Hexcel (HXL), a composite materials manufacturer primarily serving the aerospace, space, and defense industries, derived approximately 15% of its 2020 revenue from its Industrial segment. Within Industrial, wind energy is Hexcel’s largest submarket. In its 2020 10-K, Hexcel reveals wind energy sales declined 28.9% from the prior year and identifies reasons why:

“This reduction reflects a customer demand shift in the U.S. market attributable to the commoditization and outsourcing of blades with a change in technology from prepreg to infusion.”

Prepreg is shorthand for a reinforcing fabric that has been pre-impregnated with a resin system that already includes a curing agent. New methods, according to trade publications, allow for the manufacture of larger, stronger, and lighter blades. Even though Hexcel was praised for being on the cutting edge two years earlier, the move away from prepregs appears to have prompted Hexcel’s exit from the U.S. wind energy market:

“As a result of this demand change, Hexcel closed its wind energy prepreg production facility in Windsor, Colorado in early November 2020 that served the U.S. market.”

Though Hexcel still has prepreg facilities in Europe and China to serve those markets, the company’s future in the industry is uncertain when you consider its exit from the U.S. market was due to a course change from the world’s largest wind turbine manufacturer.

Vestas, the largest wind turbine company in the world, was Hexcel’s primary customer in the Industrial segment. In its 2019 10-K, Hexcel warned investors of the consequences of losing Vestas as a customer:

“The loss of, or significant reduction in, purchases by Airbus, Boeing or Vestas or any of our other large customers could materially impair our business, operating results, prospects and financial condition.”

In its 2020 10-K, Hexcel omits Vestas from the same key customer warning it issued the prior year:

“The loss of, or significant reduction in, purchases by Airbus or Boeing or any of our other significant customers could materially impair our business, operating results, prospects and financial condition.”

The loss is especially untimely when you consider Hexcel’s aerospace customers— Airbus and Boeing (BA)— were plagued by pandemic related travel restrictions and aircraft groundings. It also follows Hexcel’s termination of a planned merger with Woodward, another aerospace manufacturer that also serves the wind energy market. In conjunction with calling off the merger, Hexcel also adopted a poison pill, or a shareholder rights plan designed to discourage hostile takeover attempts.