. So to maintain that position, we need to ensure that our culture is solid and strong as well as we're creating those environments that associates wanna grow and develop and stay in.
We've deployed solid talent practices. At TPI, talent is not an HR issue. It's a collective issue. So I feel tremendous support from my friends in operations and the functional leadership of the organization to ensure that we have solid talent practices. We focus on mid level leadership, high potential identification, succession planning, and we've standardized these practices and programs throughout the last number of years.
And that collective ownership and talent makes my job, honestly, a lot a lot easier and and most times more fun. Talent analytics. This year, we're upgrading all of our HR systems worldwide. We provide talent analytics to the organization, which we feel helps us facilitate good decision making when it comes to people. But with the upgrade of our HR systems, we're excited we'll be able to provide a lot more depth in those analytics as well as faster and less manual.
I wanna talk a little bit about diversity and inclusion. When you think about diversity, diversity means a lot of things to a lot of different people. At the heart of it and fundamentally, diversity is how we're different. Right? We see some diversity in the room here today.
Age, gender, ethnic background, sexual orientation, educational level. These are the things that make us different. At TPI, when we talk about diversity, we really use the word intent a lot. We act intentionally when it comes to diversity. We honor our differences, but we bring them to the table, and we wanna know what makes people tick.
One of the ways that we think about diversity is diversity of thought. And when you think about bringing together people who think a little differently, it tends to drive great conversation and better outcomes. We have a vision. We have a plan when it comes to diversity. Our leadership team is engaged.
Some of the critical segments that we talk about when we talk about diversity, as a woman, I tend to hold the hold the torch in that segment of diversity, and we do an outstanding job there. Annually, we work with the women of renewable industries and sustainable energy to bring women from all over the world to the annual wind energy conference, and we celebrate their contributions. We have global participation in International Women's Day, and this year, I'll actually be at our India operation launching our first employee resource group, which we're gonna call TPI LEAP. The India team is very focused on diversity and inclusion at the start up of their operations. And even in markets where it may not be as traditional, you see wonderful opportunity and you see great diversity.
Particularly, cultural diversity is something that we spend a lot of time on at TPI. We're embedding and aligning measurements and practices. When you talk about diversity, though, one of the things that's most critical is you need to tell the story. People remember stories. I'm sure all of you remember facts and figures given the background and experiences that you have, but if you tell a story and it's endearing and it's true, it really adds value to the conversation.
One of the stories I love to tell and which we've been recognized for is the story of our Iowa blade plant. In our Iowa blade plant, when you walk in, there's flags around the the walls. When you go look up, you see flags from 46 different countries. It's truly remarkable how those individuals from 46 different nations, 46 different cultures and backgrounds come together to produce an outstanding product for our customer, and that's a great example of how diversity inclusion is alive and working at TPI. Lastly, we need to measure our impact.
Impact is important, and we can have the best programs that if we're not measuring it, we're not knowing if we're gonna improve and do the right things. So we have those metrics in place, particularly around our talent management practices. At this point, I'd like to hand it back over to Steve Lockard, who's gonna take us into questions. Thank you.
Thanks, Steve. Just one of the
our four folks. And then also, there's a microphone available for those of you that may wanna ask questions as well. Why don't we open it up? Questions, please. Mike?
Could you talk a little bit about the supply chain efficiencies you're getting and what that means for pricing with your customers? I assume that, that means as you get larger, that your scale in house gives you better efficiencies than your scale at TPI gives you better efficiencies than the in
house production of your clients.
Yes. I'll take a quick one, Mike, and then Jim or Bill or others may want to add. But as I think you know, in our relationships with our customers, we have a shared gain and shared pain mechanism on raw materials primarily. As Jim described to you, we have a global footprint that's unmatched. We have scale today and buying power that's really unmatched.
And so we leverage that, qualifying new suppliers, pitting one against the other, driving the lower cost regions of the world and then share the gain of that with our customer, but not all of it. So it does give us margin leverage. It gives us price reduction opportunities, which our customers benefit from. And that's the way that we play it out. Yes.
Anything to add? Jim?
No. I also think that as we talked about with being able to produce blades for multiple customers in one facility allows really drives that localization and support of our suppliers really well. Yes. We're buying more raw materials than any of our customers are. So to Jim's point, for us to and it goes across all layers of cost,
not just raw materials, Mike, as you know, but that is a big benefit for us as well. If we can build a campus like in Mexico, multiple sites, multiple customers, leverage the scale of that, the buying power of it across the commodities, and then many of our customers may come in with different materials that they've qualified. But if we then use our labs to qualify alternatives, we can combine all that scale and really use it to drive more efficiency on cost and productivity on our side, right, if we get more comfortable with certain materials that can help drive cycle time as well as Ramesh described.
Thanks. Phil? Phil Shannon with Roth Capital Partners. In terms of your guidance, I wanted to explore the potential impact of the coronavirus. So I was wondering if you might be able to bracket what the downside might be.
Specifically, you guys talked about potentially getting back online March 1. Let's say that's the case. You know, that would suggest you guys are offline for about a month for your Chinese facilities, which I believe represent 25 to 30% of your overall footprint. So what does that mean in terms of your guidance? Let's say that's kind of the baseline scenario.
And then what are you guys planning for in terms of scenarios beyond that? You guys mentioned that China is also supplying into other facilities throughout the world. Jim, perhaps you can comment on what the impact there might be as well. Thanks.
Yeah. So, Phil, I think as you you read in our guidance and as I mentioned earlier, the situation is really fluid. So estimating what the impact will be, it's it's too early to do that. So that's the answer. We're not we're not gonna give you a bracket because we don't know what that bracket is yet.
Good news, bad news, the virus hit over Chinese New Year. So we were already shut down for that period. So it's not like we're losing four weeks of production. Right? It's it's it's really we're pushed out a couple of weeks.
We also have the ability with our capacity in in China to make up some of the volume that we'll lose during this period. Again, our customers have to agree to what that plan is. And and really one of the big dynamics, and and Jim can talk about this, it's it's it's not only the mobility of our people as they come back from from their their New Year's breaks that have been extended, unfortunately. There's quarantine requirements that I mentioned, so it's and it's different a little bit by province and by city. So we'll have to work through that.
But the bigger the bigger challenge may be on the supply chain locally within China because of the the logistics China. As it relates to outside of China, again, Jim and his team have done a really good job of minimizing the product. If if you think about The US, you know, we have we have very little supplied by China, and that's by our customers actually supplying it. Everything else is sourced out from somewhere other than China, so there's no impact really on Iowa. Mexico, again, Jim's done a great job on the supply chain.
No real impact in Mexico. Turkey, there's a few challenges, and and that relates more, again, to customer supplied parts that are being manufactured by our customers in China. So, Jim, I don't know if you wanna add to Yes.
Not a lot to add there, Bill, but thank you. I think the good news is is that we're very tied in with our suppliers, and we understand clearly what our inventory is, what our suppliers' inventory is and and how that will take us through production as we ramp back up not only in China but in our other regions as well. Logistics could be an issue, although we're at least seeing a process in China to to permit and be able to to start shipping materials. So we'll see how that goes. I think in the other regions, as Bill mentioned, it's more of a pivot.
Right? So we have spent a lot of time really qualifying second sources and being able to to make sure that we have multiple suppliers available. So it's a pivot from a a China supplier to a a more regional supplier or from from another region that that can support us. And for that, we actually know the timing and when we have to pull the trigger to do that as well.
Great. Just a quick follow-up. Ramesh, you talked about transitions and how you guys are improving them. It looks like you guys are making great progress there. Can you quantify how much and sorry if I missed this, but how much the transitions have improved over the past year?
And then looking forward, can you quantify how much you plan to improve those transitions? Thank you.
So, Phil, I think when you when you talk about transitions, right, different different shapes and sizes. Right? You could have a product transition in an existing factory, which is just a dip switch or a transition in a new start up in a new location like India. So it covers the entire gamut, right, in terms of complexity, if you will. But so I think over the last year, think I showed you the example of one of our new factory start ups.
We hit a speed bump from a construction perspective. Right? But once we ironed some of the technical issues, right, we drove it down pretty quickly, right, as you saw in the curve. So we are we are we are getting better. Right?
It depends on what the nature of the transition is. So in general, when you look forward to 2020, right, we've we've got a target internally to reduce the time required for a transition. Right? And that could be anywhere from fifteen to twenty percent to up to 45 or 50% depending on what the transition is, what the readiness of the product is. So that's the range that that we are targeting, across.
It's not one number. It's it's a range. Yeah? Thanks.
So I think in general for us too and for Adrian's team and others within Ramesh's group to take a look at this thing and say, take onethree out, take onetwo out. It's those types of orders of magnitude as a way for you to think about it. And with hundreds of thousands of dollars per line per week on the line, as was mentioned, it's worth it. Right? It's worth investing in additional jigs and fixtures and and doing more work offline to get the line prepped so that the transition time in that critical mold parking space is as productive as possible.
So we're investing more time and money in doing things offline to get ready for prime time in the mold slot. But but think about it as as the percentages Ramesh gave you, we're going to take a big chunk out of this. We need to. And we used to think about transitions were good because we would add to contract value, right, and we were driven a bit more by runway. You can imagine today, we're driven less by runway, and we're driven more by productivity, utilization, short term profit and meeting the needs, the volume demand needs of our customers, I mean, there's critical deliveries globally.
There's critical PTC timing in The U. S. This calendar year. But there's various things that drive our customers' delivery windows that are critical. And I'd just add one other point as you asked about the coronavirus and other things.
Guys, if you think about it in big, big picture, so we've said 18 gigawatts to you for a little while. And as Bill described, our current under contract is about 15. If we fill the remaining eight lines in Yangzhou and in India, we would be at about 18. So one of the benefits of being at 18 of capacity is we're gonna have more flexibility than we've ever had as a company. 35% CAGR for a number of years, now flattening down into the 20s.
But when you're growing up into the right the way we have been, there's very little recovery capacity in that investment in growth. And now we're kind of, I'm going to say, finishing the infrastructure work a little bit. It's not that we'll stop completely. But as a percent of our footprint, percent of headcount, percent of EBITDA, all those metrics, we're going to be stabilizing that and then harvesting, Right? And part of that harvest is gonna be having more global recovery capacity in our system than we've ever had.
So whatever hits us then, we're gonna have a chance to make things up. So as Bill described on the on the coronavirus by the way, this year, not we'll see how it plays out exactly, but with the tariffs, less of our China volume has been coming to The U. S, as you might imagine. We've still had heavy demand on the China footprint the last couple of years even with this. But there's some critical 100% PTC windows that we're all going to be chasing as well as you well know.
So hopefully, that's helpful added color. Ron?
So just on the transition, so based on that chart on the top right, seems based on the scale, you're gonna shorten the time by about 40% if I read that correctly. So I just want to maybe kind of be a 100% clear that the the ultimate goal for all the facility, all the all the cases. Then secondly, the the next slide, you have this dip in some other I guess, if I look at a scale, it seems that's during the dip, that's similar to the minimum volume that you can achieve on the EBITDA side. So should I think the way that because, I guess, the trend is people worry about the transition will be more frequent going forward. But should we be thinking that the minimum volume is kind of the floor?
So, like, based on the contract, you have to I mean, your customer will give you the minimum volume even with more frequent transition. Just may maybe more clarity on
that. Thanks. Maybe I'll just talk to the first part, and then Bill can address the second part. So that picture was illustrative. So, you know, it was basically the steps and how we squeeze it down.
And like we said before, our we have internal programs to drive these transitions as you can imagine. And the target is anywhere from 15 or 20% up to 50%. Right? So that's the range. And so that was more illustrative in nature.
Right? It should be around 30% or so. But I that was just a pictorial illustration. And then Bill can address the second portion.
Yeah. First of all, Ramesh is hedging a little bit. It's 50% as our internal goal. And and I'm very confident that Adrian and the team are gonna get I mean, we've made significant progress. And I would just go back.
We've had a lot of transitions. But if you look at our performance on transitions over the last year, the performance has been very good. I mean, we've continued to reduce the time. The big the biggest impact we had last year was from a start up standpoint. So I mean and and and we were starting up brand new facilities and and some and new geographies in many cases.
We were in the same country but a different location, didn't have the proximity of the workforce. So as you look at, you know I I talked about the fact that with Chennai getting done, we've got 18 gigawatts under under rooftop. A start up in one of those facilities now is gonna be much, much more seamless because we've got a trained workforce. We've got a trained management team. We've got policies, procedures.
We understand the workforce better. So so that'll speed it up. The the dip the the point there is is that when when you see the dip and and just so you know, that dip in that spread is pre all the work. Know, we didn't factor in that we're gonna reduce transition times by 50% when we showed you that graph. That's kind of been the history.
But the reason the dip kinda stops at the minimum volume, if we go through a transition for a customer in a year and the volume as a result of the transition would dip below the minimum value, then we do get margin makeup for that. So that's kind of where it is. But does that answer your question?
I do. Ron, the other benefit of that is when we talk about if we don't transition, then we end up potentially with our customer at the MBO scenario. That's through the life of the contract, not three months or six months, right? If we're not building the state of the art leading blade, then it probably drives down the potential for growth with that customer for longevity of the contract. It puts us in a challenging situation with our customers.
So look, we want to help drive LCOE down. We've always wanted that. We wanna help compete for when to compete favorably with solar in more places. In Iowa, it's not a fair fight. Wind wins.
You know, in West Texas, it's competition between both. So it depends on where we are in the world and and the fuel resource. But We want to keep doing that. At the same time, we need to harvest more. So it's kind of a question of just striking the right balance.
We don't need to keep growing at 30%. We can't. There's no need to. And at 20% global market share, 18 gigawatts, some flex capacity, we just feel like we're striking the right balance. We'll be a $2,000,000,000 revenue company, right, be able to really drive EBITDA and cash flow generation in the right way.
By the way, Brian is going to go through a little later a few more slides that will help see the start up costs. And we talk about start ups and transitions, but please, as you think about it, as Bill just said, separate the two start ups versus transitions because they're very different things in terms of us driving the growth of our business and the profitability and free cash. Go ahead. Go ahead. Sorry.
Yes. Thanks. Two questions on, I guess, a little bit of kind of from an HR perspective. We're in a world of sub 4% unemployment in in this country. Presumably, labor cost is one of the headwinds you have to live with.
How are you managing around upward wage pressure, etcetera? And then secondly, in that context, what led to the decision to close the bus body plant in in Iowa and shift those operations over to Rhode Island?
Why don't you take
the first part of it?
Yes. Thank you. You know, when you think about wage pressure, I think what we're trying to do with our workforce is educate them on a total reward with TPI. So, yes, there's unemployment challenges, and there's weight base wage pressures. But when you look at the total offering that TPI has for our employees, when you talk about adding benefits, safe work environment, culture, that's where I feel like we differentiate.
And we've really established ourselves as a destination where people wanna come. We target the median of the market for our wages, so we are wage competitive. But it's that extra and added that I think differentiates us in the marketplace. So in any market in which we operate, I feel pretty good about that attraction equation for us. And, yes, sometimes when you're ramping, you know, you're hiring, you know, hundreds of people at a time.
It can be hard on the process side, but I feel our operations are at a stable place and that we offer that package that puts us in a good position in the marketplace.
And then, Pavel, to the to the decision in Iowa. It was it was largely based around availability of qualified talent for what we were doing. We were unable to to get the number of people we needed, keep them, and and and get to a steady state, basically. And so, you know, we've been building composite products in Rhode Island since 1968. We have a a very highly skilled group of of craftsmen and workers in in Rhode Island.
We were able to and it's a much more stable workforce there. As you know, in Iowa, the unemployment rate is less than 3%. A lot of people are struggling. So the good news is, is we had an alternative, and that's Rhode Island. So we're moving it back there.
That helps both our customer from a delivery and quality standpoint as well as us with a more robust production facility. But the good news is and again, you you think about the bus and the blade, they're they seem very similar, but they're actually quite different in in the actual process to build it. There's more of an art, I would say, to the bus than to the than to the blade itself. And our guys in Rhode Island have that, and it was just taking too long to develop that in in Iowa. But the good news is is that virtually that entire workforce has moved into our blade production facility.
We were we were struggling to get fully staffed on the blade facility as well. So the good news is we're able to move those people who understand composites just in a different way into the blade plant. So it was unfortunate that we had to move it, but from a long term profitability standpoint for us and cost for our customer is the right move for us.
And again, as global manufacturing company, Pavel, as you know, going forward, you're going to see us adapt supply chains globally. Right? We now have 6,000,000 square feet and 13,000 people around the world. So we'll we'll make moves that make sense over time. But as Bill rightly points out, we were short 80 to a 100 people in the blade plant for months, months and months and months.
So just too much overtime, too much stress on the workforce, we resolved that exactly as Bill described. So again, as a global manufacturing company, these are things that we're now able to do, and we will make tough choices from time to time in that way. Anthony, and then we've got a mic up here too next, please. Oh, you got one. Sorry.
Go ahead. So so contractually, you know, when you're when you're pricing these contracts, you know, in in the past, you've had transitions coming, I guess, more quickly than you had expected. As you're doing new contracts, are you now trying to build in a an expectation for an earlier transition so that you're pricing more correctly and getting a better return?
Yeah. It's a combination. Actually, what we're trying to do is we're trying to limit the time period or the number of transitions a customer may do. So there's a you know, if we do a transition, you can't transition that blade for x period of time. That's part of it.
Part of it is having a little bit more clarity around what the transition costs are and who's actually responsible for them. So I talked about that a little bit earlier about balancing the economics of a transition. So it's a combination of limiting the time frame to make sense as well as contractually defining a little bit clearer for some of our customers what those costs are and what they're gonna be responsible for going forward. And and and, Steve, you can embellish this. But if you think about the conversations we're having with the senior leaders at our customers, they're struggling with the same thing, this this pace of new product introduction.
They would like for it to slow down too. They're kinda stuck. You know, it's a competitive competitive business. It's market share gain. So they're struggling with it, but they would like to slow it down.
So as we bring these new concepts to them, they're embracing them, which is which is making us collaborate more deeply with our customers and how we and how we approach a new start up or a transition and how do we both work together to minimize the impact on both of our operations.
If you think about you know, we've got a lot of things right in our judgments and in the company. We've got a couple of things wrong. And one one thing we missed, I missed, was the impact of transitions or the predictability of some of this about one year, one years point ago. And as Bill said, we don't make this stuff up on our own. We interact with our customers' senior teams all the time.
However, what I think we missed a bit is the consolidation pressure and just how that came so quickly on our customers deciding that they're going to work pretty hard for share and to try to put a couple of the smaller players out of business. So their acceleration, right, 70 new product introductions versus 35 in a year kind of numbers, that was just this massive move to drive down cost, to consolidate, to drive share, and and we ended up getting hit a bit more by that than we predicted at the time. So I think now we're saying rather than trying for us to predict something that's out of our control that way, we're getting faster. Right? It's about speed, as you've heard several times.
We're charging more for transitions. We're not as apt to give up some of that premium pricing in exchange for extending a contract. We've got runway. So those it is a matter of negotiation, and we get we get to participate in that negotiation. So to me, it's a combination.
I hope that's clear. It's kind of a combination of those things that'll help us win even in a heavy transition environment for as long as that continues.
Tony? Yes. Two questions, please. The first is related to what you were just discussing. How with the speed of new product introductions by your customers, should we think of the number of transitions going forward being similar to what they are in 2020 expected to be as a percentage of lines?
How should we think about it?
I mean, the what we've kind of transitioned to over the last few quarters is we we think about it as utilization of our facilities. Right? So whether it's 10 lines or 15 lines, we're gonna talk about that now in utilization. But to directly answer the question, you know, our our we're planning, and that's why we're so focused on speed, we're planning to have a similar number of transitions on an annual basis for the foreseeable future. Now we all hope that slows at some point in time.
I think if you if you asked us, we do think it will slow. We just don't know exactly when. But we're gonna plan on on that's why we're plan we're gonna plan that it will not slow for the foreseeable future. That's why speed is so important.
And if you see just what our big public customers have been saying even in the last couple of days in their quarterly and annual wrap up calls, what are their points of emphasis? Price stability, price discipline, margin expansion, balance sheet strength, return of capital. So there is a even though these forces of consolidation and market share are there, there's also a bit of a pushback even just amongst themselves of saying, how are we gonna how long is this necessary? And what we felt is when we got to a certain LCOE, cheaper than marginal coal. I mean, come on.
Right? It wasn't only a few years ago. I'm not sure we would have thought that would have happened as quickly as it as it has. But competition with solar is continuing, and competition between the turbine players is continuing on the wind side. So that that I think that's the force that we're paying closer attention to, and we care about, Tony, in that way.
And and then, again, making sure that we're in control of our own destiny no matter how many transitions our customers ask for.
And just thank you for that. Just quickly on the cost side, with all the improvements that you've made over the last three years that you showed, congratulations. It's great. Where where do you think your own cost of production now compares to your customers? They do it internally versus outsourcing it to you.
What's your cost relative to theirs?
I'll take the first shot. Or do you wanna do it?
I mean, I I don't think we'll He used to be one of our customers. So we we can pin him down.
Right. No. And and without getting into specifics and and names. Right? For us, I think, you know, when we when you look at our products and, you know, our customers are also our competitors, maybe if we talk to cycle time because that's a better better proxy.
Right? We're probably, I'd say, 35% better, right, than our customers when it comes to throughput and productivity. Obviously, it's a mix. It depends on the product. So I think we feel that when it when it comes to to blade manufacturing right, we are certainly faster and far more competitive than our customers at this point, their their their blade making facilities.
You wanna add anything to that? I think just one other quick thing to add is there's a make versus buy decision that's made quite often by our customers these days. But it's not only kind of our cost within a factory, but it's that cost, total landed cost to the markets versus where their footprint is, or do they add footprint? That's the decision they actually make. And are they willing to share a 15 plus or minus gross margin at the factory level with us and use more of our capital?
Or are they going to do one of those on their own? And so the general trend is still to more outsourcing and largely because a lot of the markets where the growth is are new emerging markets. It's not Denmark and Spain, right, a lot of the historical blade plants were. So that helps us as well to compete on the new make versus buy decisions. So there are a few exceptions to that, Tony, but generally, that trend is generally still continuing.
And again, for us to get to 18 gigawatts and 20%, we don't want to overshoot pieces of this too much either, right? We want to make smart investments. It's time to start harvesting, as we've said, and we just want to be smart in terms of how to make those make those calls. So we don't say yes to every opportunity we're given either in that discipline. That makes sense?
Guys, we're we're right on schedule. Let's do a fifteen minute coffee break, and we'll come back at 11:00. And then again, we'll have another opportunity for Q and A as well as informally during the coffee break. Thank you. Back at 11:00, please.
Now walked right in and brought my crippiest name. One magic moment my heart seemed to know. That love said hello, Though not a word was spoken, one look, and I forgot the glue of the bear. One look, and I had found my future at last.
Is my mic up? Yep. Okay. We're gonna go ahead and restart. Thanks, everyone, for making it back promptly.
So we're going to pass to Lance Merame. Lance joined us a few months back after many years, decades in the wind turbine industry and is leading our service business development side. Lance?
Thank you, Steve. Okay. Let's talk about global service. If we take a look at the global blade specific service market, we could see the growth from the 2018 at about $1,600,000,000 growing to, on a 7% CAGR, to about 3,200,000,000.0 by the end of twenty twenty eight. And just so we know, this is not with offshore.
So it's a pretty strong market in itself. And as I'm sure you're familiar, the service side of the business in wind is multiples in profitability as compared to the production side of the business. So if you look at the demand, well, the demand is gonna continue because blade issues in the field is one of the major sources of downtime for our customers' customers. Basically, downtime is loss of production, loss of revenue. So our goal is to be a leader in this market, notwithstanding that today, it's a very small part of our overall business.
The good thing is that we have a lot of unique competitive advantages. Obviously, one, we have a global footprint, so we can take advantage of that. We're blade experts. We've been manufacturing blades for so many years, and we're also servicing blades for several years already. And we can take advantage of our existing customer relationships.
So we have a lot of the largest OEM OEMs, global OEMs in the world that will continue to support in the field, And we can subcontract to them as they have their service agreements with their customers and provide blade expertise. At the same time, there are the largest global IPPs in the world that many of them want to take their service in house and manage and manage that as they go out of warranty with the OEMs. So
as they go out
of warranty, they're looking for expertise from people like ourselves, TPI, so we can help them as well. So lastly, I wanna talk about the optimization. So another competitive advantage that we have is this market tends to be quite dependent on the weather. So on downtimes and when the weather is extreme, blade service is very difficult to perform. But we have our blade production facilities, we have our transportation facilities, where we can support during those down periods.
So we can share resources and optimize internally. And at the same time, we can also provide support for customers like Proterra and other parts of the industry in transportation. Okay. So from diverse as we grow, we're gonna diversify in regions as well as with customers. And the more we have a global footprint in the field, we can better support our existing customers.
And we'll continue to look for added value beyond the typical firefighting of this industry. When a blade has damage, you get a call, you go out, and you service it. But things that we'll add and provide more support is the mitigation of those blade failures. How can we help our customers and customers' customers mitigate that downtime? And look for longer term agreements as well.
So who are we? We're certified blade experts, as I said. We train our own teams in factory, and that's quite unique already. Beyond the certified blade expertise, of course, we have to have our certifications in health and safety. Obviously, that's number one.
So we have our OSHA training. We have our work at heights, our confined spaces, all these specific trainings that we have, and also our own blade expertise certifications internally, and we can set ourselves apart in the market. Secondly, we have our own internal engineering and preventative maintenance that we can do before actual repairs are taken or are happening. We can analyze and see what would be the best type of repair, if needed, we could do. We have the ability to look at long term predictive maintenance solutions.
Leading on to that, it's what we do about the inspection side and the analysis. So I've heard from one customer that, you know, doing ultrasound inspections is not done in the field, but we do it already. So providing this, like, advanced inspection abilities is is key to grow in this market. We'll we'll do thermography. We'll do, you know, drone work, all these things to help us mitigate this downtime.
More work on inspections annually, out of warranty inspections. You wouldn't be amazed of the just the damages that you have in shipping or construction when you install these larger and larger turbines. There's a lot of blade demand to support. And then we get to the repair and improvements. So not only will we actually go out in the field and repair, there's leading edge repairs, there's trailing edge repairs, composites, and structural, more advanced internal repair work to be done.
Then there's could be something as simple as paint, coatings, three m tape. But even more interesting, as we grow in this business, is to look at adding blade enhancements. A lot of the asset owners are looking to increase production over time. They wanna maximize what they can get on their wind farm, their production. So going beyond even twenty years, going to twenty five or so, and how can they squeeze out that extra 1%?
So we can help them provide these enhancements on these blades. And lastly, but definitely not last, is recycling. We've heard a lot lately in the market, and I'm gonna say that, you know, in some countries already, in Europe, for example, in Germany and Holland, it's already illegal to landfill blades. So there's a market starting for the recycling of blades in the field. And we see that that's gonna continue.
But at the same time, you have the ESG movements, and even just in The US, we hear about asset owners looking for solutions. They do not want a landfill blade. What can we do? So that demand will continue, and we've launched an initiative to be a part of this to help our customers and customers' customers recycle blades in the field, but at the same time also looking at more recyclable materials when we make new blades. So please stay tuned on the recycling stand front.
We'll we'll be continuing to work on that with our partnering with organizations to to provide full solutions. So thank you very much. And with that, we'll launch with mister Kherkhove on diversified markets. Thank you.
Thanks, Lance. And, everyone, welcome this morning. Thanks for joining us. So we're the we're the nonwind guys. So there'll be three of us speaking over the next fifteen I saw some heads poke up there, so that's good.
We don't wake up every day wondering about wind. We wake up every day wondering about and focusing on trucks and buses and automobiles and the transportation space. And so we're gonna spend some time, sharing with you some details about our initiatives in that area.
Over the last few years, we
have been laser focused on clean transportation programs to utilize the material attributes of composite solutions. Composite materials, they drive lighter weight. We all know that. Lighter weight drives longer range in electric vehicles. But mass is not the only material attribute that composites bring.
Composites are noncorrosive. Composites allow for for part consolidation of complex geometries that you might see in metallic options. And composites offer a lower upfront tooling investment by more than a factor of 10 versus the metallic options. So upfront tooling, more than a factor of 10 times less than what you would see in composite in, metallics. The following slides will detail more about our path to a $500,000,000 annualized revenue stream from diversified markets.
Presenting with me today will be TJ Castle who heads up our operations for diversified markets, and then Lyndon Lee who heads up our, innovation and technology for diverse diversified markets. The pictures that you see here, they highlight our production and development programs in the bus, truck, and automobile applications. In the middle on the left hand side, that's our Proterra and our Workhorse unibody composite solution. We talked earlier today about about the about both initiatives. Both of these products demonstrate a strength and a mass savings over their metallic counterparts.
On the right hand side, it highlights our Department of Energy door program, we which collaborated with General Motors. This also demonstrates a strength and weight, but it also introduces a safety factor that composite springs as well as the ability to manufacture at high volumes. So, as Steve mentioned, we're not talking about hundreds or thousands of units, but we're talking about hundreds of thousands or millions of units as we get into transportation automotive. The growth of electric buses is projected to reach greater than 1,200 annual units per year in The US by 2025. The transition to electric will be faster in this vehicle segment than in any other.
It has compelling value. It has a total cost of ownership that is on par with diesel. It has a simplified transition because we're talking about centralized bus depots where the unit will come back throughout the day or in the evening to be recharged. And the upfront cost of an electric bus is expected to be less than that the upfront cost less than that of diesel by 2030. These these these factors will allow achievement of a 40% penetration in The US market for electric buses by 2030 and an 80% adoption by 2040.
With those factors, the future diesel buses will be running on fumes. We talked a bit about Proterra earlier in our presentation. Proterra is winning. We've been a participant with them from a production partnership standpoint since 02/2017. We've been expanding our volume on an annual basis with them, and we've also shown flexibility in the bus body variant transitions as Proterra changes their body styles out.
They've been manufacturing, composite EV buses since 02/2004. Today, they have over 900 buses on the roads in The US, and they've been able to demonstrate the upfront and total cost of ownership to be very competitive with that of diesel. This, in addition to the immeasurable environmental benefits for cities as these buses are driving around their streets. We continue to invest with Proterra. Our partnership with them is key to our diversification strategy.
This is a confirmed example of a composite body saving 40% mass over 4,000 pounds per bus compared to that in its in its metallic configuration. In first quarter of last year, we announced a partnership with Workhorse to actively demonstrate a structural composite solution for lower weight, higher performance, and lower total cost of ownership versus traditional delivery vehicles. This market is important and is a near term focus for TPI. We will realize production volume revenues in 2020. Market share for freight and small delivery trucks, it will double between 2020 and 2040.
It will outpace the heavier commercial truck trends. Obviously, ecommerce is driving this, urbanization. You know, there's a lot of regulations that are now starting to be introduced about limiting heavy truck heavy duty trucks into into downtown streets. Although light vehicle will be outpacing heavy duty trucks, you know, alternative fuel options in heavy duty over the road trucks will continue to buck some trends. In 2018, TPI and Avastar announced a collaboration for the Super Truck two, initiative.
We expect to see to take benefits from that program and translate those over into similar composite cab applications for other heavy duty truck programs in the future. You can't go a month without reading about a significant freight player announcing an EV investment. We are proud to leverage our bus and truck cab experience into this marketplace and to have developed a fully composite unitized delivery truck body. It is a new design. It is purpose built.
It has significant mass savings versus metallic. It takes advantage of other characteristics such as a lower step in height for drivers as there's no traditional metallic frame rail underneath. It allows the floor to be lower. We've demonstrated lower weight, and that equals longer range. Lower weight equals more payload.
Lower weight equals fewer batteries, and lower weight is driving a better bottom line for our customer's customer. TPI and Workhorse continue to confirm the cost and performance of this vehicle through vehicle validation, which has taken place at Workhorse and with their customer. Pilot production is underway at TPI, and we look forward to further responsible investments as validation and customer financing is demonstrated. Again, we've said it a couple times. When we talk about bus and truck, we're talking about hundreds or thousands of units a year.
When we talk about automotive, it demands a different type of thinking. Right? Thinking in terms of millions of units a year. So it's it's clear that, you know, the global automakers, they've committed to electrification. $140,000,000,000 of announced investments, 200 new EV models that'll be introduced between now and 2025, and greater than 55% of all new sales will be that of electric vehicles by 2040.
So we're focused. We're engaged. Several development programs in this area. Some of them have been announced. Some of them have not been announced.
Our goal is to advance composite solutions so we can be a player in the automotive EV component manufacturing space. So here in a second, I'll introduce TJ and Linden. They're gonna come up, and they're gonna spend the next couple of slides which highlight our manufacturing process and some technology developments that will allow us to, to be a significant player in the automotive e v EV space.
Thank you, Joe. Good morning, everybody. So Joe talked a little bit about kind of the what and the why. Lyndon and I are gonna go over a little bit of the how. So our facility in Rhode Island has historically been a facility that that demonstrates structural composites and its capability and design within the the wind and transportation space.
It will remain as such as well as a continued center of excellence for tooling, design, and production. However, right now, under underway is a significant facility investment, that will drive our Rhode Island facility to become a centerpiece for the development of new structural technologies in composite manufacturing as well as process development for high volume manufacturing capabilities that Joe spoke of. It'll will continue to allow for large scale research and development, low volume production, and the testing and development of of process technology to support our our volume and production processes globally, as well as high volume production process development with our new pilot liquid compression line. So the the 12,000,000 investment, that is being made in our automated LCM is scheduled to be fully commissioned by the end of, q two of this year. It is currently, on a boat headed towards Rhode Island and was built and will be installed and commissioned by one of the leading press and automation suppliers in the globe.
It represents the next chapter in TBI's design and production capabilities. So Bill mentioned earlier, the the the complexities and differences of the the the bus manufacturing process versus the wind blade manufacturing process. And to articulate that a little bit, a a wind blade by design is smooth. The surfaces are are designed to reduce wind resistance. On a bus, it's a box.
Right? So the the corners and the edges are basically 90 degree curves that you're trying to manufacture and you're trying to build into a much more complex design, from from the standpoint of composite build. So it's kind of a scenario of what got us here won't get us there. And when you think about the the high level assembly of the bus, taking a step back from that, it really is essentially two halves that come together, to form an upper and lower array body structure. So in high volume production and operations, that will not support when, as Joe highlighted, we're talking about units in the millions of production, you can't demonstrate that historical production process of two halves being bonded together.
You have to think differently and move towards a more highly automated, low touch labor process, which is what this pilot line is is bringing TPI towards in our production process. So, essentially, in looking at this way of thinking in terms of millions, we're moving more towards up the volume curve and down the cost curve. And the results is, as we will we will demonstrate, will move our cycle times from measures in the tens of hours into under ten minutes. So with that, I'll turn it over to Linden to talk through, one of our examples.
Thanks, DJ. As you look at our our two words that we're phrasing, decarbonize and electrify, I kinda look at it from an automotive wind the wheels, and I'm the wheels guy. I've come from automotive, and I'm gonna talk about this automotive application. So just real quickly, how many people have an EV car in the room here? Quite a few.
And I I have one as well. If I would've asked that question five years ago, how many people would've raised their hand? None. So that you can see the curve is changing, and we're growing up going up that curve very quickly. So one of the applications I'm talking about here is an example of how we're expanding on this investment on in the automotive or in the transportation area.
DPI has been working with several of the automotive OEMs to develop an EV high voltage battery assembly or a battery enclosure that solves the challenges that they're facing today. Currently, the OEMs are working are are using metallic enclosures for these batteries that consist of a metallic frame, a metallic upper and lower plate. There's a number of problems with these. You have to have additional components for thermal conditioning, for charging. They have to be able to withstand internal and external fire protection.
It have to be environmentally sealed, produce or and provide EMI shielding and electrical isolation. The total mass and assembly of these cells is just not efficient. So we've developed a design that utilizes the LCM tooling that TJ talked about that molds a composite battery tray that houses the cells. It also has integral battery heating and cooling circuits for charging. The composite top cover, as you see there, provides an environmental ceiling, also matches to the bottom of the vehicle much better than a metallic cover does.
And the composite material we've selected for the manufacturing process provides the electrical isolation, the fire and thermal properties, and the EMI protection, all in the composite body itself. The only metallics we have in our design is an aluminum frame around the outside to help with crash protection. With this design, we're able to help significantly reduce the mass as well as the assembly complexity of this. That provides a benefit to the end customer with additional range as well as to the OEM with reduced cost of assembly. You can see on the bottom all the tests that we ran.
As I mentioned, the different criteria we need to pass, we meet every single one of those with our design. So this is just one example of several new technologies that we're developing in the transportation area. More to come in the next several months as we speed up our process and speed up composite vehicle manufacturing. So with that, I'll turn it over to Brian to go through the financials.
Thanks, London. It's great to have everyone here with us today. It's great to see the tremendous effort being made and being forecasted in the future of what's going on with TPI. We hope you have a better understanding of the value we are creating for our shareholders. Through my presentation today, we will go through 2019 guidance, reflect on how far I p that we have come since the IPO, further discuss the cost out initiatives that have been discussed today and into the future, and go through 2020 guidance.
First, I'd like to give you an update on 2020 guidance or 2019, sorry. We are slightly reducing our guidance for 2019 for revenue of $1,420,000,000 to $1,440,000,000 Loss per share, we are decreasing to $0.43 to $0.47 This is due to the noncash impairment totaling 5,000,000 associated with the two the Iowa two restructuring and the increase of tax expense associated with the return to provision and jurisdictional mix. Nonblade sales has increased to a range of 110,000,000 to $115,000,000 and capital expenditures decreased to a range of 75,000,000 to 80,000,000 The decrease was due to the timing of payment of CapEx that was financed. After the items presented remain unchanged and all other items will be discussed in the future in Q4 earnings release in Q4 on February 27. Since going public in 2016, we have invested $2.00 4,000,000 and 169,000,000 204,000,000 was in CapEx and 169,000,000 was in start up expenses.
This translates into an annual increase of revenue of 80% with represents a CAGR of 23% over this time frame. This growth has been funded primarily by cash flows from operations along with a net debt increase of $66,000,000 We exited 2019 with a net leverage ratio of one point two million dollars one point two. Throughout 2019, we have focused on our cash conversion cycle. And at the end of 2019, we drove it to negative utilizing supply chain financing with our customers. This focus will continue into 2020.
We exited 2019 with approximately $70,000,000 of cash on hand on the balance sheet. The $189,000,000 of cash flow from operations generated since 2016 is net of $169,000,000 of start up costs and 33,000,000 of transition costs. This is just to highlight the support the cash generation ability of TPI. The wind industry has significantly evolved over the last four years, and we have been on the cutting edge since our IPO. Our operations team has done a solid job of executing above the market average.
Over the past four years, we have experienced a 24% CAGR on gigawatts sold while the market was at 8% CAGR. While we have grown market share, we have also increased the output to our plants to over 80 sets per line. We continue to see and drive the push for LCOE, and our blades are a key component of that drive. With our continuous improvements, we have been able to increase the number of sets we can produce per line even though we are building longer, heavier, and more complex blades. Increased throughput coupled with the longer blades and therefore more megawatts per set is driving our gigawatts sold growth to three times the industry CAGR for gigawatts since 2016.
Given we don't see the blade evolution slowing down for the foreseeable future, we expect megawatts per set and therefore megawatts per line and overall gigawatts delivered to continue to increase. Since 2016, we have primarily focused on growing our low cost global footprint to enable the outsourcing trend, build scale, and open up the emerging markets to our customers. At this time, we went public. We had six plants. Now we have 12 plants in China, India, Mexico, Turkey, and US.
With the completion of Yongzhou, China plant in 2019 and Chennai, India this year, we will have a footprint of 18 gigawatts of production. As we discussed over the past several quarters, operating at 80% utilization, which takes into account the recent pace of transitions as well as start ups, we will result in approximately 15 gigawatts of blade delivered or a global market share of approximately 20%. We feel this is the right scale for TPI for the foreseeable future, and now it's time to focus on the profitability and free cash flow by leveraging our global scale. We believe we can drive meaningful bottom line improvements through cost out initiatives that we are executing on a coordinated plant by plant basis and as well as corporate G and A costs. For cost sales, we are focusing on the BOM, which represents an average of 65% of total sales.
By leveraging our purchasing volume, gaining control of more of our customers' supply chains, entering into long term contracts and regional localization of key raw material, and we will not only drive the overall cost of our commodities down, but we will have more stable and secure supply of our critical raw materials. As Ramesh and Adrian explained, while discussing start ups and transitions, the more involvement and collaboration with our customers we have on the front end of the transitions and start ups, the quicker we can get optimal cycle time and therefore maximize the volume and drive to normalize gross margin much quicker. For G and A, we are focusing on scale. On the scale and making the fixed market manufacturing overhead more variable. We are looking at utilizing global shared service centers, contract associates, and a flexible work, etcetera.
We need size our global utilization we need to size our global utilization at 80% globally and not just at a plant level. The chart on the left reflects the adjusted EBITDA as reported and the start up costs we incurred during the corresponding year. We included the start up costs in this analysis because we see this as an investment in the future growth and earnings. Over the past three years, you can see the increase in adjusted EBITDA as the start up cost decrease as we build out our global footprint. As you can see, a 1% cost reduction, which is greater than $10,000,000, can have a meaningful impact on adjusted EBITDA.
Now for 2020 guidance. Excluding the potential impact of the coronavirus, we see net sales of 1,550,000,000.00 to 1,650,000,000.00, adjusted EBITDA of 100,000,000 to 125,000,000,000, sorry, million, I wish. Our earnings profile for 2020 adjusted EBITDA that will be low as the the adjusted EBITDA profile for 2020 will be lower in q one and gradually increase over the course of the year. Utilization of 80% to 85%, wind blade set capacity at 4,300 and 80, average selling price per blade of 140,000 to 145,000, net blade sets sales of 75 to 100,000,000. This decrease is primarily due to the tooling revenue that is included in this line item.
Tooling revenue can fluctuate year over year based on the molds that we are demand. And capital expenditures of 80,000,000 to $90,000,000 Start up costs will be 17,000,000 to $20,000,000 This is a walk going from 2019 midpoint to 2020 midpoint of adjusted EBITDA. 2019 adjusted EBITDA is comprised of $131,000,000 of wind related earnings, 26,000,000 of general and administrative expenses, and an investment in diversified markets of 22,000,000. As we walk across the bridge, the first two bars reflect the increase in adjusted EBITDA associated with the wind business on a billings basis. The first step is the performance improvements at our plants.
The second step relates to the LDs that we incurred in 2019 associated with the startup of the China plant in Mexico. I'm briefly skipping over the diversified markets to touch base on the ASC six zero six. ASC six zero six impacts us in a multiple of ways due to the nature and long term contracts. The impact is primarily on the wind business. Under ASC six zero six, we must estimate the total revenue and cost associated with each blade type manufactured in a plant over the term of the contract.
Six zero six attempts to provide a levelized margin over that life of the contract. Therefore, as we have changes in BOM pricing, volume, blade pricing, blade type, transitions, for example, contract extensions, transition payments collected from our customers, and as we had in 2019, liquidated damages tied to the startups in Mexico and China, there will be a cumulative catch up based on the percentage of completion in that contract. The cause can have significant volatility on earnings. The impact of the LDs incurred in 2019 on adjusted EBITDA was relatively minor under 06/2006 since we were early in both the stage of that and the contract. So therefore, the percentage of completion adjustment was significant and got pushed out to the later years.
As a result, you will see a negative impact from ASC six zero six in 2020 compared to 2019. What also happens is that in early stage of a contract, additional margin is pulled into the start up and initial production year in order to levelize margin over the life of that contract. This has an impact of improving margins in the early years and pushes out and impacts that negatively in the outer years. The third step is a decrease in losses associated with our investment in a diversified market. As announced last month, we made the decision to exit the Iowa bus facility and consolidate our manufacturing into the Rhode Island transportation facility.
This decision was a tough one, but we were unable to reach adequate production volumes and therefore profitability levels. This was mostly due to the inability to attract and maintain the requisite employee base out of Iowa. Transitioning the production into the Rhode Island facility will enable us to reduce our expected investments associated with our bus manufacturing operations going forward. The final step is an increase in general and administrative expenses. The increase is driven by a couple of factors.
First, as Deeny noted, we have hired some key senior leadership and depth to our organization to support the global organization. Secondly, in 2020, we expect to pay out the target amounts of incentive compensation since we fully expect to execute our start ups, transitions, and cost out initiatives for 2020 and meet or exceed our targets. In 2019, we significantly reduced the incentive compensation, both cash and equity, of our corporate team based on the overall performance. In total for 2020, you will see the impact or the adjusted EBITDA midpoint of 112.5. This is consistent consists of a 155,500,000.0 associated with the wind business.
Corporate G and A will run at approximately 35,000,000, and you can see the additional investment in the diversified markets of 8,000,000. These components get the midpoint of guidance to approximately the 112 that I referred to. As Bill referenced earlier, we have 6,000,000 square feet under wind blade manufacturing space. At full capacity, this equates to approximately 18 gigawatts. Running at 80% utilization, this is how we get to 15 gigawatts.
Given the estimated ASP per blade and sets produced by year per line, this equates to 2,000,000,000 in revenue. To build out the remaining four lines in Yangzhou, China and the four lines in India that are not under contract, we estimate the CapEx to be approximately 48,000,000. This amount is not in our current 2020 CapEx forecast. We will update our guidance when these additional lines are under contract. To maintain and selectively modify or improve the 6,000,000 square feet of wind blade manufacturing space, we estimate annual CapEx to be 30,000,000 to $60,000,000 annually.
Although we believe we can achieve $2,000,000,000 of revenue with our current footprint, our footprint will likely evolve a bit as we make shifts towards lower cost regions, which may mean additional CapEx in the future. Once we are at our 18 gigawatts of capacity, we believe our growth rate in wind will moderate to be more in line with the overall growth rate of the onshore and offshore markets. We forecast our cash tax to be 20% to 25. We see company wide ROIC of 25% to 30%, 12% adjusted EBITDA and free cash flow of 7% to 9%. On the right side of the slide, it reflects the future revenue under contract.
It reflects minimum, maximum and the current rev forecasted revenue by year. The minimum sums to a total of 2,800,000,000.0 and the maximum contract amount to $25,200,000,000.0. The light blue line reflects the estimated revenue by year. Currently, our estimated revenue under existing contracts is 4,300,000,000.0, which represents a book to bill of almost three times. It is important to note that the 4,300,000,000.0 does not consider the existence of any of our the extension of any of our existing contracts.
And historically, we have extended all of our contracts with with the exception of GE, which we lost two of them due to the acquisition of LM. So with the 15 gigawatts under contract today and the extension of the majority of our contracts, this balance will be filled with our pipeline of opportunities that we are continuing to actively work. This slide highlights the free cash flow from 2016 through our forecasted 2020 cash flow from operations. From 2016 through 2019, we had cash flow from operations of $189,000,000 and CapEx of $2.00 $4,000,000 For 2020, we forecast cash flow from operations of $100,000,000 and CapEx of $85,000,000 After hitting a low of negative free cash flow in 2018, we believe that we are on a track to get back to being free cash flow positive in 2020. Currently, we forecast that we will have free cash flow of 10,000,000 to 20,000,000 In addition, we have the opportunity to improve those through additional supply chain financing with both our India and Turkey customers.
This slide pro provides an overview of why we feel 80% utilization is a better way to model us. This was touched on by Bill and Steve earlier. Over the past four years, we have averaged 80% utilization. Sometimes it has been higher and sometimes lower, but overall, the average has been 80%. And this will become less volatile as we build out our global footprint.
With 60 lines in service, we are able to have 20 lines in transition, six lines in start up, and 34 lines operating at 92% utilization. With our continued focus of speeding up transitions and start ups, this utilization rate should only improve. Thank you for spending time with us today. I will now turn it over to Bill and Christian, who will walk you through the ESG initiatives. We look forward to answering your questions during q and a.
Thanks, Brian. I'm gonna touch a little bit on ESG and then let Christian take you through some details. But we started our ESG journey in 2018 when we engaged Deloitte Consulting to assist us in the development of our strategy as well as to then guide us through our the materiality assessment phase. Christian's gonna take you through a little bit more of the details as far as exactly what we've done and how we did it. But the big picture is is the process has added clarity to me and I think to our team on how more focus improving measurements around certain aspects of our operations, as well as our human capital, environmental, and government practices can make a meaningful difference on our associates, our financial performance, and the communities in which we work.
Some of the key benefits we see from this practice, which has now become a mindset within TPI, include the following. So a focus on risk mitigation for material risks that was part of the materiality assessment that we believe could impact our business and the communities in which we work is clearly a good starting point. Focusing on our associates. Their engagement, health, and well-being, and overall satisfaction improves retention, and improved retention, therefore, helps us to improve our safety as well as quality, and ultimately that drives operational improvement and performance. Reducing waste to reduce environmental risk and in turn oops.
Sorry about that. There we go. So reducing waste to reduce environmental risk and in turn our operational execution. Through these and many others, this translates into an improvement in financial performance and, in turn, a lower cost of capital, improved profitability, and improved shareholder returns. And finally, better alignment with management, the board, all of our stakeholders through enhanced governments or governance policies and increased transparency drives value creation.
So taking care of our associates, treating them with respect and with dignity, being transparent with our stakeholders, and being stewards of the environment is not only the right thing to do, but we also believe incorporating ESG principles into our strategy, operations, and culture will enable us to drive business performance, long term sustainability, and shareholder value. So with that, I'll let Christian take you through the detail.
Alright. So in the last couple of years, TPI has prepared the company for ESG reporting by performing materiality assessments, as Bill said, collecting data for our first sustainability report, which we plan to publish q one, q two this year, and we'll also perform a materiality refresh in 2020. Over time, we also plan to adopt additional ESG reporting frameworks such as CDP, formerly known as the carbon disclosure project or TCFD, task force for climate related financial disclosures, as well as set sustainability goals. So as Bill mentioned, we hired, Deloitte's ESG team to run through a very robust materiality assessment process. So we completed interviews, surveys with our key internal and external stakeholders, which included customers, investors, associates, coupled this information with third party ESG analysts, industry associations, as well as regulators.
The information from this engagement was then assessed based on the importance to our stakeholders and the impact of our business to arrive at the relevant ESG material topics, which can be find found here in this matrix. So for example, our reports that will be coming out will be focusing on those items that are underlined, such as governance and ethics, economic performance, and occupational health and safety. Our sustainability report will be aligned to the GRI and SASB reporting standards, and the reporting metrics that TPI will include are as follows, safety, energy, waste, emissions, materials, associates, environmental compliance, local communities, indirect economic impact, and c o two avoidance. So on c o two avoidance as an example, in 2019, the blades that TPI manufactured will help contribute to the reduction of over 300,000,000 metric tons of c o two over the turbine lifetime. And to put that into perspective, that's the equivalent to the c o two emissions from 35,000,000 homes electricity use for one year.
And with that, I'll turn it over to Steve for closing remarks.
So just a few comments to summarize what you've heard today and some of the most important imperatives around TPI and our value creation mission. So the bottom line here is from our perspective, there's just a tremendous background of opportunity on which TPI is building our value. And we're going to continue to focus on the mission, the big picture mission. We're going to continue to diversify our sources of revenue, be it globally in the wind business as well as in the diversified market space and transportation. We're focused on harvesting both from a profit and free cash flow standpoint and rounding out the capacity that we've been planning on and building for some time.
We're really pleased that the growth in wind is more about economics and, again, about what customers wanna buy, corporate buyers, homeowners, and the like, and more and more what many of you and our key investors wanna be investing in. And in DC, it's okay to talk about climate change again. Right? We can we can work these issues. We can work them in an open way and build value around this in the right way.
Wind costs are going to continue to come down. Blades will continue to get larger. Towers will get taller. We're adapting our model to take advantage of that, turn speed into a competitive weapon, and not be hurt by some of these changes And the real competition, the competitive landscape is with solar and and not so much other technologies.
We're pleased ourselves that it's wind and solar that are gonna be a really important percentage of the overall makeup. And you're starting to see within our customers talking more and more about pricing discipline on their behalf, the forces of consolidation but yet balance sheet strength as they go through it, margin expansion on their side. So you can see some some of the messages starting to form in a way that will guide a better longer term discipline in the space. We're building out our global infrastructure. We're we're getting close to where we'd like to be from an overview there.
And you heard a couple of times today, 15 on 18, the need to round out a little bit of capacity over time and make sure that every operation is world class to the growth aspects of the market. What's key for us is that total delivered cost, not just Xworks, the blades outside the door, but plus logistics, if there are tariffs, whatever, making sure the total landed cost of the wind farm site is truly optimized, and we're matching where the global growth is. So it's our global footprint leveraging that to be even more competitive with our customers and helping them grow market share around the world. We'll continue from a technology standpoint. We have leading edge technology today.
We're going to continue to invest in that both in wind and transportation. The partnerships with our customers run deep. We're continuing to invest heavily in them. We're adding more value like our Berlin design team to make sure that we can get closer earlier on the front end of the design of these blades and in all other aspects, driving down material costs, sharing a portion of that gain, making sure we can keep a piece for ourselves to return value to our shareholders as we go forward. We're really pleased.
I hope you got a sense from not just on the Diversified Markets team, but a sense of our team. But you think about somebody like Lyndon and others and Joe and Lance that have joined our team. But on the Diversified Markets side, automotive expertise. Folks like Lyndon, many years with General Motors, principal engineer and lead engineer on things like Cadillac programs. Diversification of our team as well as highlighted to you and across all aspects.
We're already culturally diverse just by the makeup of our network around the world. Right? That kinda comes automatically, but making sure that we're making a concerted effort to recognize the diverse diversity of thought and diversity in all its all its aspects. Jim talked about the the scale, applying our scale, applying our growth. And I I think he and his team have done a remarkable job of even in the environment of rising costs in some commodities of using our growth and the global footprint and our labs and the engineering expertise to drive down costs even when others are are having a tougher time doing that.
We haven't been perfect at it. With our growth, we get constrained from time to time. With the amount of growth we have, we've got to make sure we're staying out ahead of that growth and are not hurt by it. You've heard from Ramesh and Adrian and others that we've always been focused on the execution side, but we've just been growing like crazy as a company. And I think for us to slow that growth and focus even more on productivity metrics, on speed metrics, we've always been relentless on safety and quality.
Those are not new things for us at all as a company, but making sure that we're turning really all of our focus on just world class manufacturing. We're a global manufacturing company. We need to be world class in every area. In addition to risk mitigate is risk mitigation. And I think one of the things we could have done a bit better as we thought about some of the growth pieces is what's plan b if things don't go quite as well.
If if we have a strike in Matamoros, how do we deal with that? If the building in China is three months late, free building, but it wasn't free in a sense, right, the way the way it impacted us. As you think about our plan going forward, with 80% utilization as the baseline plan, we'll have recovery capacity. As we said earlier, we really haven't had a lot of that built into our system, but making sure that we're planning and mitigating risks a little more broadly than we have during the heavy growth sector segment of our history. Turning speed into a competitive advantage, cutting transition start up times in half, as you heard today, is a critical goal.
And negotiating more effectively, sharing more of the cost, maybe not just adding contract value, but making sure that we're harvesting better in the short term as well. We'll continue to innovate, as we've said, and you heard from Adrian in that area. You heard from Lance a bit. There's a service business opportunity here, and it won't be a huge chunk of our revenue, but the margins are two to 3x what we'll get on blades. So the revenue isn't the goal as much as just making sure that we leverage the expertise, as Lance spoke of.
We have some of the best blade experts already in our factories. They're running the finishing operations in our sites today. Now the question is how many of them want to work 100 meters up in the air and make this stuff happen. That's where a lot of this a lot of the expertise comes. And then adding technology, as you heard Lance say as well.
And we'll be adding more to our technology road map as it relates to growing a profitable service business. So on the EV side, and again, we're repeating a bit, but just to emphasize this point, for us, the key is driving down cost and finding just where is the profitable place going to be for us and how far down the cost curve, how high up the volume curve can we get. And whether it's hundreds of dollars per automotive vehicle in the millions of units per year, we can still create a solid profitable chunk of value there. It's clear to us in the lower volume unit products, the bus bodies and commercial vehicles, where there's thousands of pounds. And again, just think about those numbers.
In a lot of the automotive environments, a pound, a half a pound, 10 pounds, 20 pounds, those are meaningful numbers when the automotive engineers make decisions and product managers make decisions. So the key for us here is, again, creation of new technology, driving up volume, driving down cost, and then just seeing how far up that volume curve we can profitably operate. I don't know how many companies have funded 23% CAGR with adding a fairly small chunk of net debt to their company. I think it's pretty rare. We've been able to do that.
Would like for some of the execution on individual quarters to have been better. But if you just step back and think about the build of this infrastructure, we've stayed consistent around what it is we're trying to accomplish big picture. And from our perspective, I think been really successful to maintain a strong balance sheet and fund all of this growth largely from our operational cash generating machine. We've heard from some of you about capital allocation and just how is it that we're making these choices. I think from our perspective, especially in a consolidating environment, maturing operations, big customers where you can see what they're up to, We are deeply committed to just solid balance sheet, number one.
And we just want to make sure that we maintain that as a strength for the company. As Bill said, we will make smart investments in growth. We are cautious about many of those investments, but we will continue to invest in growth where it makes sense. And we'll also, as a Board, consider other forms of returning capital to our shareholders. You've heard from Bill and Christian around ESG, and we've been at this a long time.
We haven't been reporting. Our work's been better than our reporting, in my opinion, and we're starting to report now with the materiality matrices and then some of our early reporting coming out. But we're committed to it. And as many who have really gotten into this, it's not just the governance side. The governance side causes better discipline in a lot of ways, but focusing on other critical metrics, certainly the environmental and social side.
On our social side, we've actually again, I think we've outperformed our reporting for quite some time. Deanie and her team and our global team have done a tremendous job from my perspective on the social responsibility side. So we'll report better and get take a little more credit, I think, publicly for the work that the company has been doing, and we're adding some key areas of focus to ESG initiative as well. It's the right thing to do, and our commitment is clear. As we mentioned, we'll continue to build out our board.
Expect to see some more progress against this goal through this calendar year. But strength, strong athletes that bring important advice and challenge to us as a leadership team is what we're looking for. It's not just diversity only for the sake of diversity, but it's outstanding athletes and diversity in each of its form, including diversity of thought of just causing us to think differently and better than we might otherwise on our own get to and making sure that our team is fully aligned with building shareholder value from a compensation standpoint. So look, you've heard from our team how we expect to deliver on our mission. We can repeat the numbers again.
You've heard them enough today. But from our perspective, to get to this $2,000,000,000 level, to drive 12%, to drive free cash, it's time for us to focus on completing that mission and harvest the good work that's been done over the last number of years. So with that, we'd like to move to our final QA, Q and A session, and then we'll have lunch here in a little bit as well. But Paul, if if you could come up, and Bill and Brian and Jim, you with us? Won't you guys take seats over there if you would?
Anthony, we have a mic. Yep. You guys up here as well? Thank you. Again, Paul Jovakini is our Chairman, been with us for quite some time from Landmark Partners and Jim, who we introduced to you as well a little bit ago.
And Pavel?
Thanks. Two questions. One, kind of a micro scale. Q '1 of last year, you had the Matamoros labor issue and the Sendion bankruptcy. Q one of this year, we have the coronavirus.
Hard hard to win this game, I know. Year over year, how should we think about the the top line comparison? So in other words, you're guiding to kind of roughly 10% revenue growth for 2020 as a whole. Should Q1 be up or down or flat?
Brian? This work? Yeah. So if I look at it, I mean, again, we can't say anything on the coronavirus and the impact that will have. But overall, as we've built out, Yongzhou's operating much better than it was.
And same with India is gonna be ramping up. In q one, you won't have much revenue at all from there, but then you have Matamoros, Mexico also. So quarter over quarter, it would be up. Okay.
Okay. Compared to The prior year, yes. To the prior year. Got it. And then kind of big picture, the only acquisition that you've made in certainly your years as a public company was the Euros Group addition from last July.
You haven't really talked about M and A in your kind of strategy discussion. I'm curious if there is anything out there that might be relevant for you to add on an inorganic basis?
Yes. So Pavel, we've been we've looked at a number of acquisitions in the wind side of other factories, blade factories that we could buy rather than organically build. And the test we apply to that every time is, is this a world class facility for the next five to ten years, not could we take over an operation at a relatively low cost to get in. And so each time we've said the growth of the market is in new places, new rooftop, organic growth has made sense. So that's in the core blade manufacturing part.
In the transportation sector, we've been working that quite a bit for a while and just haven't gotten to anything there either where we felt that the tools we would add to the toolbox were better than the investments we were making ourselves, capable of making ourselves to build out our own tools. And even the LCM line that we're building has never been done. So it's not like we could have just got gone and bought a company that had that tool kit already developed. We're developing some new technology that's never been done. So we've been exploring in that space, but we just haven't gotten to anything where we felt that it made more sense than not.
And then the last area really is on the aerospace side, which you may remember a couple of years ago, we talked about aerospace is $25,000,000,000 in composites. It was growing high single digits. But even there, the space, which has been, there's been a fair amount of M and A activity in that space, but fairly high multiples in it and not something that we saw as being particularly accretive to our business in the case. So as Bill said, I think it's something we consider and we will continue to, but but that's maybe a more thorough picture as to how we thought about it. Question, Tony?
I'll just ask one about the long term 12% adjusted EBITDA target. And how what are the main levers that gets you to 12% from where you are today? If you're talking about sort of 80% utilization today, 80% utilization in your long term target, what what should we look for that's gonna drive that?
Yep. I'll I'll jump first and then Brian. I think part of it is speed. Right? So speeding up transitions, having more efficient startups.
If you if you think back to 2017, we were pretty close to that number. Right? And then and then the world changed in the wind industry with feed in tariffs going away, going to an auction market, etcetera. So that and and then the new product introduction. So it's about speed.
It's about execution. And and as we you know, Steve mentioned, as we slow our growth, it gives us more time to really focus on some of the finer points of our operations. I was mentioning to somebody in the lobby, you talk about low hanging fruit. I think there are times we're tripping over watermelon still. So I think there's that much opportunity from an operational standpoint where we can drive with with very specific levers to pull that we can drive that that margin up substantially.
It's also part part of it is gaining more control of some of the supply chain. We don't control 100% of the supply chain for all of our customers. I think that will drive a significant amount of upside opportunity as well.
The only thing I would add is along the lines of as we build out India and Yongzhou in those low cost regions, that will also contribute to that along with the additional cost initiatives that we have in place.
Yes. Just to put a finer point on Brian's last point, Tony, that low cost operations we have today as they're mature are already meeting those numbers. So we've demonstrated our ability to hit those numbers. But then we start up two new plants and invest heavily in start up costs, and the transitions have drug us down more than they will as we speed up, right? So we got to meet the pace of transitions and not lose as much, not dilute our margin as much during the transition period.
That's the speed piece. But also just having more world class operations from low cost hubs, less growth, less start up investment, we're already demonstrating our ability to hit those numbers. We just need to do it across the whole platform all the time. Right? So there's a little more just stability with lower growth, and we'll demonstrate that across the whole company.
Just to pile on that just a little bit. Steve mentioned the mature operations and and remeshments and stabilization of operations. If you think about it, we've had operations this year that have gone through full transitions, and the EBITDA profile is well above what our corporate, kind of target is. And so as our plants continue to mature, so as we get through another year in Yangzhou, we get through a full year in Matamoros. As those plants mature, you've got this you've got a mature workforce, a mature management team.
And when you do a transition in a mature factory, sometimes you don't even notice it. Right? There's very little impact. So to Steve's point, we've had a number of plants ramping. And so as those plants mature and as our our footprint stabilizes, then that pace of transition is is is is going to not be nearly as big an impact because we've got a workforce that knows how to do it.
So I remember, during q three call, you were talking about the uncertainty this year, because of the PTC dynamic. So there's some you you were discussing with your customers on the on the schedule of the delivery. So now I assume you have clarity. So could you share a little bit more color on on that front?
Yes. We have clarity, which is why we put out guidance. Right? Yes. So it it there were a number of iterations.
I think we have clarity. A lot of it had to do with our customers and exactly what they needed, but we certainly have clarity for q four. I think as 2021 has firmed up, especially in The US market, it's added more certainty for our fourth quarter of this year. So the answer is yes. We have we have very good clarity now.
Again, we've got the coronavirus. How that will impact it? Don't know. But other than that, we have very good clarity on what our customers are looking to do. And and just want to kind of be perfectly clear.
So 20 transitions this year, I assume that's the result of this discussion. And if I remember correctly, basically, you're gonna deliver all the blades in q three for your customers to meet the deadline, then so should we think a lot of transition will happen in q four? Or So some of our our transitions will actually be a little bit less than we thought, and that's primarily be been because of a pushout by some of our customers on their design and what they want to do. So that's helpful. The other thing was because 2021 has firmed up, they want that volume from the fourth quarter.
So part of it is pushing transitions, get as much volume as they can get in the fourth quarter, and then some of those transitions push into the early part of 2021. But our the transitions we do have are more heavily weighted towards the back half of the year. Same.
Ron, an important point Bill just made too is that as 2021, as that picture is strengthening, it also helps Q4 for us, right? Because blade shift in Q4 for us are really more likely to affect the 2021 operating start up date for our customers' customers. So that and '21 is strengthening, which is good. The 60 PTC extension, the one year really affects more like 2024. Right?
That's commenced construction for 2024, but affects safe harbor late this year as well. So there's several dynamics in there, actually. Does that make sense?
A question about the EV bus market and the growth projections that you have going forward. And maybe this is a question for Proterra, but I understand that weather takes makes a big difference in terms of the performance of the buses depending on the markets that you're in. I'm wondering if you're taking all that into account and what you think of that.
Yes. And it's probably a good question for Proterra about their product. I can tell you it affects my EV car, the heat of the summer in Phoenix versus the winter in the mountains. So I mean, there is an effect like that in terms of range, is that that's what you mean on the electric product. But I think in terms of Proterra's product, we'll tend to let them answer questions about how they're marketing their product in that way.
I think the reality is I think most customers, EV customers do take into account that just the stated range isn't always the stated range, at least in the automotive space that I'm familiar as a buyer of it. That's the way we've operated.
I was wondering if you're also comfortable in giving any projections going forward on the revenue ramp in diversified markets.
Yes, I think not at this point. What we're trying to do is to and you saw the nonblade sales. But again, keep in mind, as Brian said, the nonblade sales is windblade tooling and diversified markets. That's not only a diversified markets number, but not until we get a little bit further along. And look, we're we put the $500,000,000 target out, and we're calling it a longer term target on purpose to try to give you a sense of the mission.
But also, this stuff takes time. It takes time to develop a battery enclosure that that you saw today. It takes time to develop a a purpose built delivery vehicle. It takes time to do the reliability testing on some of these things that are nonmetallics, so they're they're innovative and new. And not all of it's gonna work.
I mean, I mean, we're gonna we're working on more things than we expect to be a 100% successful on in order to fulfill it. So I think we just need more time to get a little more production traction production wins, I'll call it, traction, more visibility that we can then clearly commit to to you all.
Yeah.
Just wanted to ask, for a
little more color about the, high volume automotive opportunity. And, you know, when you think about the buses and delivery trucks, that that large unibody is a capability that's fairly unique to what you do. Whereas on the automotive side, where did you get down to smaller high volume components, there's you know, that's an area that has been growing in the automotive space, and other people are focused on it. So what did you see that wasn't being satisfied for the customers? And specifically, where did your core capabilities kind of fit into that to give you an advantage to break into that space?
Yes. Thanks, Dan. It's a good question, actually. So most of the automotive composite stuff that's been done is I'm going to exaggerate a little bit. It's more cosmetic and less structural.
You take a sledgehammer through the front quarter panel, it goes right through. That's not a structural part. It's a fairing or a nonstructural, semi structural. And the automotive community is doing that and has been. It's sheet molding compound.
It's RTM. Process technology, resin transfer molding, sheet molding compound, nonstructural or far less structural, let's say. The approach we're taking is to go, we tried to mention this, but it may not be clear, highly structural engineered solutions where if we're not taking out weight that's significant, we shouldn't even be touching it. Right? So that's the innovation that's happening.
And there really aren't very many composites companies that are doing that. And so we're really working, striving to create competitive advantage, both, as we said, product IP, product patent attributes, product claims, as well as core know how process technology that we're never gonna document outside the company. Right? And you can imagine in this space, there's two types of IP. Right?
What does the product patent not allow someone to do? And then what do we do inside that we don't tell anybody how we do it? And it's actually both. In most cases, we're we're really working to try to do both. That's different than our wind blade business, by the way.
In the blade business, we're building our customers' product largely. It's largely their product intellectual property. It's very much our process and materials and know how and design for manufacturability. But in the transportation side, that's what we're doing. So it it's a bit different than the Magna's and some of the big guys that that bang out a bunch of of nonstructural automotive parts.
Other questions?
Never seen Phil out of questions, but and Pavel. This is a first. Yeah. Nor have we seen Pavel out of questions.
One more on the on the transportation.
Sorry about that.
So GM, Workhorse, and Navistar are the three prerevenue EV opportunities. Did I miss any in that list? Those are the ones that we've publicly announced. And as Joe said, we have a few that we've been public about and then a few that we've not talked publicly about. And recognizing that it's gonna take time to, you know, commercialize any of those, what is the earliest that any of those three could become revenue generators for you?
Well, I think we said today, actually that Workhorse will become a revenue generator this year. We'll be in production. We're in pilot. We're starting pilot production now. And so we expect it to be a contributor, not necessarily a game changer in terms of total top line, but a revenue contributor this year.
I think next year, we may well have some additional revenue contributors, but it's going to take a little just because it's contributing doesn't mean we're at full speed either, right? So we may well start at a bit of a of a crawl or walk and then and then a jog and then a full sprint.
And in relation to China, given that 99% of the world's electric buses are sold in China and operated in China. Is there an opportunity for your Chinese operations to play the same role in that electric bus market that you've started to play domestically?
There could be. There's less recognition of value of weight savings so far in some of those in the Chinese, I'll call it, more commoditized opportunity, as you might imagine. But you rightly point out that there's a lot of volume there too. So the question again, how high up the volume curve, how low down the cost curve can we get, that would apply to buses in China as well. You could argue.
It's a little different analogy than the automotive passenger vehicle, but it's applicable in the China bus space. So the answer is potentially yes, but we're not we're not there yet.
Will Griffin, UBS. On the, appreciate all the color and and sort of targets you gave around the, reducing transition costs. Just curious if if we can expect, I guess, an update sort of as you progress towards the goal of of cutting that in half. You know, should we, expect to get any metrics around that?
Ramesh, no. The answer is yes. We're trying to we're trying to figure out what the best metric is to talk about more publicly, but the answer is that is in the works.
Okay. Absolutely. Just, one other quick one. Is there any risk of liquidated damages as a result of impacts from the virus?
It's complicated. So we have force majeure provisions in all of our contracts with our customers, and they go both ways. Right? So we've obviously been in discussions with our customers about what's going on. So the answer is unlikely that we would have liquidated damages as a result of the discussions we're having, but we'll have to continue to monitor that.
And it and it it could go both ways, quite frankly, with some of our customers, but that's in the works. Again, it's fluid like most things with the coronavirus right now.
You. If you watch, Will, if you watch the public comments of our big customers and win the last couple of days, Henrik from from Vest has commented that if this thing were to grow, it could be a pandemic force majeure. I mean, he used those words himself. Right? So I think we're all in the same boat right now of just let's go figure out exactly what the the come back to work dates and constraints are gonna be, which, by the way, is still pretty fluid even every other day, not just in the last week or two.
We'll go figure that out. We'll sort it out. As Bill said, we do have force majeure provisions that could provide some degree of protection. That's true. I think the question is kind of how do we do we navigate all this.
And as Bill said earlier, our ability to recover later in the year on volume that could be affected in Q1 is also a really big factor for us, and it's going to take a little time to sort through that. Now that the product transitions are settled and we know what we're building throughout the rest of the year, we can also then commit to a little more volume off some of the products that aren't changing, right? So there's a recovery capacity piece that we're getting better at as we slow our growth and some of these operations are more mature. So that's the other piece is how much can we recover even as we lose some time in Q1. So one of the questions we got through the webcast was around Chinese competition for both onshore and offshore.
We had a little side discussion about this, too. There are a couple of Chinese competitors that have that that tend to supply most of their volume in China. Best has just spoken about Elon, for example, is one Chinese player that that they're expanding their relationship with, but they also talk about TPI in four countries and Eilan in one. And you can still get a sense for roughly the ratio of how that's working. And then Eris out of Brazil, which is primarily a Brazil for Brazil local content player.
They've done a nice job. Our volume is significantly higher than both of those and probably higher than the two combined in terms of just a way to think about the global footprint and how we're leveraging market share. But the other thing is on the technology side. As these blades get bigger and bigger, the precision stuff is getting harder at 70 meters, 75 meters, as you heard. And those of us that have better technology that are investing aggressively in that, we're planning to leverage that to stay ahead.
That's our job, right, is to leverage that to stay ahead of our of our friendly competitors, and that's what we'll do. Jim, I wonder if you could maybe comment with the energy background that you've had in the solar experience, kind of your take on on the market from an overview. What do you think our investors should know? So in the
when I'm speaking to investors broadly, the general message is, you know, we've translated from a period of time where growth was dependent upon policy driven activities to a market that's clearly driven by economics today. Steve referenced Jim Robo's comments, the CEO of NextEra. You know, I tell people that we're we're entering a era where on a projected forward basis, we're around, we're gonna be around 3¢ a kilowatt hour for renewables integrated with storage, four hour sort of a four hour storage. That asset, just from a grid management standpoint, a renewable asset with four hours of peak storage capability, that looks and feels like a dispatchable facility to grid operators. So we've we we're entering a a circumstance where the low cost alternative for new capacity in a majority of the market, both in The US and globally, is a renewable solution, and likely a renewable solution with storage integrated on a going forward basis.
You will you will find skeptics that that tend to engage in these sort of arguments about material balance and and what it takes to to fully decarbonize the grid. I I tend to ignore that and not even gay engage in the debate. Yes. If you wanna get above, let's call it 70% penetration in any significant grid, you start the costs start to go up, and you run into significant challenges. We're decades away from 70% penetration.
So, it's it's a industry that's driven starting to be driven more by overall macro demand within the power sector as opposed to having to keep our pulse on the the latest policy level activities. And and that's a that's a a new world to to exist in, And I think people are coming to realize and recognize that that's the world we're in on a going forward basis.
Yeah. Thanks, Jim. And in the in the W administration, the Department of Energy laid out our goal of 20% by 02/1930, and that was based on 300 gigawatts. And a number of the utilities at the time and others were saying, we don't know how to handle 20% wind.
Whereas now, you know, if you go look at the utility sector, we've had utility after utility after utility go to their public utility commission and put forward aggressive plans to decarbonize their generation. If they have coal, they want out of it, and they want out of it as fast as they can. Mhmm. You're starting to hear people express the fear that if we don't go cut a settlement on shutting our coal plants, prudency is gonna come into the equation. You're starting to hear some of the public advocates that appear in front of utility commissions that are starting to talk about when utilities are trying to get recovery stranded asset recovery on, the shutdown of coal units.
You're starting to have people start to talk about prudency and whether they should have invested, in those coal facilities. So the the race to the exits on coal is underway and accelerating. And and the pace you know, I'm on the board of public service in New Mexico. So we've we've agreed with our utility commission to be out of coal by by 2045, and to be out of carbon producing assets by 2045. We've set a a goal for the company of 2040.
AEP is on a similar time schedule. You know, it's utility after utility after utility. So they're starting to redo all of their integrated resource plans, taking out incremental thermal units and adding in battery storage and and incremental renewable units, solar and wind. So it's it's stunning where we are versus five years ago.
And, Paul, wonder if you could comment just as our as our chair, anything related to to governance or the board's leadership as it relates to management or any other comments you think our investors should know.
Well, I think the board and management have worked together for a long time, on, trying to improve on ESG matters, before we even heard of what ESG was. Our our number one criteria in management incentive plans every year has always been safety as far back as I can remember. Mhmm. And as Steve mentioned, I think we do perform better on those matters than we report. And as our reporting as our as our data gathering and our reporting gets more sophisticated,
I think you'll like what
you see. And I don't know. I always feel good that I think we are part of the formula that enables ESG for a lot of other companies. You know? So I've I've kinda wondered if we shouldn't do a project sometime and look at all the companies who use wind turbines in their promotional materials to demonstrate ESG because they're buying renewable power and, you know, how many pictures of wind turbines as opposed to how many companies actually participate in producing them.
Great. Any other questions for our Board members or leadership team? Okay. Great. Well, again, thanks very much for being here for your interest in TPIC.
There is lunch outside as well, so please help yourself, and we'll be available through lunch if you have, follow-up questions. Thanks very much, everybody.