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North Dakota firms set sail with wind industry

(Sunday, Oct. 12, 2003 -- CropChoice news) -- Gerry Gilmour, The Fargo Forum, 10/06/03: Four years ago, West Fargo's DMI Industries was at a crossroads.

The company manufactured equipment for the Red River Valley's sugar beet industry, such as beet pilers, conveyors and sugar tower diffusers.

Trouble was, the big players in that industry were not investing in new equipment.

So former DMI president and CEO Mike Hohl -- who just stepped down last week -- took a chance, bid on production of 14 wind towers for a job in Wisconsin and landed the contract.

Four years later, DMI is the nation's second-leading manufacturer of wind towers, cranking out the cylinder-shaped sections at a rate of 20 per week.

"We're maturing with the industry. And hopefully, we're getting a lot smarter," Hohl said.

North Dakota's fledgling wind energy industry is filling the financial sails of a number of businesses.

From DMI Industries and its wind towers, to Grand Forks LM Glasfiber and its turbine blades, to Wanzek Construction and its giant cranes, to dozens of subcontractors working on wind farms at Kulm and Edgeley -- North Dakota companies are carving out a niche in what they hope will be a booming business for years to come.

The two wind farms built between Kulm and Edgeley this year by FPL Energy cost a combined $62 million. The farms -- named North Dakota Wind I and North Dakota Wind II -- supply power to Basin Electric Power Cooperative of Bismarck and Otter Tail Power Co. of Fergus Falls, Minn., respectively.

FPL Energy, of Juno, Fla., is the nation's leader in wind farm development.

John DiDonato, FPL Energy project director, said most of that money stays in the region.

FPL Energy this spring signed an agreement to buy 315 wind turbines from GE Wind Energy for projects in five states, including the two North Dakota projects. GE has secured more than $2 billion in turbine orders since it acquired the assets of Enron Wind Energy in February 2002 from bankrupt Enron Corp.

FPL Energy's relationship with GE essentially eliminated a North Dakota turbine blade plant from consideration on the projects. LM Glasfiber, with a plant in Grand Forks, would have been considered, DiDonato said, had GE not already acquired blades for its turbines from a Brazilian plant.

"We haven't penetrated them yet," Craig Hoiseth, manager of LM Glasfiber in Grand Forks, says of FPL Energy.

LM Glasfiber is the world's leading supplier of wind turbine blades, having captured 50 percent of the world market. In addition to its U.S. plant in Grand Forks, it has production facilities in Denmark, the Netherlands, Spain, India and China.

LM Glasfiber is owned by Doughty Hanson & Co, a privately held European equity company. LM Glasfiber opened its Grand Forks production facility, in the city's industrial park west of Interstate 29, in 1998.

According to Hoiseth, Grand Forks was selected as the site of a North American plant because of its location on the Great Plains, surrounded by states with so much wind energy potential.

"We think that strategically, geography makes a big difference. Being in Grand Forks is an advantage for us just in terms of freight," Hoiseth said.

LM Glasfiber's Grand Forks plant employs more than 100 people, according to Hoiseth.

FPL Energy made an effort to work with West Fargo's DMI Industries for the 41 wind towers supporting the GE turbines at Kulm and Edgeley.

DMI Industries started out as a small machine tool company. In the mid-1980s, it began producing sugar beet industry equipment.

It was acquired by Otter Tail Corp. of Fargo and Fergus Falls in 1990.

Since entering the wind tower field, DMI Industries has doubled in size. The company employs 180 people working in more than 130,000 square feet of shop space on 86 acres at 420 E. Main in West Fargo.

DMI a year ago temporarily laid off 17 employees, but was able to bring the positions back as orders for wind towers picked up, according to Dan Hoefs, vice president of operations.

DMI Industries in North America is a close second to Beaird Industries of Shreveport, La., in wind tower production. The big two are trailed by a scattered group of smaller manufacturers, including SMI & Hydraulics Inc. of Porter, Minn.

DMI Industries fabricates its towers in sections -- three to four bolted together on site form a tower.

A tower costs anywhere from $60,000 to $300,000, depending on size, specifications and shipping and delivery. "They all look like the same pop can, but we probably build somewhere in the area of 12 to 15 different tower designs," said Hoefs.

DMI Industries has built 800 towers since it began production in 1999 and its production pace is quickening. This year, to date, DMI has shipped 450 tower sections and has pending orders for 196 towers. The company is building at a rate of 20 towers per week.

Recycled steel -- old Fords, Pontiacs and Chryslers pressed into plates -- arrives by truck and rail from Minneapolis. The steel is rolled into cans, several of which are welded together to form a section. Interior components, including ladders, platforms and electric wiring and lighting, are installed. Each section is sandblasted and painted before shipping out on truck or rail.

DMI has shipped wind towers to New York state, Michigan, Wisconsin, Minnesota, North Dakota, South Dakota, Texas, California, Kansas, Iowa, Colorado, West Virginia, Alberta and Saskatchewan, Canada, and to the Yukon.

According to Hoefs, sales revenues are up at DMI Industries but profit margins are off at least 20 percent from a year ago because of competition for wind work.

Hoefs said DMI hopes to command 30 percent of North America's wind tower market share by the end of this year.

Wanzek Construction has been around since 1971. The Fargo company first worked in wind in 2001 with the erection of Freedom, the second Moorhead Public Service Department wind tower and turbine built on the northeast side of the city.

Since then, Wanzek crews have erected 114 more wind towers in Minnesota and North Dakota.

"I think the outlook is really good for wind," said Leo Wanzek, president of the company.

With its cranes, other heavy equipment and road-building experience, wind farm construction was a perfect area in which to branch out, according to Rush Waite, a company vice president.

Wanzek made a name for itself in heavy industrial and road construction. This year alone, it has nearly 400 trades people on the job with projects in 10 states.

Waite said Wanzek, like DMI, needed additional work when the valley's sugar beet industry cut back on capital expenses.

"It's kind of filled the gap for us," he said. "We've learned the business through the school of hard knocks. It takes a lot of homework and calculation on these jobs. But we needed work and we went looking for it."

Wanzek solidified itself as a regional wind player with the purchase of a $2 million Manitowak (built in the Wisconsin town of the same name) 300-ton crawler crane. It takes 18 semi-loads to move the crane, but it's just what the foreman ordered for erecting 200-foot-plus wind towers.

Wanzek was the successful bidder through FPL Energy for the 41 towers at Kulm and Edgeley, leasing three identical cranes for the project. Nearly 40 Wanzek employees spent the summer in the Kulm and Edgeley area. Wanzek says it amounts to a $5 million-plus job for his company.

Waite said the experience Wanzek crews gained this summer will give the company the upper hand in bidding for more wind work.

"Not any everyday guy can climb up and do this kind of work," he said. "It's not 8-to-5 work. You have to get up in the morning before the wind is up and work into the darkness to take advantage of the stillness."

Wanzek, this fall, has already bid on potential wind jobs for next construction season. The company is the low bidder for a 22-tower Montana Dakota Utilities project scheduled to be built next year near Ellendale, N.D.

With $2 million invested in that big crane, Wanzek said it's imperative his company has more windmills on the horizon.

"When that crane isn't working, it's like having 10 to 20 guys just standing around,"Wanzek said.