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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.
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