Good morning, everybody. My name's Steve Lockard. Sorry. I'm the CEO of TPI Composites. Bill Siwek, 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 2020 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. Let me go through a bit of what we're going to cover this morning and some of the team members that you're going to have a chance to meet and hear from as well. Bill and I will start this morning with some opening remarks, set the stage a bit, also give you, 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. 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&A, and I'd ask you to hold your questions for the Q&A session. 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 development of our service business on the wind side. We'll switch gears a bit.
Joe and T.J. and Lyndon will chat a bit about the traction that we're creating in the diversified market space, in 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&A session at that point. We'll be joined on stage at that point by Paul Giovacchini, who's here today. Paul's our chairman, and Jim Hughes, who's another board member that'll join us mid-morning or so. We'll have a chance for some informal discussions over lunch. Let's jump right in.
TPI is a mission-driven company, and we are really proud to be able to map our growth in building value and in serving our stakeholders, a variety of stakeholders, mapping onto 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. 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.
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 going to grow by more than a factor of eight between 2018 through 2050. We'll grow from 5% of the terawatt-hours created in 2018 to more than a quarter, 25%-26% of those terawatt-hours created in 2050. A lot of the new capacity-generated equipment investments that are being made in order for this to play out are in the wind and solar sector. Wind is competing. If you think about it's not about competing with coal anymore. Coal is going away, largely.
It is about competing in some places with natural gas. The longer-term competition is really wind and solar. The piece of the pie available, half or so of the terawatt hours, will be met by those two technologies. 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 winning. We're also really pleased that these trends are driven more and more by economics, by what customers want to buy, by what investors want to 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. There's 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. 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. Over the next number of years, more than half of the new sales of delivery vehicles will be electrified. Now we're talking about millions of units, five million units a year or more in the 2040 timeframe. Then on the passenger side, it's tens of millions of units. It's still a similar macro of more than half of the volume is expected to be electrified in the 2040 timeframe in terms of new equipment sales. 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's 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. 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 said, 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, some of you got a chance to look at the animated video, and that 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. Think ± 2 mm tolerance is over 75 m. 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.
There's some changes in terms of the flexibility we've been mapping onto in terms of those long-term commitments, given product transitions. The nature of the partnership is the same. 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. Compared to a solar or semiconductor type model or some that might be more highly automated, it's a capital-light model. Reasonable EBITDA drives very compelling returns on invested capital. 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 being successful attracting top talent around the world.
I'll turn things over to Bill for a few minutes.
Thanks, Steve. It's nice to see all of you today. A lot of familiar faces, some friendly, some not so friendly at times. Thanks for being here. Appreciate it. As Steve mentioned, 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 U.S. When we talk about world-class, that means world-class sites, world-class facilities, world-class technology, and world-class talent. 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 GW of capacity to achieve this position. That's based on about a 70-75 GW market on an annual basis.
Finally, we're enabling both wind and transportation technology, composites technology, to improve our competitive advantage. 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. Our global footprint, again, it's important and 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. With our Chennai, India plant literally starting up this week, built the first small parts in that plant this week. That started this week. We now have 18 GW of world-class manufacturing space under roof. Under roof, about 6 million sq ft, with approximately 15 GW under capacity today. 18 GW. Sorry, under contract.
18 GW of capacity, 15 GW under contract, so we've got a little work to do to fill that up. In the last 18 months, we've added nearly 2.4 million sq ft and approximately 9 GW 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 new tooling and now transportation facility in Juarez, Mexico. As we speak, that's in the process of that footprint being doubled. As we're talking about the footprint, how important it is, it is global. I mentioned Yangzhou, China. We do have a substantial footprint in China. 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 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 1st, 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 by the central, provincial, and municipal governments in China. As our employees come back from Chinese New Year, 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 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 raw materials to our plants outside of China, so we're actively looking for alternative sources to the extent the delays are longer than we may anticipate. While we expect the overall issue to be temporary, we can't reasonably predict the impact. You saw the guidance this morning, if you looked at our 8-K, Brian Shoemaker, our CFO, is going to talk about that a little bit later. Our guidance does not take into consideration any impact of the outbreak.
As we get better information and have a better certainty as to exactly what the impact will be, we will go ahead and update that guidance. A lot of you have probably seen this slide before. It looks pretty familiar. 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, we agreed to do that. The potential revenue under the 52 lines is approximately $5.2 billion over the contract term, with a minimum take or pay of about $2.8 billion.
During the three years ended 2018, the 2019 data will come out here in the next few weeks or months, 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 2019. We still have a very robust pipeline. I talked about 18 GW of capacity, 15 GW under contract, very robust pipeline for both onshore and offshore with existing customers and new customers.
We'll use that pipeline to backfill to the extent we have customers that want to move geographies or to grow beyond the 18 GW, if that makes sense economically for us.
The wind industry has clearly gone through a lot of success. 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. 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 a cost reduction 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. 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 U.S. and other government policies, but from an overview, we're just not dependent as an industry on those policies as much as we have been in the past. The yellow line on the left-hand chart indicates to you the new product introductions that the wind turbine manufacturers have come with over the last number of years. We moved from an average of about 35 new products or so to last year being in excess of 70. A doubling of new product introductions. The rate of new product introductions of our customers has clearly increased recently. We expect this to continue for the foreseeable future, and I think rotor diameter will continue to increase. 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. It's pretty attractive for our customers then to harvest the wind at higher heights and build larger rotors, then figure out how to truck them or how to put them on rail cars, 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, in thinking about wind 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-$30 per megawatt hour unsubsidized.
As you think about these intermittent resources or non-dispatchable 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. 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. 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. In 2007, the blades were 46 m 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 m. Big Ben is 96 m, just to give you a perspective.
The right-hand side gives you what today's state-of-the-art full turbine at 150-m rotor, 175-m tip height, just the physical size of what it is that we do. These blades weigh 15-20 tons apiece, to manufacture something like that within a 24-hour cycle is the challenge that we embrace. 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, we're building our team of experts, you'll meet a couple of them today. We're continuing with a long-term target to build a half a billion dollar revenue business. Why a half a billion?
Well, as we build our $2 billion 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. As we quantify the programs we're working on, this is likely 10 major wins at $50 million a year or five major wins at $100 million in revenue per year. That's the scope of the revenue opportunity, most of the 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 million into our diversification strategy. 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. 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 shape, if you will, but more content in Mexico while still meeting the Buy America provision of U.S. transit authorities and just getting better at what we do. We're also announcing, 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. 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, 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, then composites expertise. 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 quarters ago is on track for installation in our Rhode Island operation.
We're spending about $12 million on that pilot line as well. You'll hear a bit more about that today. This is a line that will be building structural composite parts in cycle times measured in minutes, not tens of hours. 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.
With all this growth and our ambitions for the transportation diversification as well, we've obviously had to add a lot of associates around the globe. As of the end of the year, we had about just a little over 13,000 employees globally. As Steve mentioned, 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 going to see 11 of those today. Some new faces, some that you might recognize if you were here a couple of years ago. Significant number of years of experience in both wind technology as well as automotive, we still continue to build that engineering team with 300-plus engineers and technicians around the globe.
Deane Ilukowicz, our Senior Vice President of Human Resources, will spend a little bit more time on this later this morning. Significant top-line market share growth. Since our IPO in 2016 through 2019, we grew at about a 23 CAGR. 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% over the long term. In 2019, we kind of passed through 12 GW of blades manufactured since TPI began building blades in the early 2000s. This growth hasn't come without challenges and some setbacks.
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 report today that, number 1, the labor situation has stabilized. We've signed a new labor agreement with our associates in Matamoros, got that done five weeks early without any work stoppages or interruptions. 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'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. That created some startup challenges for us.
Labor availability in our Iowa bus plant has created 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. We've learned some valuable lessons in 2019. We're going to learn from those, and I think we're all very confident and very well situated to move into 2020 on a very solid footing with our operations around the globe, all in very good shape. This growth, how did we fund this growth? The growth in the footprint, senior leadership, technology, startups, transitions, has been largely funded from cash flow from operations. Since 2016, we've generated $190 million of cash flow from operations. That's net of almost $200 million that we've invested on startups and transitions.
Again, significant cash flow opportunity from this business. Through this whole period, we've maintained a very strong conservative balance sheet. We have net debt of about $72 million exiting 2019. We just dipped into our IPO proceeds from 2016 during 2019. Again, it just reemphasizes our ability to generate cash, working capital management, and the like. Capital allocation plan. 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 aligned 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 TPI from a longer-term standpoint. Finally, consider the return of capital to shareholders over time. As we mature into our footprint, as we reduce our growth CapEx, and it becomes more of a maintenance CapEx routine, if you will, then I think the opportunity for return of capital to shareholders is certainly there.
As Bill said, we're committed to learning, right? We're committed to continue to improve each area of the company. 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 of 2015, we've added three independent directors. Jim Hughes, who again, you'll have a chance 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 clean tech 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 the U.S.
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, spent some time with Skelly at Clean Line on the transmission side. She brings a perspective of our customer's customer, how our customer's customers make choices as it relates to wind turbine supply and decisions as they go forward. Most recently, T.J. Jordan. T.J. 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.
T.J.'s lived a lot of the same challenges that we're dealing with, and is helpful to us in that sense as well. Just lastly, in terms of how our board operates, 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.
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 by definition, margin expansion. We need to turn speed into a competitive advantage. You'll hear a lot. We've talked a lot about transitions and startups over the last couple of years. You're going to hear from Ramesh, our CEO of Wind, Adrian, our Senior Vice President of Technology, on some of the initiatives we have to drive transition and startup time down. We're going to continue to advance our composites technology and our transportation technology, again, 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. You think about tooling design for manufacturability, blade design, service offerings that Lance will talk about a little bit later, and transitions, right? Engaging our customers earlier in transitions is critically important. Again, we've talked a little bit about how we're going to share the cost of our transitions, but it's really about reaching a better balance with our customers on the economics of a transition. The way that we do that is, it's more transparency and communication upfront. It's our upfront involvement in what their new design might be. 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 startup. 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 want to get that to market as quickly as they can. The faster we can ramp from start to serial production, the better it is for them, and clearly, the better it is for us. 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.
The nice thing about the localization that we're working on, and Jim Schimanski, our Senior Vice President - Global 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. Not only are we adding capacity to the industry, but we're then securing a long-term supply. We reduce significantly the risk of any interruption of supply, which we had some challenges in 2019. Then continue to build our team. Deane will spend some time on this, but we need to continue to build, develop, retain, in order for us to continue to execute as a world-class team. Then finally, drive our ESG vision, right?
It's not only the right thing to do, but 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. With that, we've got two pages of biographies of all the folks you're going to meet this morning. We're not going to go through them in detail. They'll provide a little background, or the person introducing them will provide a little introduction before they go. 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. With that, I'm going to turn it over to Tom Adams, our Senior Vice President of Wind.
He handles all the commercial negotiations and interactions with our customers. Christian Eden, who's our Senior Director, I was going to 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 GW to 19,000 GW, attracting $13.3 trillion in new investment. Wind draws 40%, or $5.3 trillion of this new investment, and is projected to make up 26% of the power generation mix 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 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 costs of operations and maintenance, and better siting. Capacity factors have almost doubled in the last 20 years. There's a potential for a further 50% increase by 2050. Wind has to compete with other technologies. 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. 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. 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 GW installed this year or in 2019, all the way to 89 GW 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 GW 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 to 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 GW growing to 22 GW 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 trillion of investment just in offshore projects by 2050. Obviously, we're excited to be participating in this global market, and it's being driven, as Christian alluded to wind being ever more competitive on an unsubsidized basis. Going to the U.S. 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 U.S. market. The UBS forecast would average about 8 GW stabilized from 2022 to 2025. 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 U.S. market onshore is also supported by the one-year PTC extension at the 60% level through 2024. For the offshore opportunity in the U.S., we're very excited to see significant named projects supported at the state level of the U.S. through policy and funding decisions they're making. That cumulative amount of installed capacity we expect to be around 20 GW by 2030.
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 GW per year average install through 2028. Offshore growing rapidly at a 12% CAGR over this period up to 11 GW 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 2 GW of annual installations up to 8 GW by 2028.
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. 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 8 GW a year installed by 2028. A 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.
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. We're well-positioned to serve the rest of the Latin America market. I will hand it over now to Ramesh, who's our COO for wind, who will give an operational update. Ramesh.
Thank you, Tom. We'll now cover the operational part of the presentation. We'll first talk about SQDC, which is an acronym for safety, quality, delivery, and cost. These are our operational priorities in that order. We'll talk about execution on both startups and transitions, because this is critical to TPI's business strategy and financial results. All these activities are essentially tied together by a core value, operational excellence. For us in TPI, operational excellence is execution of our business strategy more reliably and consistently than our competition. Let's start with safety. For us, safety is not just our first operational priority, but also a core value. 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 a U.S. regulatory agency. It's known as a recordable injury.
The second is an injury that's sustained that leads to a loss of productive work time, and that's known as a lost time injury. They're both indexed, so you can compare these metrics across different industries, right? 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. How did we do this? First, we basically have focused efforts on prevention, because safety is all about prevention, right? 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. We also have behavioral-based safety programs that we've deployed across the whole organization.
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. 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. 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. Sorry, it's not a cost, it's an investment. Flip it around. Now let's move on to quality. This chart shows a reduction in our non-conformances or defects over the last three years. It's almost a 24% reduction.
What we used to do traditionally is to conduct process audits. We've now expanded the scope of this to conduct not just process audits, but product audits, system audits, journal audits, and layered audits. We're looking at the whole operation holistically. We are instituting a culture that's based on prevention and not on inspection. We've also invested in people resources. Deane will talk about that a little later. We've brought 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. There's lessons learned that's shared, and these are being transmitted across the enterprise in a disciplined and a timely manner. Next, we'll talk about speed. Great.
On delivery, for us, it's all about manufacturing productivity and stable operation. When you do a value stream map of our operation, right? We have critical pacing items. Like for us, it's the molding, which is a critical operation. 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. 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. That really helps us from a productivity perspective.
The chart that you see on the right is really our cycle time evolution with time over the last three years. 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. 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. This helps us reduce our costs and also helps our customer reduce their costs in turn. Now we'll finally talk about cost. If you look at our blade costs, about 65% of the sales price is basically materials, 10% is labor.
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 improve processes to take these costs down. 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, using different engineering parameters to reduce the materials and also direct material productivity to take these costs down. You can see we've taken them down about 12%, our bill of material cost, over the last three years. Labor is also a key component of our cost structure. Represents about 10% of the sales, 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.
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. As you can clearly see, we've taken the labor cost down by about 11% over the last three years. We'll next talk about our execution on startups and transitions. This is key to TPI's business strategy and also our financial results. For us, speed's the name of the game here. It is our top priority. Let me draw your attention to the chart on the top right. That chart represents, at a high level, the five steps that are required to do a typical transition. We want to reduce the time taken for those five steps. The financial implications are significant.
For example, if we reduce the time required for a transition on one line by one week, the impact on the EBITDA is over $200,000, assuming average sales price for 2019 and a 30% contribution margin. For us, I think the opportunity when we speed these up from a financial perspective is quite significant. We look at the process, we basically baseline it, and then we use continuous improvement or lean manufacturing to shrink it down. In this process, we might combine or eliminate operations as necessary. There's another portion that's also important, which is consistency. It's especially important for our startups in the new factories. 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. It's collaboration between engineering and supply chain and operations. It's also collaboration with our customer upstream. The better we can plan, the better we can risk mitigate, the faster we can basically start up. We do have, in summary, a pretty disciplined approach to accelerate and execute these startups. 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. We took it down from 107 hours to 28 hours over a period of 16 weeks. As we do more of these, we are also learning and improving.
Finally, we'll basically talk about transitions and the impact of transitions to EBITDA, a topic I'm sure all of you are really interested in. When you look at this curve, the blue line is what happens for us typically during a transition. We start off, and then it's three years. This is the EBITDA on the year before the transition, during the transition, and after the transition. What you see is a dip during the transition year. We have this dip because of three things. There's a reduction in volume, there's basically an underutilization of labor, and there's an under absorption of overhead. The EBITDA goes down. As we ramp up and reach our steady state, you'll find out that the EBITDA goes up pretty rapidly.
I'd argue that being at a larger blade in the same cycle time, it could potentially go up even more. The blue curve illustrates what happens during a typical transition. We really need to compare that to the orange curve, which tells you what happens if we don't do a transition. If we choose not to do a transition, then the customer can decide to reduce the volume and take it down to a volume which is their minimum volume obligation that we have contractually. This is not good for us, because not only do you have a reduction in volume for a longer period of time, which has a tangible impact on the EBITDA, but then you also have other added effects like underutilization of the facility, the motivation of the workforce, and so on and so forth.
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. 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. For us, although we'd like to reduce the transitions, sometimes wish they go away, they're here to stay. We do collaborate with our customers to manage these more effectively. Like I said, we are learning through every transition. We are working collaboratively with our customers from a planning perspective, from a risk mitigation perspective, to make sure that we are getting quicker and faster at these transitions. This is clearly a focus area for us because it impacts our financial performance.
When you look at the operations in summary, like Bill said, we got three key priorities. The first one is operational excellence in every facet of what we do across the board. The second one is speed as a competitive differentiator for us in our startups and transitions. 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 better, faster, and cheaper. With that, I'll turn it over to Adrian, our technology 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 transitions, 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. The speed and flexibility are crucial to us. We are the 24-hour cycle company. We are the best in developing technologies and processes 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 products. We're continuously looking to reduce the cost through BOM optimization and reutilization of the tooling.
We participate in consortiums to develop new blade solutions, materials, and automation. In 2019, we acquired a design group, formerly known as EUROS, that was part of Senvion. As a result of this acquisition, we broadened our collaborative space, and now it includes aero design and structural design. Moreover, our team in Berlin has enhanced the collaboration 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 this leads to more streamlined design for manufacturing and robust risk mitigation planning. We're also involved in joint prototyping activities of blades with our customers.
Due to all this, we can talk about a team, customer and TPI, that actually has control of the full cycle, design for manufacturing, and continuous improvement. This translates into new products being put into manufacturing faster, reducing the 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 of 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, the root joints, the webs, the spar caps, we all put them in a long mold, which can be 60 to 70 meters long.
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, ±2 mm . 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 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've put a significant focus on circular economy of glass and carbon composites, and both U.S. and Europe are focusing on recovery of embodied energy rather than low-cost materials like the glass. We participate in several projects addressing this problem.
Overall, our focus on developing new technologies and processes led to 13 invention disclosures, five provision applications filed, and five applications drafted just in 2019 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. I want to introduce Jim Schimanski, who's in charge of global supply chain.
Good morning. I'm going to 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 really where the commodity markets are from a pricing standpoint, and then TPI's performance in those same areas across our commodities. With TPI's continued expansion, our strong global presence and footprint, our buying power, our 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.
While 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 2020, we did struggle with the rest of the industry with some capacity constraints on core raw materials. 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 deep industrial base, there is limited infrastructure today for the production of raw materials for composite materials. With our expanded footprint in Mexico, we've been very successful in getting our customers to localize in Mexico and set up and co-locate 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 roving 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. We continue to look at new suppliers 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 our materials. There are a number of growing suppliers in China today that are becoming more and more sophisticated in delivering materials to the global markets. We are also in the process, or we have qualified and are 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, but they also allow us to minimize the risks of any tariffs that we see and other geopolitical issues in that region.
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 localize or 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 localize regionally for us to better serve TPI. 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 India, as well as core foam manufacturing as well. TPI continues to be really the best suited to really assess, test, and qualify materials for our customers, with our strong technical staff, as well as our two DNV GL certified labs, both in China and in the U.S. 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. 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 Deane Ilukowicz, our Senior VP of HR.
Good morning. How is everyone? I stand between you and questions. As Bill indicated earlier, we've had significant growth in head count in the last number of years since the IPO, but this head count growth has 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 startup 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 500 years of experience in their functional disciplines, in wind, and in transportation.
We have 300 engineers worldwide, and this remains one of our most critical talent segments for the organization. I really want to spend a little bit of time to tell you about how we're focusing on their development at TPI. Improving our technical capabilities is going to have an immediate and enduring, 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. We need to ensure that we're both attracting that talent, and we're developing them and we're retaining them. 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 going to have 13 courses, entry, mid-level, and senior level. We're really excited to be deploying that globally. It's going to improve our capabilities. It's going to ensure that we can be faster and more effective. Think about the tolerances that Adrian talked about, and Ramesh as well, within that 2 mm . Ensuring you've got the right technical talent to support that, we view as a critical opportunity and an issue for TPI. It's going to improve our quality overall. We're driving towards that zero defect. Certainly, the cooperation with the acquisition of the team in Berlin is going to help us with that design for manufacturability.
It's also going to enable us to be more innovative. This team of leaders worldwide that lead the technical talent is also focused on mobility. They want to ensure that best practices are shared. While we have different factories all over the world, which might have different cultures and way of doing work, they drive towards 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. This year, we refreshed our people strategy for the organization.
I want to talk to you a little bit about these five fundamental parts of that strategy. With culture and values, 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 want to 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 want to ensure that they want to stay with TPI. You heard Steve talk about destination for top talent. We want to secure that position. Today, we are a destination for top talent, particularly in our industry. With the growth of diversified markets that you're going to hear TJ, Joe, and Lyndon talk about, we're also becoming a destination for people who want to get on board with us in that vertical as well. 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 want to 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. 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, we've standardized these practices and programs throughout the last number of years. That collective ownership and talent makes my job, honestly, a lot easier 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. 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'm going to talk a little bit about diversity and inclusion.
When you think about 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 want to 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 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 going to call TPI LEAP. The India team is very focused on diversity and inclusion at the startup of their operations.
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. 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 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. That's a great example of how diversity and inclusion is alive and working at TPI. Lastly, we need to measure our impact. Impact is important, we can have the best programs, but if we're not measuring it, we're not knowing if we're going to improve and do the right things. 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 going to take us into questions. Thank you.
Thanks, Deane. We're going to open up for some Q&A or some observations thus far. Steve, can we bring up the mic for our four folks, also there's a microphone available for those of you that may want to ask questions as well. Why don't we open it up? Questions, please. Mike?
Thanks. 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, your scale at TPI gives you better efficiencies with in-house production than you have with your clients.
I'll take a quick one, Mike, and then Jim or Bill or others may want to add. 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. 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 customers, but not all of it. 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. 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 really drives that localization and support of our suppliers really well.
Yeah. We're buying more raw materials than any of our customers are. To Jim's point, 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. Many of our customers may come in with different materials that they've qualified. 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 Shen with ROTH Capital Partners. In terms of your guidance, I wanted to explore the potential impact of the coronavirus. 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. That would suggest you guys are offline for about a month for your Chinese facilities, which I believe represent 25%-30% of your overall footprint. What does that mean in terms of your guidance? Let's say that's kind of the baseline scenario. What are you guys planning for in terms of scenarios beyond that? You guys mentioned that China's also supplying into other facilities throughout the world. Jim, perhaps you can comment on what the impact there might be as well. Thanks.
Yeah. Phil, I think as you read in our guidance, and as I mentioned earlier, the situation is really fluid. Estimating what the impact will be, it's too early to do that. That's the answer of we're not going to 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, we were already shut down for that period. It's not like we're losing four weeks of production, right? It's really we're pushed out a couple of weeks. We also have the ability with our capacity 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.
Really one of the big dynamics, and Jim can talk about this, it's not only the mobility of our people as they come back from their New Year's breaks that have been extended, unfortunately. There's quarantine requirements that I mentioned, and it's different a little bit by province than by city, so we'll have to work through that. The bigger challenge may be on the supply chain locally within China because of the logistics in China. As it relates to outside of China, again, Jim and his team have done a really good job of minimizing the product. If you think about the U.S., we have very little supplied by China, and that's by our customers actually supplying it. Everything else is sourced 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 that relates more, again, to customer-supplied parts that are being manufactured by our customers in China. Jim, I don't know if you want to add to that, but
Yeah, not a lot to add there, Phil, but thank you. I think the good news is that we're very tied in with our suppliers, and we understand clearly what our inventory is, what our suppliers' inventory is, 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 permit and be able to start shipping materials. We'll see how that goes. I think in the other regions, as Phil mentioned, it's more of a pivot, right? We have spent a lot of time really qualifying second sources and being able to make sure that we have multiple suppliers available.
It's a pivot from a China supplier to a more regional supplier or from another region that can support us. 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? Looking forward, can you quantify how much you plan to improve those transitions? Thank you.
Phil, I think when you talk about transitions, right, it's 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 startup in a new location like India. It covers the entire gamut, right? In terms of complexity, if you will. I think over the last year, I think I showed you the example of one of our new factory startups. We hit a speed bump from a construction perspective, right? Once we ironed some of the technical issues, right, we drove it down pretty quickly, right? As you saw in the curve. We are getting better, right? It depends on what the nature of the transition is. In general, when you look forward to 2020, right?
We've got a target internally to reduce the time required for a transition, right? That could be anywhere from 15%-20% to up to 45% or 50%, depending on what the transition is, what the readiness of the product is. That's the range that we are targeting across. It's not one number, it's a range. Yeah. Thanks.
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 a third out, take half out." It's those types of orders of magnitude is a way for you to think about it. 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 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. We're investing more time and money in doing things offline to get ready for prime time in the mold slot. Think about it as the percentages Ramesh gave you, we're going to take a big chunk out of this. We need to.
We used to think about transitions were good because we would add to contract value, right? 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 volume demand needs of our customers. Right? There's critical deliveries globally. There's critical PTC timing in the U.S. this calendar year. There's various things that drive our customers with delivery windows that are critical. I just add one other point, as you asked about the coronavirus and other things. Guys, if you think about it in big pictures, we've said 18 GW to you for a little while, and as Bill described, our current under contract is about 15 GW. If we fill the remaining eight lines in Yangzhou and India, we would be at about 18 GW.
One of the benefits of being at 18 GW of capacity is we're going to have more flexibility than we've ever had as a company. 35% CAGR for a number of years, now flattening down into the 20s. When you're growing up into the right the way we have been, there's very little recovery capacity in that investment in growth. 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? Part of that harvest is going to be having more global recovery capacity in our system than we've ever had. Whatever hits us then, we're going to have a chance to make things up.
As Bill described on the coronavirus, by the way, this year, 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. There's some critical 100% PTC windows that we're all going to be chasing as well, as you well know. Hopefully that's helpful added color. Ron?
Just on the transition. Based on that chart on the top right, seems based on the scale, you're going to shorten the time by about 40%, if I read that correctly. I just want to maybe kind of be 100% clear that's the ultimate goal for all the facility, all the cases. Secondly, the next slide, you have this dip in some of the, I guess, if I look at a scale, it seems that doing the dip, that's similar to the minimum volume that you can achieve on the EBITDA side. 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?
Based on the contract, your customer will give you the minimum volume even with more frequent transition, just maybe more clarity on that. Thanks.
Maybe I'll just talk to the first part, then Bill can address the second part. That picture was illustrative. It was basically the steps on how we squeeze it down. Like we said before, 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? That's the range. That was more illustrative in nature, right? It should be around 30% or so. That was just a pictorial illustration. Then Bill can address the second portion.
Yeah. First of all, Ramesh is hedging a little bit. It's 50% is our internal goal. I'm very confident that Adrian and the team are going to get there. We've made significant progress. I would just go back. If you look at our performance on transitions over the last year, the performance has been very good. We've continued to reduce the time. The biggest impact we had last year was from a startup standpoint. We were starting up brand new facilities in new geographies in many cases. We were in the same country, but a different location, didn't have the proximity to the workforce. As you look at, I talked about the fact that with Chennai getting done, we've got 18 GW under rooftop.
A startup in one of those facilities now is going to be 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. That'll speed it up. The dip, the point there is that when you see the dip, and just so you know, that dip and that spread is pre all the work. We didn't factor in that we're going to reduce transition times by 50% when we showed you that graph. That's kind of been the history. The reason the dip kind of 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. That's where it is.
Does that answer your question?
Yeah. Thank you.
Yeah.
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. Look, we want to help drive LCOE down. We've always wanted that. We want to help compete for wind to compete favorably with solar in more places. In Iowa, it's not a fair fight. Wind wins. In West Texas, it's a competition between both. It depends on where we are in the world and the fuel resource. We want to keep doing that.
At the same time, we need to harvest more. 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. A 20% global market share, 18 GW, some flex capacity, we just feel like we're striking the right balance. We'll be a $2 billion revenue company, might be able to really drive EBITDA and cash flow generation in the right way. By the way, Brian's going to go through, a little later, a few more slides that'll help see the startup costs. We talk about startups and transitions, but please, as you think about it, as Bill just said, separate the two, startups versus transitions, because they're very different things in terms of us driving the growth of our business and the profitability and free cash.
Right in front of you, Anthony.
Go ahead, Pavel. Sorry.
Yeah, thanks. Two questions on, I guess a little bit of from an HR perspective. We're in a world of sub 4% unemployment in this country. Presumably, labor cost is one of the headwinds you have to live with. How are you managing around upward wage pressure, et cetera? Then secondly, in that context, what led to the decision to close the bus body plant in Iowa and shift those operations over to Rhode Island?
Why don't you take the first part, and I'll take the second?
Yeah, thank you. When you think about wage pressure, I think what we're trying to do with our workforce is educate them on the total reward of the relationship with TPI. Yes, there's unemployment challenges and there's 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 want to 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. In any market in which we operate, I feel pretty good about that attraction equation for us.
Yes, sometimes when you're ramping, you're hiring hundreds of people at a time, it can be hard on the process side. 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.
Then, Pavel, to the decision in Iowa. It was largely based around availability of qualified talent for what we were doing. We were unable to get the number of people we needed, keep them, and get to a steady state, basically. So we've been building composite products in Rhode Island since 1968. We have a very highly skilled group of craftsmen and workers in Rhode Island. 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 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.
The good news is, and again, you think about the bus and the blade, they seem very similar, but they're actually quite different in the actual process to build it. There's more of an art, I would say, to the bus than to the blade itself. Our guys in Rhode Island have that. It was just taking too long to develop that in Iowa. The good news is that virtually that entire workforce has moved into our blade production facility. We were struggling to get fully staffed on the blade facility as well. The good news is we were able to move those people who understand composites, just in a different way, into the blade plant.
It was unfortunate that we had to move it, but from a long-term profitability standpoint for us and cost for our customer, it was the right move for us.
Again, as a global manufacturing company, Pavel, as you know, going forward, you're going to see us adapt supply chains globally. Right. We now have 6 million sq ft and 13,000 people around the world. We'll make moves that make sense over time. As Bill rightly points out, we were short 80-100 people in the blade plant for months. Months. Months, and months. Just too much overtime, too much stress on the workforce. We resolved that exactly as Bill described. 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, we've got a mic up here too. Next, please. You got one, sorry. Go ahead.
Contractually, when you're pricing these contracts, 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 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. 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. I talked about that a little bit earlier, about balancing the economics of a transition. It's a combination of limiting the timeframes 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 going to be responsible for going forward.
Steve, you can embellish on 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 pace of new product introduction. They would like for it to slow down, too. They're kind of stuck. It's a competitive business. It's market share gain. They're struggling with it, but they would like to slow it down. As we bring these new concepts to them, they're embracing them, which is making us collaborate more deeply with our customers on how we approach a new startup or a transition, and how do we both work together to minimize the impact on both of our operations.
If you think about, we've got a lot of things right in our judgments and in the company, we've got a couple things wrong. One thing we missed, I missed, was the impact of transitions or the predictability of some of this about a year and a half ago. 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.
Their acceleration, 70 new product introductions versus 35 in a year kind of numbers, that was just this massive move to drive down costs, to consolidate, to drive share. We ended up getting hit a bit more by that than we predicted at the time. 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. 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. It is a matter of negotiation, and we get to participate in that negotiation. 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?
Yeah. Two questions, please. The first is related to what you were just discussing. 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?
What we've kind of transitioned to over the last few quarters is we think about it as utilization of our facilities. Whether it's 10 lines or 15 lines, we're going to talk about that now in utilization. To directly answer the question, 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. We all hope that slows at some point in time. I think if you asked us, we do think it will slow. We just don't know exactly when. We're going to plan that it will not slow for the foreseeable future. That's why speed is so important.
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. Even though these forces of consolidation and market share are there's also a bit of a pushback, even just amongst themselves, of saying, "How long is this necessary?" What we felt is when we got to a certain LCOE, cheaper than marginal coal. I mean, come on. It wasn't only a few years ago, I'm not sure we would have thought that would have happened as quickly as it has. Competition with solar is continuing, and competition between the turbine players is continuing on the wind side.
I think that's the force that we're paying closer attention to, and we care about, Tony, in that way. Again, making sure that we're in control of our own destiny, no matter how many transitions our customers ask for.
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 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 want to do it?
I don't think we'll-
He used to be one of our customers.
Three of them.
We can pin him down.
No, without getting into specifics and names. For us, I think, when you look at our products and our customers are also our competitors, maybe if we talk to cycle time, because that's a better proxy. We're probably, I'd say, 30%, 35% better than our customers when it comes to throughput and productivity. Obviously, it's a mix. It depends on the product. I think we feel that when it comes to blade manufacturing, we are certainly faster and far more competitive than our customers at this point. Their blade making facilities.
You want to add anything to that?
No.
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. It's not only 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. Are they willing to share a 15%± 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? 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, where a lot of the historical blade plants were.
That helps us as well to compete on the new make versus buy decisions. There are a few exceptions to that, Tony, but generally, that trend is generally still continuing. Again, for us to get to 18 GW and 20%, we don't want to overshoot pieces of this too much either. 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 calls. We don't say yes to every opportunity we're given either in that discipline. That make sense? Guys, we're right on schedule. Let's do a 15-minute coffee break, and we'll come back at 11 o'clock, and then again, we'll have another opportunity for Q&A, as well as informally during the coffee break. Thank you. Back at 11 o'clock, please.
Is my mic up? Yeah. Okay, we're going to go ahead and restart. Thanks, everyone, for making it back promptly. We're going to pass to Lance Marram. 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 end of 2018 at about $1.6 billion, growing to on a 7% CAGR to about $3.2 billion by the end of 2028. Just so we know, this is not with offshore. It's a pretty strong market in itself. 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. If you look at the demand, well, the demand is going to 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.
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. We can take advantage of our existing customer relationships, so we have a lot of the largest OEMs, global OEMs in the world that we'll 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 that as they go out of warranty with the OEMs. As they go out of warranty, they're looking for expertise from people like ourselves, TPI, so we can help them as well. Lastly, I want to talk about the optimization. Another competitive advantage that we have is this market tends to be quite dependent on the weather. On downtimes and when the weather is extreme, blade service is very difficult to perform. We have our blade production facilities, we have our transportation facilities where we can support during those down periods. We can share resources and optimize internally.
At the same time, we can also provide support for customers like Proterra and other parts of the industry in transportation. Okay. As we grow, we're going to diversify in regions as well as with customers. The more we have a global footprint in the field, we can better support our existing customers. 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. 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? 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. 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 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. I've heard from one customer that doing ultrasound inspections is not done in the field. Well, we do it already.
Providing this advanced inspection abilities is key to grow in this market. We'll do thermography. We'll do drone work, all these things to help us mitigate this downtime. More work on inspections annually, out of warranty inspections. You would be amazed of 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. Then we get to the repair and improvements. 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 could be something as simple as paint, coatings, 3M tape. 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 want to maximize what they can get on their wind farm, their production. Going beyond even 20 years, going to 25 or so, and how can they squeeze out that extra 1%? We can help them provide these enhancements on these blades. Lastly, but definitely not last, is recycling. We've heard a lot lately in the market, and I'm going to say that, in some countries already, in Europe, for example, in Germany, in Holland, it's already illegal to landfill blades. There's a market starting for the recycling of blades in the field, and we see that that's going to continue. At the same time, you have the ESG movements, and even just in the U.S., we hear about asset owners looking for solutions.
They do not want to landfill blade. What can we do? 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. At the same time, also looking at more recyclable materials when we make new blades. Please, stay tuned on the recycling stand front. We'll be continuing to work on there with our partnering with organizations to provide full solutions. Thank you very much. With that, we'll launch with Mr. Kishkill on diversified markets. Thank you.
Thanks, Lance. Everyone, welcome this morning. Thanks for joining us. We're the non-wind guys. There'll be three of us speaking over the next 15. 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. We're going to 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. Mass is not the only material attribute that composites bring. Composites are non-corrosive.
Composites allow for part consolidation of complex geometries that you might see in metallic options. Composites offer a lower upfront tooling investment by more than a factor of 10 versus the metallic options. Upfront tooling, more than a factor of 10x less than what you would see in metallics. The following slides will detail more about our path to a $500 million annualized revenue stream from diversified markets. Presenting with me today will be TJ Castle, who heads up our operations for diversified markets, Lyndon Lee, who heads up our innovation and technology for 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 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, which we collaborated with General Motors. This also demonstrates a strength in weight, it also introduces a safety factor, the composite springs, as well as the ability to manufacture at high volumes. Again, as Steve mentioned, we're not talking about hundreds or thousands of units, 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 U.S. 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. The upfront cost of an electric bus is expected to be less than that of diesel by 2030. These factors will allow achievement of a 40% penetration in the U.S. 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 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 2004.
Today, they have over 900 buses on the roads in the U.S., 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 metallic configuration. In the 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, e-commerce is driving this. Urbanization. There's a lot of regulations that are now starting to be introduced about limiting heavy-duty trucks into downtown streets. Although light vehicle will be outpacing heavy-duty trucks, alternative fuel options in heavy-duty over-the-road trucks will continue to buck some trends. In 2018, TPI and Navistar announced a collaboration for the SuperTruck II initiative. We expect 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. It's clear that the global automakers, they have committed to electrification. $140 billion 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. 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. Here in a second, I'll introduce TJ and Lyndon.
They're going to come up, and they're going to spend the next couple of slides, which highlight our manufacturing process and some technology developments that will allow us to be a significant player in the automotive EV space.
Thank you, Joe. Good morning, everybody. Joe talked a little bit about kind of the what and the why. Lyndon and I are going to go over a little bit of the how. Our facility in Rhode Island has historically been a facility that demonstrates structural composites and its capability and design within 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 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 will continue to allow for large scale research and development, low volume production, and the testing and development of process technology to support our volume and production processes globally, as well as high volume production process development with our new pilot liquid compression line. The $12 million investment that is being made in our automated LCM is scheduled to be fully commissioned by the end of Q2 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 TPI's design and production capabilities. Bill mentioned earlier the complexities and differences of the bus manufacturing process versus the wind blade manufacturing process. To articulate that a little bit, a wind blade by design is smooth.
The surfaces are designed to reduce wind resistance. On a bus, it's a box, right? 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 the standpoint of composite build. It's kind of a scenario of what got us here won't get us there. When you think about the high level assembly of a bus, taking a step back from that, it really is essentially two halves that come together to form an upper and lower or a body structure. 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 bringing TPI towards in our production process. 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. The results is, as we will demonstrate, will move our cycle times from measures in the tens of hours into under 10 minutes. With that, I'll turn it over to Lyndon to talk through one of our examples.
Thanks, TJ. As you look at our two words that we're phrasing, decarbonize and electrify, I kind of look at it from an automotive wind to wheels, and I'm the wheels guy. I've come from automotive. I'm going to talk about this automotive application. Just real quickly, how many people have an EV car in the room here? Quite a few. I have one as well. If I were to ask that question five years ago, how many people would have raised their hand? None. As you can see, the curve is changing, and we're going up that curve very quickly. One of the applications I'm talking about here is an example of how we're expanding on this investment in the transportation area.
TPI's been working with several of the automotive OEMs to develop an EV high voltage battery enclosure that solves the challenges that they're facing today. Currently, the OEMs 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. They have to be environmentally sealed, and provide EMI shielding and electrical isolation. The total mass and the assembly of these cells is just not efficient. 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 the environmental sealing, also matches to the bottom of the vehicle much better than a metallic cover does. 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.
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. With that, I'll turn it over to Brian to go through the financials.
Thanks, Lyndon. 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 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 $1.42 billion-$1.44 billion. Loss per share, we are decreasing to $0.43-$0.47.
This is due to the non-cash impairment totaling $5 million associated with the Iowa II restructuring and the increase of tax expense associated with the return to provision and jurisdictional mix. Non-blade sales has increased to a range of $110 million-$115 million. Capital expenditures decreased to a range of $75 million-$80 million. The decrease was due to the timing of payment of CapEx that was financed. After the items presented remain unchanged, all other items will be discussed in the future in Q4 earnings release on February 27th. Since going public in 2016, we have invested $204 million and $169 million. $204 million was in CapEx, $169 million was in startup expenses. This translates into an annual increase of revenue of 80%, which represents a CAGR of 23% over this timeframe.
This growth has been funded primarily by cash flows from operations, along with a net debt increase of $66 million. We exited 2019 with a net leverage ratio of 1.2. 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 million of cash on hand on the balance sheet. The $189 million of cash flow from operations generated since 2016 is a net of $169 million of startup costs and $33 million of transition costs. This is just to highlight 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 GW 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 a push for LCOE. 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 GW sold growth to three times the industry CAGR for GW 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 GW 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 U.S. With the completion of Yangzhou, China plant in 2019, and Chennai, India this year, we will have a footprint of 18 GW of production. As we've discussed over the past several quarters, operating at 80% utilization, which takes into account the recent pace of transitions as well as startups, we will result in approximately 15 GW 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&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 startups and transitions, the more involvement and collaboration with our customers we have on the front end of transitions and startups, the quicker we can get optimal cycle time, and therefore maximize the volume and drive to normalize gross margin much quicker. For G&A, we are focusing on the scale and making the fixed manufacturing overhead more variable. We are looking at utilizing global shared service centers, contract associates, and a flexible work, et cetera. 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 startup costs we incurred during the corresponding year. We included the startup cost 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 startup costs decrease as we build out our global footprint. As you can see, a 1% cost reduction, which is greater than $10 million, can have a meaningful impact on adjusted EBITDA. For 2020 guidance, excluding the potential impact of the coronavirus. We see net sales of $1.55 billion-$1.65 billion, adjusted EBITDA of $100 million-$125 million. Sorry, million. I wish. Our earnings profile for 2020 adjusted EBITDA, the adjusted EBITDA profile for 2020 will be lower in Q1 and gradually increase over the course of the year. Utilization of 80%-85%. Wind blade set capacity at 4,380. Average selling price per blade of $140,000-$145,000. Net blade sets sales of $75 million-$100 million.
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 in demand. Capital expenditures of $80 million-$90 million. Startup costs will be $17 million-$20 million. This is a walk going from 2019 midpoint to 2020 midpoint of adjusted EBITDA. 2019 adjusted EBITDA is comprised of $131 million of wind-related earnings, $26 million of G&A expenses, and an investment in diversified markets of $22 million. 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 and Mexico.
I'm briefly skipping over the diversified markets to touch base on the ASC 606. ASC 606 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 606, we must estimate the total revenue and cost associated with each blade type manufactured in a plant over the term of the contract. 606 attempts to provide a levelized margin over that life of the contract. 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 606, 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 606 in 2020 compared to 2019. What also happens is that in early stages of a contract, additional margin is pulled into the startup 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 but negatively in the outer years. The third step is the 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, 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 Deane noted, we have hired some key senior leadership and depth to our organization to support the global organization.
In 2020, we expect to pay out the target amounts of incentive compensation since we fully expect to execute our startups, 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. For 2020, you will see the impact or the adjusted EBITDA midpoint of 112.5. This consists of $155.5 million associated with the wind business. Corporate G&A will run at approximately $35 million. You can see the additional investment in the diversified markets of $8 million. These components get the midpoint of guidance to approximately the 112 that I referred to. As Bill referenced earlier, we have 6 million sq ft under wind blade manufacturing space. At full capacity, this equates to approximately 18 GW.
Running at 80% utilization, this is how we get to 15 GW. Given the estimated ASP per blade and sets produced by year per line, this equates to $2 billion 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 million. 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 million sq ft of wind blade manufacturing space, we estimate annual CapEx to be $30 million-$60 million annually. Although we believe we can achieve $2 billion 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 GW 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%-25%. We see company-wide ROIC of 25%-30%, 12% adjusted EBITDA, and free cash flow of 7%-9%. On the right side of the slide, it reflects the future revenue under contract. It reflects minimum, maximum, and the current forecasted revenue by year. The minimum sums to a total of $2.8 billion and the maximum contract amount to $5.2 billion. The light blue line reflects the estimated revenue by year. Currently, our estimated revenue under existing contracts is $4.3 billion, which represents a book to build of almost three times.
It is important to note that the $4.3 billion does not consider the extension of any of our existing contracts. Historically, we have extended all of our contracts, with the exception of GE, which we lost two of them due to the acquisition of LM. With the 15 GW 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 million and CapEx of $204 million. For 2020, we forecast cash flow from operations of $100 million and CapEx of $85 million.
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 million-$20 million. We have the opportunity to improve those through additional supply chain financing with both our India and Turkey customers. This slide 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. Overall, the average has been 80%. 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 startup, and 34 lines operating at 92% utilization. With our continued focus on speeding up transitions and startups, 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&A.
Thanks, Brian. I'm going to touch a little bit on ESG and then let Christian take you through some details. 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 the materiality assessment phase. Christian's going to take you through a little bit more of the details as far as exactly what we've done and how we did it. The big picture is, the process has added clarity to me and I think to our team on how more focus on 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. 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 wellbeing, and overall satisfaction improves retention. 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, 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.
Finally, better alignment with management, the board, all of our stakeholders, through enhanced governance policies and increased transparency drives value creation. 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. With that, I'll let Christian take you through the detail.
All right. In the last couple of years, TPI's prepared the company for ESG reporting by performing a materiality assessment, as Bill said, collecting data for our first sustainability report, which we plan to publish Q1, Q2 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 on Climate-related Financial Disclosures, as well as set sustainability goals. As Bill mentioned, we hired Deloitte's ESG team to run through a very robust materiality assessment process. 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 found here in this matrix. 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 CO₂ avoidance. On CO₂ avoidance, as an example, in 2019, the blades that TPI manufactured will help contribute to the reduction of over 300 million metric tons of CO₂ over the turbine lifetime.
To put that into perspective, that's the equivalent to the CO₂ emissions from 35 million homes' electricity use for one year. With that, I'll turn it over to Steve for closing remarks.
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. 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 want to buy, corporate buyers, homeowners, and the like, and more and more what many of you and our key investors want to be investing in. In D.C., it's okay to talk about climate change again, right? 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 that are fundamental. The real competition, the competitive landscape, is with solar and not so much other technologies.
We're pleased ourselves that it's wind and solar that are going to be a really important percentage of the overall makeup. 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. You can see some of the messages starting to form in a way that'll guide a better longer-term discipline in the space. We're building out our global infrastructure. We're getting close to where we'd like to be from an overview there, and you heard a couple 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 ex works, 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. 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 from the diversified markets team, but a sense of our team. You think about somebody like Lyndon and others and Joe and Lance that have joined our team. On the diversified markets side, automotive expertise. Folks like Lyndon, many years with General Motors, principal engineer and lead engineer on things like the Cadillac programs. Diversification of our team as well, as Deane highlighted to you. Across all aspects. We're already culturally diverse just by the makeup of our network around the world, right? That kind of comes automatically.
Making sure that we're making a concerted effort to recognize the diversity of thought and diversity in all its aspects. Jim talked about the scale, applying our scale, applying our growth. 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 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. 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 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 we have a strike in Matamoros, how do we deal with that?
If the building in China is three months late, free building, it wasn't free in a sense. 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. We said earlier, we really haven't had a lot of that built into our system. Making sure that we're planning and mitigating risks a little more broadly than we have during the heavy growth segment of our history. Turning speed into a competitive advantage. Cutting transition startup times in half, as you heard today, is a critical goal. Negotiating more effectively, sharing more of the cost, and 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. It won't be a huge chunk of our revenue, the margins are two to three times what we'll get on blades. The revenue isn't the goal as much as just making sure that we leverage the expertise that 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. The question is, how many of them want to work 100 m up in the air and make this stuff happen? That's where a lot of the expertise comes. Adding technology, as you heard Lance say as well, we'll be adding more to our technology roadmap as it relates to growing a profitable service business.
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's 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. Again, just think about those numbers. In a lot of the automotive environments, one pound, a half a pound, 10 pounds, 20 pounds, those are meaningful numbers when the automotive engineers make decisions, the product managers make decisions.
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. We would like for some of the execution on individual quarters to have been better. 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. 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. 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, and 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. We're starting to report now with the materiality matrices and some of our early reporting coming out. We're committed to it. 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. Focusing on other critical metrics, certainly the environmental and social side. Our social side, we've actually, again, I think we've outperformed our reporting for quite some time. Deane and her team and our global team have done a tremendous job from my perspective on the social responsibility side. We'll report better and take a little more credit, I think, publicly for the work that the company has been doing. We're adding some key areas of focus to ESG initiative as well.
It's the right thing to do, and our commitment's 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. 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. Making sure that our team is fully aligned with building shareholder value from a compensation standpoint. 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.
From our perspective, to get to this $2 billion 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. With that, we'd like to move to our final Q&A session, and then we'll have lunch here in a little bit as well. Paul, if you could come up, and Bill, and Brian, and Jim, you with us? Why don't you guys take seats over there, if you would. Anthony, we have a mic for the guys up here as well. Thank you. Again, Paul Giovacchini 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, Pavel?
Thanks. Two questions. One, kind of a micro scale. Q1 of last year, you had the Matamoros labor issue and the Senvion bankruptcy. Q1 of this year, we have the coronavirus. Hard to win this game, I know. Year-over-year, how should we think about the top line comparison? In other words, you're guiding to roughly 10% revenue growth for 2020 as a whole. Should Q1 be up or down or flat?
Brian?
This working? Yeah. If I look at it, again, we can't say anything on the coronavirus and the impact that will have. Overall, as we've built out, Yangzhou is operating much better than it was, and same with India's going to be ramping up. In Q1, you won't have much revenue at all from there. Then you have Matamoros, Mexico also. Quarter-over-quarter, it would be up.
Okay.
The prior year, yeah.
To the prior year. Got it. 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&A in your strategy discussion. I'm curious if there is anything out there that might be relevant for you to add on an inorganic basis.
Pavel, we've looked at a number of acquisitions in the wind side of other blade factories that we could buy rather than organically build. The test we apply to that every time is this a world-class facility for the next 5 to 10 years, not could we take over an operation at a relatively low cost to get in? Each time we've said the growth of the market is in new places, new rooftop, organic growth has made sense. 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.
Even the LCM line that we're building has never been done. It's not like we could have just gone and bought a company that had that toolkit already developed. We're developing some new technology that's never been done. 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. The last area really is on the aerospace side, which you may remember a couple of years ago, we talked about aerospace is $25 billion in composites. It was growing high single digits. Even there, which has been, there's been a fair amount of M&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.
As Bill said, I think it's something we consider and we will continue to, but that's maybe a more thorough picture as to how we've thought about it. Other question, Tony?
Hi, thank you for that. I'll just ask one about the long-term 12% adjusted EBITDA target. What are the main levers that get 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 should we look for that's going to drive that?
Yeah. Bill?
I'll jump first and then Brian. I think part of it is speed, right? Speeding up transitions, having more efficient startups. If you think back to 2017, we were pretty close to that number, right? The world changed in the wind industry with feed-in tariffs going away, going to an auction market, et cetera, and then the new product introduction. It's about speed, it's about execution. As 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. I think there's that much opportunity from an operational standpoint where we can drive with very specific levers to pull, that we can drive that margin up substantially.
Also, 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 Yangzhou and those low-cost regions, that'll also contribute to that, along with the additional cost initiatives that we have in place.
Yeah, just to put a finer point on Brian's last point, Tony, the low-cost operations we have today, as they're mature, are already meeting those numbers. We've demonstrated our ability to hit those numbers. 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? We got to meet the pace of transitions and not dilute our margin as much during the transition period. That's the speed piece. 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? 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 remeshments and stabilization of operations. If you think about it, we've had operations this year that have gone through full transitions. The EBITDA profile is well above what our corporate kind of target is. 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 a mature workforce, a mature management team. When you do a transition in a mature factory, sometimes you don't even notice it, right? There's very little impact.
To Steve's point, we've had a number of plants ramping, and so as those plants mature and as our footprint stabilizes, then that pace of transition is going to not be nearly as big an impact because we've got a workforce that knows how to do it. Ron?
I remember during Q3 call, you were talking about the uncertainty this year because of the PTC dynamic. You were discussing with your customers on the schedule of the delivery. Now I assume you have clarity. Could you share a little bit more color on that front?
Yes, we have clarity. Which is why we put out guidance, right? Yeah. 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. We certainly have clarity for Q4. I think as 2021 has firmed up, especially in the U.S. market, it's added more certainty for our fourth quarter of this year. The answer is yes, we have very good clarity now. Again, we've got the coronavirus, how that will impact it, don't know. Other than that, we have very good clarity on what our customers are looking to do.
Just want to kind of be perfectly clear. 20 transitions this year, I assume that's the result of this discussion, and, if I remember correctly, basically you're going to deliver all the blades in Q3 for your customers to meet the deadline then. Should we think that all transition will happen in Q4?
Some of our transitions will actually be a little bit less than we thought, and that's primarily been because of a push-out by some of our customers on their design and what they want to do. That's helpful. The other thing was because 2021 has firmed up, they want that volume from the fourth quarter. 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. 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? Blade shift in Q4 for us are really more likely to affect a 2021 operating start-up date for our customers' customers. That and 2021 is strengthening, which is good. The 60% PTC extension to one year really affects more like 2024, right? That's commence construction for 2024, affects safe harbor late this year as well. 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 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.
Yeah, 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. There is an effect like that in terms of range, if that's what you mean on the electric product. 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 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 are also comfortable in giving any projections going forward on the revenue ramp in diversified markets?
Yeah, I think not at this point. What we're trying to do is you saw the non-blade sales, again, keep in mind, as Brian said, the non-blade sales is wind blade tooling and diversified markets. That's not only a diversified markets number. Not until we get a little bit further along. Look, we put the $500 million target out, we're calling it a longer-term target on purpose to try to give you a sense of the mission. Also, this stuff takes time. It takes time to develop a battery enclosure that you saw today. It takes time to develop a purpose-built delivery vehicle. It takes time to do the reliability testing on some of these things that are non-metallics, they're innovative and new. Not all of it's going to work.
We're working on more things than we expect to be 100% successful on in order to fulfill it. 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 you all. Dan?
Just wanted to ask for a little more color about the high-volume automotive opportunity. When you think about the buses and delivery trucks, that large unibody is a capability that's fairly unique to what you do, whereas on the automotive side, as you get down to smaller high-volume components, that's an area that has been growing in the automotive space and other people are focused on it. What did you see that wasn't being satisfied for the customers? Specifically, where did your core capabilities fit into that to give you an advantage to break into that space?
Yeah, thanks, Dan. It's a good question, actually. 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. Take a sledgehammer through the front quarter panel, it goes right through. That's not a structural part. It's a fairing or a non-structural, semi-structural. The automotive community is doing that and has been. It's sheet molding compound, it's RTM, both process technology, resin transfer molding, sheet molding compound, non-structural or far less structural, let's say. The approach we're taking, 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. That's the innovation that's happening. There really aren't very many composites companies that are doing that.
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 going to document outside the company. Right? You can imagine in this space, there's two types of IP. What does the product patent not allow someone to do? Then what do we do inside that we don't tell anybody how we do it? It's actually both. In most cases, 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 customer's product largely. It's largely their product intellectual property. It's very much our process and materials and know-how and design for manufacturability. In the transportation side, that's what we're doing.
It's a bit different than the Magnas and some of the big guys that bang out a bunch of non-structural automotive parts. Other questions? I've never seen Phil out of questions, and Pavel.
This is a first.
Yeah. Nor have we seen Pavel out of questions.
One more on the transportation. Sorry about that. GM, Workhorse, and Navistar are the three pre-revenue EV opportunities. Did I miss any in that list?
Those are the ones that we've publicly announced. As Joe said, we have a few that we've been public about, and then a few that we've not talked publicly about.
Recognizing that it's going to take time to 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 starting pilot production now. 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, it's going to take a little just because it's contributing doesn't mean we're at full speed either. Right? We may well start at a bit of a crawl or walk, and then a jog, and then a full sprint.
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. You rightly point out that there's a lot of volume there, too. 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. The answer is potentially yes, but we're not there yet.
William Griffin, UBS. Appreciate all the color and sort of targets you gave around the reducing transition costs. Just curious if we can expect, I guess, an update sort of as you progress towards the goal of cutting that in half. Should we expect to get any metrics around that?
Ramesh? No. The answer is yes. 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. We have force majeure provisions in all of our contracts with our customers, and they go both ways, right? We've obviously been in discussions with our customers about what's going on. 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. It could go both ways, quite frankly, with some of our customers. That's in the works. Again, it's fluid like most things with the coronavirus right now.
Thank you.
If you watch, Will, if you watch the public comments of our big customers in wind the last couple of days, Henrik from Vestas commented that if this thing were to grow, it could be a pandemic force majeure. He used those words himself. I think we're all in the same boat right now of just, let's go figure out exactly what the come-back-to-work dates and constraints are going to 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 navigate all this?
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. 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. 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. That's the other piece, is how much can we recover even as we lose some time in Q1. 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 tend to supply most of their volume in China. Vestas has spoken about Aeolon, for example, as one Chinese player that they're expanding their relationship with. They also talk about TPI in four countries and Aeolon in one. You can still get a sense for roughly the ratio of how that's working. Aeris 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. The other thing is on the technology side. As these blades get bigger and bigger, the precision stuff is getting harder at 70 m, 75 m, as you heard.
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, is to leverage that to stay ahead 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 and the solar experience, kind of your take on the market from an overview. What do you think our investors should know?
When I'm speaking to investors broadly, the general message is 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. I tell people that we're entering an era where on a projected forward basis, we're going to be around $0.03 a kilowatt hour for renewables integrated with storage, 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. We're entering a circumstance where the low-cost alternative for new capacity in a majority of the market, both in the U.S. and globally, is a renewable solution, and likely a renewable solution with storage integrated on a going forward basis.
You will find skeptics that tend to engage in these sort of arguments about material balance and what it takes to fully decarbonize the grid. I tend to ignore that and not even engage in the debate. Yes, if you want to get above, let's call it 70% penetration in any significant grid, the costs start to go up, and you run into significant challenges. We're decades away from 70% penetration. It's a industry that's starting to be driven more by overall macro demand within the power sector, as opposed to having to keep our pulse on the latest policy-level activities. That's a new world to exist in. 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. In the W administration, the Department of Energy laid out our goal of 20% by 2030, and that was based on 300 GW. A number of the utilities at the time, and others, were saying, "We don't know how to handle 20% wind.
Now, 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.
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 going to come into the equation. You're starting to hear some of the public advocates that appear in front of utility commissions are starting to talk about when utilities are trying to get stranded asset recovery on the shutdown of coal units. You're starting to have people start to talk about prudency and whether they should've invested in those coal facilities. The race to the exits on coal is underway and accelerating.
Yeah.
The pace, I'm on the board of Public Service in New Mexico, We've agreed with our Utility Commission to be out of coal by 2045, and to be out of carbon-producing assets by 2045. We've set a goal for the company of 2040. AEP is on a similar time schedule. It's utility after utility after utility. They're starting to redo all of their integrated resource plans, taking out incremental thermal units and adding in battery storage and incremental renewable units, both solar and wind. I mean, it's stunning where we are versus five years ago.
Paul, I wonder if you could comment just as our Chair, anything related 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 number one criteria in management incentive plans every year has always been safety, as far back as I can remember.
As Steve mentioned, I think we do perform better on those matters than we report. As our data gathering and our reporting gets more sophisticated, I think you'll like what you see. 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. I've kind of 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. 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.