Biofuel industry fueling capital spending in Midwest

Source: Industrial Info Resources

According to data extracted from Industrial Info’s PECWeb Direct project spending database, the Midwest states of Iowa and Nebraska are running neck-and-neck in projected capital spending moving forward in the region. The states in the region include Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota. A snapshot of the current spending has Iowa at $4.7 billion in spending and Nebraska right on its heels with $4.6 billion in projected spending. The Midwest has seen tremendous growth over the past two years due to the fact that the square states in the region are responsible for growing 90 percent of the U.S. corn crop for the ethanol industry and strong soybean crops supporting the biodiesel industry. More than 140 active biofuel projects represent a total of $15.4 billion in the coming years.

In Iowa, there are more than 42 active projects that make up the projected $4.7 billion for the state. Nine of these projects are grassroot biodiesel plants and the remaining 33 are ethanol projects. Of those 33 projects, 30 represent grassroot construction and three projects are expansion-related. Looking at the spending breakdown between biofuels, ethanol spending is at $4.1 billion and the remaining $600 million in capital are related to biodiesel plant construction.

In Nebraska, there are 39 active projects that make up the state’s projected $4.6 billion in spending. Thirty-six projects are ethanol-related and the remaining three are grassroot biodiesel plants, with the ethanol industry outweighing biodiesel spending by $4.5 billion in capital dollars.

The spending gets cut by more than half when analyzing biofuel spending in Kansas. The state currently has a projected spending for biofuels at $2.7 billion with $2.4 billion going toward 19 new ethanol plant projects and $300 million for two new biodiesel plants.

Minnesota spending is projected to be at $1.4 billion through seventeen projects as the biofuel industry continues its build-out in the state. Fifteen new ethanol plants are planned gobbling up $1.3 billion in spending and the balance going toward biodiesel plant construction.

Missouri spending is currently right at $1 billion, representing 12 projects. Eight grassroot ethanol plant projects are valued at $915 million and the remaining spending is allocated to four new biodiesel projects.

In North Dakota, seven biofuel projects are being tracked totaling $530 million in capital spending. Approximately $484 million is going toward construction of five grassroot ethanol plants and two grassroot biodiesel plants worth $55 million in spending.

The last of the Midwest region states is South Dakota, with five biofuel projects for a total spending of $305 million. There are three new ethanol plants in the works valued at $230 million and two grassroot biodiesel plants totaling $75 million.

Industrial Info’s Ethanol Production Database provides a comprehensive outline of all current development activities in the emerging alternative fuels market. This database covers 134 ethanol plants currently in operation and 348 plants under development. It also covers 32 operational biodiesel plants and 81 biodiesel plants under development.

Case Study 2: Baxter Bioscience Facility Purchase and Auction Sale

Seller Needed

Baxter Bioscience was interested in selling its complete Rochester, MI plasma fractionalization facility, including all process and lab equipment.

Solution

Federal Equipment purchased the entire facility from Baxter Bioscience and arranged an on-site and Internet auction sale of the facility. In conjunction with a leading auctioneer a single day auction sale was planned and removal of all the assets from the facility was coordinated.

Marketing efforts to ensure exceptional performance of the auction included the following tactics:

• Phone call sales: Using information from our in-house database, we conducted a calling campaign to known pharmaceutical manufacturer contacts fitting the profile for this type of equipment, informing them of the auction.
• Direct mail: Developed an 8-page flyer listing all items, including photos, to over 40,000 names from our in-house database and purchased lists.
• Trade journal and newspaper advertising: We ran a half-page ad in Pharmaceutical Processing, Chemical and Pharmaceutical Solutions, and classified ads in the New York Times, Detroit News, Chicago Tribune, and the Raleigh News and Observer.
• Internet advertising: We developed a promotion on the homepage of our Web site with hyperlinks to individual pages containing full descriptions, specifications and photos of each piece of equipment.
• E-mail advertising: We designed an e-mail rollout that was sent over 8000 pharmaceutical manufacturers from our in-house customer list informing them of the auction.

Result

• The entire facility was sold during the one-day sale. All equipment was removed from the facility within the next thirty (30) days.

Case Study 1: Complete Manufacturing Facility Purchase including Equipment Removed and Equipment Liquidated

Seller Needed

Lonza, Inc., a Swiss pharmaceutical intermediates manufacturer, closed its manufacturing facility in Huntington Park, California. The main production facility was commissioned in 1998. A partial list of assets consisted of sixteen (16) large, multi-purpose glass-lined reactors (3,000 – 4,000 gallon), centrifuges, filter-dryers, forty (40) storage tanks, etc. The seller sought a buyer for the assets with the capability of equipment removal in a timely manner.

Solution

Federal Equipment mobilized a highly skilled team to remove and load all equipment from the facility. Concurrently, Federal embarked on a multi-dimensional marketing campaign utilizing the following tactics:

• Phone call sales: Using databases from Harris manufacturing and our in-house list, we conducted a cold-calling campaign to intermediate chemical/pharmaceutical manufacturers.

• Direct mail: Developed a six-page flyer listing all items, including photos, to over 40,000 names from our in-house database and purchased lists.
• Trade journal and newspaper advertising: We ran a half-page ad in Pharmaceutical Processing, and a full page ad in Chemical and Pharmaceutical Solutions announcing the purchase and listing with photos the best pieces from the sale.
• Internet advertising: We developed a promotion on the homepage of our Web site with hyperlinks to individual pages containing full descriptions, specifications and photos of each piece of equipment.
• E-mail advertising: We designed an e-mail rollout that was sent over 8000 pharmaceutical manufacturers from our in-house customer list.

Result

Federal Equipment Company has removed 90% of the of the equipment and to date has sold over 75% of the equipment. Job completion date: June 2004.

Appraisals

You can now obtain quick and accurate machinery equipment appraisals from a recognized industry leader. For over 50 years, Federal Equipment has customized machinery equipment and plant appraisals to your precise value classification requirements. Federal Equipment’s AMEA certified appraisers provide equipment appraisals for asset based financing, acquisition of assets, mergers, bankruptcy or a determination of the value of surplus assets. Get an accurate price for individual pieces or entire process facilities.

Federal Equipment services include equipment appraisals for:

· Auction Value

· Orderly Liquidation Value

· Fair Market Value

· In-Place Value

· New Replacement Cost Value

For immediate appraisal information contact Federal Equipment, Certified AMEA Appraiser at 216.271.3500.

In House Shop Capabilities

Federal Equipment maintains a full-service shop at our facility in Cleveland, OH. We can provide a quotation for a range of services that include:

• Mechanical testing of equipment under power
• Spark testing glass-lined surfaces
• Hydrostatic testing
• Cleaning equipment
• Painting equipment

Our shop facilities are managed by Lucky Nehez (lucky@fedequip.com).

Equipment Auction and Negotiated Sale Liquidation Services

Federal Equipment can help you turn your idle assets into cash by arranging an auction to sell your equipment. Our experience in the purchase and sale of process equipment gives us the expertise to conduct equipment auctions or the negotiated liquidation of your assets to ensure a maximum return on your investment.

Buying Equipment

Sell your unwanted processing equipment. Federal Equipment is looking to purchase single items, complete process lines or entire manufacturing plants. Federal Equipment pays top dollar for your idle or unwanted process equipment. We also employ our own staff of rigging experts, ready to assist with your dismantlement and rigging needs for easy equipment removal.

About Federal Equipment

For more than 50 years, Federal Equipment Company has been a trusted name in the processing equipment industry. As one of the world’s top suppliers, Federal Equipment provides quality used equipment, outstanding service and competitive prices to meet the needs of the pharmaceutical, chemical, plastics, and related process industries. Federal Equipment also offers a complete array of specialized services that range from the liquidation and auction of process lines and manufacturing facilities, to equipment appraisals, and more. Federal Equipment has over 10,000 pieces of equipment in stock and ready to ship and occupies over 400,000 square feet of covered warehouse space on more than 30 acres in Cleveland, Ohio, with branch offices in New Jersey and Latin America, allowing us to serve the international processing industries with exceptional service and pricing