2015 Salary Survey Shows High Job Satisfaction Rates Page 28
Keys to Employee Motivation, Success Page 38
Biofuels Training Offered Across US Page 42
THE YEAR OF
THANKS FOR BEING SOME OF THE FIRST RETAILERS TO OFFER E15. Growth Energy commends CENEX, MAPCO, Minnoco, Murphy USA, Petro Serve USA, Protec Fuel, Sheetz and Zarco USA for their pioneering spirit and efforts to expand consumer access to higher blends of renewable fuels. They offer consumers a choice and savings at the pump, while investing in a homegrown industry that supports farmers across the country. Together weâ&#x20AC;&#x2122;re making progress toward the next generation of sustainable, renewable fuels.
Learn more at GrowthEnergy.org/E15
VOLUME 21 ISSUE 5
EDITOR'S NOTE On The Money By Tom Bryan
10 THE WAY I SEE IT Ethanol Delivers Quality And Price By Mike Bryan
11 EVENTS CALENDAR 12 VIEW FROM THE HILL
2015 Ethanol Industry Salary And Satisfaction
Connecting Compensation To Performance
By Susanne Retka Schill
By Holly Jessen
Workforce responds to employment questions
The cost of employee complacency can be high
Crowd Participation Needed By Bob Dinneen
A Call To Action By Tom Buis
16 GRASSROOTS VOICE
Flexing Forward With E15 By Brian Jennings
20 BUSINESS BRIEFS 22 COMMODITIES 24 DISTILLED 58 TALKING POINT
Setting The Table For The Big Score By David VanderGriend
MINNEAPOLIS CONVENTION CENTER MINNEAPOLIS, MN www.FuelEthanolWorkshop.com
Top Of Biofuel Class
Small Companies, Big Ideas
By Holly Jessen
By Tom Bryan
Training opportunities available for career advancement
Learn about seven businesses presenting at FEW in June
High Performance More Marathon Than Sprint
60 BUSINESS MATTERS New Rule Offers Whistleblowers More Protections By Daniel Kaufman
JUNE 1â&#x20AC;&#x201C; 4, 2015
The process of culture change when new management arrives
By Scott McDermott
54 Ethanol Producer Magazine: (USPS No. 023-974) May 2015, Vol. 21, Issue 5. Ethanol Producer Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
4 | Ethanol Producer Magazine | MAY 2015
Open windows of opportunity with good chemistry. Each day offers the opportunity to transform the potential of your ethanol plant. Reinvent your performance and growth potential with our advanced chemistries, unique application insights and practical expertise. Together, we will transform multiple parts of your operation—boost corn oil yields, drive production efficiencies and find inventive new ways to cut costs. Discover the full potential of your plant today. Learn more at solenis.com/biorefining
™ Trademark, Solenis or its subsidiaries, registered in various countries © 2014, Solenis AD-10040
On The Money Salary isn’t everything, but it’s hard to be happy in your job when you’re earning less than people in similar roles inside or outside your company. Ultimately, job satisfaction isn’t just about what you make—I think we all Tom Bryan
President & Editor in Chief firstname.lastname@example.org
know that—but it’s definitely related to what you make relative to what’s average for your profession within your industry. Every two years Ethanol Producer Magazine conducts an industry salary and job satisfaction survey. We do this to give the men and women who manage and work at ethanol plants perspective on industry compensation trends. This year’s survey was delivered to more than a thousand ethanol plant employees, from CEOs to plant operators, and about one-fourth of them responded. The data was self-reported and collected without random sampling techniques, but strong participation gives weight to the results. Once again, we see an industry full of well-paid, highly educated people who tend to be extremely satisfied with their jobs and loyal to their employers. EPM Senior Editor Susanne Retka Schill, who spearheaded this year’s survey and analyzed its results, reports that 8 out of 10 ethanol plant employees received a raise in 2014, and 9 out of 10 took home a bonus. You’ll find more data like that, much of it brought to life in vibrantly-colored graphics, starting on page 28. Our personnel theme continues with “Top Of Biofuels Class” on page 42. In this story, EPM Managing Editor Holly Jessen reports on the important role that technical colleges and training centers play in providing a steady stream of skilled and upwardbound employees to the ethanol industry. After that, Jessen circles back to topic of compensation in her page-38 feature about linking employee pay to individual and company performance goals. Finally, if you’re not already registered for this year’s International Fuel Ethanol Workshop & Expo, I urge you to take a look at the agenda today. With four tracks, 25 panels and more than 100 speakers, there is something for every ethanol industry professional at this summer’s FEW, taking place June 1-4 in Minneapolis, Minnesota. While large corporations are increasingly prevalent in the modern ethanol industry, technology and service providers of all sizes are still finding major opportunities in the space. In “Small Companies, Big Ideas,” on page 48, we highlight the offerings of seven business presenting at the industry largest international forum. See you in Minneapolis.
FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US: 6 | Ethanol Producer Magazine | MAY 2015
VOLUME 21 ISSUE 5
President & Editor in Chief Tom Bryan email@example.com Vice President of Content & Executive Editor Tim Portz firstname.lastname@example.org Managing Editor Holly Jessen email@example.com Senior Editor Susanne Retka Schill firstname.lastname@example.org News Editor Erin Voegele email@example.com Copy Editor Jan Tellmann firstname.lastname@example.org
Art Director Jaci Satterlund email@example.com Graphic Designer Raquel Boushee firstname.lastname@example.org
Chairman Mike Bryan email@example.com CEO Joe Bryan firstname.lastname@example.org
Vice President of Operations Matthew Spoor email@example.com Business Development Director Howard Brockhouse firstname.lastname@example.org Senior Account Manager/Bioenergy Team Leader Chip Shereck email@example.com Account Manager Jeff Hogan firstname.lastname@example.org Account Manager Tami Pearson email@example.com Sales & Marketing Director John Nelson firstname.lastname@example.org Circulation Manager Jessica Beaudry email@example.com Traffic & Marketing Coordinator Marla DeFoe firstname.lastname@example.org
2015 International Fuel Ethanol Workshop & Expo 2015 National Advanced Biofuels Conference 2016 International Biomass Conference & Expo BBI Project Development BetaTec Hop Products Buckman Cereal Process Technologies Cloud/Sellers Cleaning Systems Direct Automation DuPont Industrial Biosciences EcoEngineers Fagen Inc. Fluid Quip Process Technologies, LLC Growth Energy Hengye USA Hydro-Klean LLC ICM, Inc. Indeck Power Equipment Co. Interra Global Corporation INTL FCStone Inc. Iowa Economic Development Authority J.C Ramsdell Enviro Services, Inc. Lallemand Biofuels & Distilled Spirits Leaf Technologies Mist Chemical & Supply Company Nalco, an Ecolab Company New Holland Agriculture New York Blower Company North American Industrial Services Phibro Ethanol Performance Group POET-DSM Advanced Biofuels Renewable Fuels Association RPMG, Inc. Solenis LLC Sulzer Pumps Solutions, Inc. Swedish Exergy AB Thermal Refractory Tower Performance, Inc. Valicor Seperation Technologies Victory Energy Operations, LLC
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Customer Service Please call 1-866-746-8385 or email us at email@example.com. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for anyone outside the United States. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or firstname.lastname@example.org. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at 866-746-8385 or email@example.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to firstname.lastname@example.org. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
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MAY 2015 | Ethanol Producer Magazine | 7
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THE WAY I SEE IT
Ethanol Delivers Quality And Price By Mike Bryan
Not being in the loop of Washington politics regarding ethanol, I have always looked at it from more of a grassroots perspective. While I’m thankful
for those who represent this industry in Washington, we need both perspectives in order to have an industry that meets the needs of the consumer as well as addresses the political realities of the policy makers. The oil industry spends an enormous amount of time and money determining what motivates their customers. Keep in mind that this effort is being made by an industry where the only choice consumers have is to either not drive or buy from a competitor. Personally, I want to know what the average consumer thinks. Not a corn farmer, or an ethanol advocate, but the person who works in an office every day, or the taxi driver, or a plumber, anyone who has no vested interest in whether the ethanol industry lives or dies. That’s the person we need to be canvassing. Back in the early '90s when I was with the National Corn Growers Association, we conducted a phone survey and several focus groups on consumer attitudes toward renewable fuels. A significant percentage of those surveyed were not even exactly sure what renewable fuels were. Hopefully, we’ve made progress on that front. When asked if they would use a renewable fuel in their vehicles, a very high percentage of more than 80 percent said yes. When asked if they would pay 10 cents a gallon more for that fuel, less than 25 percent responded in the affirmative. In January, the National Association of Convenience Stores unveiled their 2015 NACS Consumer Fuel Survey. The results show that when consumers were asked “When buying gas, which of the
following factors is most important to you?” price topped the list at 71 percent, followed by location of store or station at 18 percent, brand at 8 percent, ease of entrance or exit at 3 percent and other at 1 percent. I guess things haven’t changed much since the early '90s. Somewhere along the line, we seem to have lost touch with Joe the Plumber. The folks in the oil industry know what motivates a purchase; they are keenly aware of what buttons to push to maximize their sales. I would suggest that even if we had the money for a national advertising campaign, we would have to do a whole lot of market research before we spent a dime. I think marketing ethanol goes deeper than just getting a station to sell E10, E15 or E85. It’s about a concerted effort to focus on locations where there is high traffic 12 months of the year, on stations that are willing to promote ethanol to their customers. We have taken the shotgun approach. There is currently no exclusivity with ethanol. The rifle approach would be that “Only the finest stations sell ethanol blends and as a result you get the very best fuel at the lowest-possible price.” Perhaps it’s time to begin marketing ethanol as a step up, not in price, but as a high-quality, environmentally friendly fuel, sold only by quality stations all across the country. Everyone looks for the highest quality product at the lowest possible price. We can deliver that every day of the week. That’s the way I see it.
Author: Mike Bryan Chairman, BBI International email@example.com
10 | Ethanol Producer Magazine | MAY 2015
EVENTS CALENDAR International Fuel Ethanol Workshop & Expo June 1-4, 2015 Minneapolis Convention Center, Minneapolis, Minnesota The FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the world—and the only event powered by Ethanol Producer Magazine. 866-746-8385 | www.fuelethanolworkshop.com
ACE Conference August 19-21, 2015 Omaha, Nebraska Hilton Omaha
ACE’s annual conference is tailored to the interests and needs of the people of ethanol, the folks in the trenches. It’s a gathering of ACE’s commitment to connect ethanol producers with the farmers, researchers, retailers, and support businesses to continue what all of them started a long time ago. It’s also an excellent place to learn and share ideas. And, it has all the fun of a family reunion. 605-334-3381 | www.ethanol.org/events/conference
National Advanced Biofuels Conference & Expo October 26-28, 2015 Hilton Omaha Omaha, Nebraska Produced by BBI International, this national event will feature the world of advanced biofuels and biobased chemicals—technology scale-up, project finance, policy, national markets and more—with a core focus on the industrial, petroleum and agribusiness alliances defining the national advanced biofuels industry. 866-746-8385 | www.advancedbiofuelsconference.com
International Biomass Conference & Expo April 11-14, 2016 Charlotte, North Carolina Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries. 866-746-8385 | www.biomassconference.com
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VIEW FROM THE HILL
Crowd Participation Needed By Bob Dinneen
Vince Lombardi famously said, “The achievements of an organization are the results of the combined effort of each individual.” In the
same way the success of E85Prices.com—RFA’s newest website— hinges on the participation of individuals all across the country. E85Prices.com is a crowdsourced website providing updated and timely information on the price of higher-level fuel blends at more than 3,450 stations throughout the country. The site is unique in that it offers a price breakdown at stations selling E85 and E15. A driver can easily find the price of E85 and E10 at any reported station, as well as the prices of E15 and other midlevel ethanol blends. On a broader level, one can identify the average price spread and lowest E85 price by state and track month-by-month trends on all blends ranging from E0 to E85. The site has been the premier tool for drivers to access the most up-todate information on the cost and availability of E85 and received more than 4 million hits last year alone. As a crowdsourcing site, E85Prices.com is only as good as the information it receives, which is why RFA also offers the mobile app for E85Prices.com. The mobile app makes it easy for individuals who stop to fill up at a station or simply pass by a station to log the information into the app on their phone. In addition to E85Prices.com and the adjoining mobile app, RFA also manages E85Vehicles.com, which helps individuals identify flex-fuel vehicles, whether they are shopping for a flexfuel vehicle or simply looking to see if their current vehicle is capable of running on E85. E85Vehicles.com also allows users to connect through its forum, where readers can share stories and information about everything from newly opened E85 stations to basic tips about fueling with higher-level ethanol blends. There are approximately 18 million flex-fuel vehicles on the road today and nearly a quarter of all model year 2015 vehicles coming off the line are capable of using E85. Combine that with the 23 million vehicles
12 | Ethanol Producer Magazine | MAY 2015
manufacturer warranted to use E15 and it seems clear consumer demand for these resources should be quite high. These sites, in conjunction with www.chooseethanol.com, round out RFA’s arsenal of digital tools ensuring consumers have access to all the information necessary to find stations and identify the lowest prices for E15 and E85. This information will prove useful to consumers, but will also provide a valuable resource to the government as well. So far, the government has not lived up to its obligations in keeping track of E85 availability. Last year, we examined the U.S. DOE’s Alternative Fuels Data Center and found it woefully out of date with about 1,000 stations missing from its database. An accurate accounting of E85 and E15 availability is vitally important today as continued E85 and E15 use will help the United States overcome the so-called “blend wall.” And what driver with a flex-fuel vehicle wouldn’t want to take advantage of E85? For much of last year, a $1 per gallon price difference could be found between E85 and regular unleaded. That adds up to real savings! In early 2015, E85Prices.com found that there were more than 3,450 stations in 2,155 cities selling E85. E85Prices.com helps consumers easily find a station and fill up. Lombardi’s Green Bay Packers had dedicated players who came together to win Super Bowls. In the same way, E85Prices.com gives dedicated individuals a way to make a difference and further the use of higher-level ethanol blends. Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835
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A Call To Action
By Tom Buis
Earth Day is a reminder that, now more than ever, we need to take steps to reduce greenhouse gas (GHG) emissions, improve our environment and help clean the air for ourselves, our children and future generations. Planting a tree isn’t the only way to achieve
those goals. Standing up and supporting the renewable fuel standard (RFS) will make a difference too. The RFS is our nation’s most successful energy policy in the past 40 years. By using increasing amounts of biofuels under the RFS, GHG emissions will ultimately be reduced by 138 million metric tons, the equivalent of taking 27 million cars off the road. In 2013 alone, the 13.2 billion gallons of ethanol blended into gasoline in the United States helped reduce greenhouse gas emissions by approximately 38 million metric tons, the equivalent of removing roughly 8 million cars from the road. According to the Argonne National Laboratory, compared to gasoline, ethanol reduces GHG emissions by an average of 34 percent. Advanced biofuels have the potential to reduce greenhouse gas emissions by more than 100 percent. Ethanol also reduces the need for aromatics—many of which are known to cause severe health problems—in motor fuel to improve their octane and performance. The American Lung Association has endorsed the RFS for these very reasons. Ethanol producers are constantly developing new and innovative ways to produce sustainable biofuels from farm waste and woody biomass, ushering in the next generation of renewable fuels that promise even greater reductions in GHG emissions. Meanwhile, the oil industry is polluting our air as well as our water and land with an endless barrage of spills. In 2014, Big Oil was responsible for more than 3,500 oil spills, which averages to nearly 10 oil spills each day. Only a handful of those spills managed to grab the attention of the media, and none entered
14 | Ethanol Producer Magazine | MAY 2015
the national dialogue like BP’s 2010 Earth Day disaster—the 3.19 million barrel Deepwater Horizon oil spill in the Gulf of Mexico. The impact of that spill is still being felt five years and billions of dollars later. In comparison, no beach has ever been closed due to an ethanol spill. While Big Oil is becoming less environmentally friendly and more expensive, the ethanol industry is becoming dramatically more efficient, with less water and less energy being used to produce more ethanol from each bushel of corn. According to the Argonne National Laboratory, ethanol production only borrows 2.7 gallons of water for every gallon of ethanol, compared to 5.8 gallons of water in 1998. The majority of the water is returned to the atmosphere in the form of steam. Not only is the ethanol industry using less water than ever, it’s also using less energy to produce a gallon of ethanol, 23,862 Btu per gallon in 2012 versus 26,206 Btu per gallon in 2008. Additionally, the industry is now able to produce 2.82 gallons of ethanol from each bushel of corn, compared to 2.78 gallons in 2008. Reach out to your elected officials and ask them to support these advancements by supporting the RFS, the only successful domestic energy policy that is reducing our dependence on foreign oil and fossil fuels, creating jobs right here in America and helping revitalize rural economies. The RFS is helping improve our environment by incentivizing the production of fuels that ensure a cleaner, greener future for us all. The biofuels industry has transformed the fuel market for the better and with next generation renewables right around the corner, the future is full of promise.
Author: Tom Buis
CEO, Growth Energy 202-545-4000 firstname.lastname@example.org
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Flexing Forward With E15 By Brian Jennings
Market development has always been an important part of our DNA at the American Coalition for Ethanol. Our founding members recognized that the ethanol
industry would only grow profitably by developing new markets for our fuel. Fifteen years ago, ACE hired our now-senior vice president, Ron Lamberty, who had established himself as an ethanol promoter while working in the retail and wholesale fuel business, to serve as market development director at the time. His initial focus was helping retailers understand the math of E10 and to see ethanol as a profit opportunity. Today, ACE applies this proven approach to E15, flex fuels and blender pumps. As retailers consider changes or additions to their fuel slate, they rely upon ACE to help them get past the avalanche of anti-E15 propaganda they’ve been exposed to, and help them see the opportunities available with flex fuels. ACE is equipped to make sure retailers are aware of the growing market for E15, with 16 million cars and light trucks built and under warranty for E15 in the last three model years, and automakers building 8 million more E15-compatible vehicles every year. Fuel marketers get information in many ways, but among their most trusted sources are their competitors, their peers. To that end, ACE is launching a new retailer-focused campaign called Flex Forward in 2015, based on the real-life experiences of retailers who were able to break free of oil company restrictions, get over the “blend wall” and make money by offering E15, E85 and flex fuels to their customers. A facet of the Flex Forward campaign is a video documentary we produced, featuring the CEO of a wholesale distributorship that owns and operates 21 convenience stores that sell flex fuels, the first retailer in America to offer E15 and a single-store station owner who distinguished himself from the two major chains in his town by offering E15, E85 and midlevel ethanol blends. We have also produced short video clips of these retailers answering the kind of questions their peers will no doubt ask when they consider adding E15 or flex fuels as product options.
16 | Ethanol Producer Magazine | MAY 2015
• Did they have the equipment to make the change to E15 and flex fuels? If not, what did they do? • What did the change cost? • Did they get any help? • What about regulations and the “blend wall”? • What almost made them not move to E15 and flex fuels? • How many complaints have they had? How many repair bills? • And finally, how has it worked out for them? How are sales? Can you really make a profit selling E15 and flex fuels? Flex Forward is focused on retailers and their equipment suppliers and will include earned and paid advertising, engagement at fuel marketer trade shows (where retailers go to make decisions about new products), webinars and retailer workshops. ACE has specifically designed the Flex Forward campaign to reach marketers who have not yet responded to other industry efforts, and make them aware of all of the tools available to help them succeed with E15 and flex fuels. It would make no sense—financially or otherwise—for ACE to try to duplicate the shock and awe of the NASCAR E15 program or the Prime The Pump Fund. However, in order for these programs to translate to meaningful real-world volume, someone has to be the boots on the ground who takes that message to the independent retailers who own two-thirds of the nation’s convenience stores. Furthermore, fuel marketers need someone to turn to for information and technical assistance on an ongoing basis and the ethanol industry needs expertise to tackle issues such as Reid vapor pressure, UL certification and ASTM specifications over the long haul. No organization is better-suited and prepared for that mission than ACE. To learn more about Flex Forward, go to www.ethanol.org and check out the E15 and flex-fuels section or our new website designed specifically for retailers, www.flexfuelforward.com. Author: Brian Jennings Executive Vice President American Coalition for Ethanol 605-334-3381 email@example.com
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NEWHOLLAND COM NA ÂŠ 2015 CNH Industrial America LLC. All rights reserved. New Holland Agriculture is a trademark registered in the United States and many other countries, owned by or licensed to CNH Industrial N.V., its subsidiaries or affiliates. New Holland Construction is a trademark in the United States and many other countries, owned by or licensed to CNH Industrial N.V., its subsidiaries or affiliates.
BUSINESS BRIEFS Iowa Secretary of Agriculture Bill AGRICULTURE Northey recently announced that Mark McKinley and GaAND LAND STEWARDSHIP len Barker from Fuel Time in St. Ansgar and Steve Neuendorf from Farmers Win Cooperative in Fredericksburg are the 2015 winners of the Secretary’s Ethanol and Biodiesel Marketing Awards. The awards, created by Iowa Department of Agriculture and Land Stewardship, recognize fuel marketers who promote and sell renewable fuels through creative efforts, such as hosting special events highlighting their renewable fuels, developing creative signage, initiating new advertisements or marketing efforts, and dramatically increasing renewable fuel availability.
People, Partnerships & Deals
tive analytics, statistical programming, and physics-guided data mining experience.
IOWA DEPARTMENT OF
REPRESENTS PMS 349
REPRESENTS PMS 102
GreenShift Corp. has announced the U.S. Patent and Trademark Office recently issued notice of allowances for several U.S. patent application numbers, including 13/450,997, titled “Methods of Processing Ethanol Byproducts and Related Subsystems;” 13/185,841, titled “Method and Systems for Enhancing Oil Recovery from Ethanol Production Byproducts;” and 11/908,891 titled “Methods and Systems for Washing Ethanol Production Byproducts to Improve Oil Recovery.”
Fluid Quip Process Technologies has announced that United Wisconsin Grain Producers has purchased its Maximized Stillage Co-Products System. The patented MSC System produces Still Pro 50, a 50 percent purity high-value protein product from stillage. The MSC System also improves corn oil yield and clarifies thin stillage. MSC has been in full-scale operation for more than five years, and UWGP marks the third system sold. Lux Research, a global leader in emerging technology research and advisory services, has acquired the assets of Energy Points, a leading provider of data analytics that gives the most accurate and precise analysis of energy and resources. Headquartered in Boston, Energy Points helps large companies and government entities improve their resource efficiency through analysis of energy, water, fuels and materials. As part of the transaction, Ory Zik, founder and CEO of Energy Points, and all of the data scientists from Energy Points, will be joining Lux Research. Lux Research clients will gain access to the Energy Points team, who have a combination of modeling, predic-
Accenture has entered an agreement to acquire Gapso, an advanced analytics services and solutions provider based in Brazil that specializes in solving complex supply chain and logistics challenges, mainly for companies in the natural resources and agribusiness sectors. Through the acquisition, Accenture will further expand its analytics capabilities in Brazil and provide clients with advanced analytics talent and solutions that enable data-driven decisions that can optimize operations and reduce supply chain risks and costs. Terms of the transaction were not disclosed. Complementing Accenture’s end-to-end analytics services, Gapso will help position Accenture as a key advanced analytics player in Brazil, serving clients that specialize in the oil and gas, petrochemical, mining, pulp, paper, steel, grains, sugar and ethanol industries. Alliance BioEnergy Plus Inc. has announced new board members. Incumbent members Ted Chasanoff of CBIZ MHM LLC, Michael Bilodeau, Daniel de Liege and Mark Koch were reelected to the board of directors, while retired Army Lt. Gen. Mark Hertling and newly appointed CEO David Matthews were added. Chasanoff will serve as chairman of the board.
Thermal Refractory Solutions & Maintenance Give the Thermal team a call today! 612-751-2010 www.thermalrefractory.com We are your Ethanol Refractory Experts! We know your energy center and can provide superior results on your RTO, TO, Boiler, or Dryer. We have installers based from 3 different locations to provide a fast & cost effective solution for your plant. We understand the importance of your operation and will provide the results you need to be running smooth. 20 | Ethanol Producer Magazine | MAY 2015
Companies associated with UNICA, the Brazilian sugarcane industry association, have elected Luis Roberto Pogetti, chairman of the board of directors of Copersucar, as the organization’s new chairman of the board. Pogetti replaces former minister Robert Rodrigues. Elizabeth Farina remains on the executive presidency of UNICA. The government of Canada has announced it will invest $3.7 million to help Integrated Grain Processors Cooperative Ethanol Inc. install Canada’s first Fiber Separation Technology system. The investment will enable IGPC Ethanol to have a higher output of ethanol, corn oil and distillers grains, and develop new higher-value animal feed products while lowering the plant’s energy consumption. The introduction of FST and the IGPC plant allows for the early separation of fiber from corn prior to its fermentation, increasing the efficiency of the distillation process and producing a cleaner fiber product.
Pathogen control specialist Anitox has appointed Mark Danen as national accounts manager of biofuels. The company is driving growth in the green energy sector following the Danen launch of its OpimOH yield-booster. Danen previously held a series of roles at Novartis Animal Health and has more than 15 years of sales and key account management experience. Lallemand Biofuels & Distilled Spirits and Mascoma LLC recently announced that Lallemand has been awarded a patent (U.S. 8,956,851 B2) for the technology that is used in TransFerm Yield-plus. This invention provides for novel metabolic pathways that reduce or eliminate glycerol production and thereby increase ethanol yield by yeast or other microorganisms. This method was originally filed in April 2012 and the patent was granted Feb. 17, 2015. During the past three years, LBDS and Mascoma introduced TransFerm and TransFerm Yield-plus yeasts into the ethanol industry to help producers reduce the amount of glucoamylase needed in fermentation and also to provide a substantial yield increase through the introduction of this glycerol reduction pathway. Since that introduction, over 50 plants have utilized the TransFerm platform producing over 4 billion gallons of ethanol.
Ergon BioFuels LLC, subsidiary of Ergon Inc., recently announced that it has entered into a comprehensive services arrangement with Gavilon to originate and market grain at the company’s Vicksburg, Mississippi, facility. Under the terms of the agreement, Gavilon will operate the 3.2 million-bushel warehouse at the Ergon BioFuels facility and begin buying corn, soybeans, milo and soft red wheat from area producers in the near future. The strategic arrangement between the companies will also support the reopening of the ethanol plant located on site. Ergon BioFuels will own and operate the 65 MMgy ethanol plant and market the ethanol and corn oil. Gavilon will supply feedstocks to the facility and market certain offtake, including dried distillers grain with solubles, wet distillers grains with solubles and corn distillers condensed solubles for Ergon BioFuels. The plant is scheduled to reopen in May. Mycogen Seeds, the national retail seed company of Dow AgroSciences, has joined Growth Energy as a premiere associate member. Mycogen Seeds’ partnership with Growth Energy supports ethanol as a market option vital to corn growers throughout the U.S.
MAY 2015 | Ethanol Producer Magazine | 21
Prices & Market Analyses
Natural Gas Report
Analysts to watch summer inventory supply closely March 23â&#x20AC;&#x201D;As the market moves farther from peak demand in the winter, the decline in storage inventories begins to slow and then reverse as the relatively steady level of natural gas production matches and then exceeds demand. As this progresses, the market will begin to answer questions about the relationship between production, demand and inventory capacity over the course of the summer period or injection season. On Feb. 19, market data suggest that residential plus commercial (res-com) demand peaked for the winter at over 71 billion cubic feet (Bcf). In contrast, on Aug. 22 last year, res-com demand was a paltry 10.2 Bcf. As we move further into spring, res-com demand will continue declining and ultimately help to drop aggregate demand in the natural gas market below the aggregate daily supply level. When this happens, excess production will be injected into natural gas storage facilities to be saved for the upcoming winter when heating demand in the res-com sector once again rises to levels that consistently exceed daily production. Of course, the limiting factor in this cycle is inventory. At stake this year is whether growth in production over the course of 2014 is of sufficient magnitude to exceed inventory capacity to carry excess supply into winter. If storage inventory is at risk of being overrun prior to the return
by Ben Straus
of res-com heating demand, natural gas prices will likely have to fall to a level that induces an uptick in one of the other demand categories (likely power generation) or to cause a supply response.
Volatile global currency environment affects corn March 23â&#x20AC;&#x201D;The corn market has been responding to an evervolatile global currency environment. The U.S. dollar has been affecting commodity values within the U.S., with the fear of restricting exports. Therefore, some focus on commodity values has been relative to the dollar. Managed money was observed liquidating long positions in corn in March, according to the Commodity Futures Trading Commission. However, that could lead to potential volatility as the corn crop has not yet been seeded. The planted acreage report has suggested corn acres will be down while soybean acres advance relative to last year. The current new crop corn and soybean ratio would suggest that as well. After the planted acreage number is released, it will be on to yield estimates that will lure traders in trying to modify the corn demand table. U.S. corn carryout declined by 50 million bushels in the March USDA supply and demand report. Total corn demand was estimated at 13.695 billion bushels. Ethanol demand is expected to consume 5.200 billion bushels, down from the previous estimate 5.250 billion bushels but up 66 million bushels from a year ago. Exports increase to 1.800 billion from February but it is still lower than 1.917 billion bushels a year Comments in this column are market commentary and are not to be construed as market advice.
22 | Ethanol Producer Magazine | MAY 2015
by Jason Sagebiel
ago. This sector is being impacted by greater global inventories and global currency components. Overall world corn ending stocks have increased and world corn carryout-to-use ratio is at the highest level since 2008-â&#x20AC;&#x2122;09. This allows some buffer if world production levels become static.
Regional Ethanol Prices ($/gallon) Front Month Futures (AC) $1.495
1.666 SOURCE: DTN
Longevity, depth of Chinese market at top of mind March 23—Coming into March Madness, DDGS prices are still being dramatically affected by Chinese demand, in both bulk and container shipments. More than 2.5 million metric tons have been booked via the Gulf in bulk vessels destined for China so far for the summer, the bulk of which is just starting to ship as the Mississippi thaws to the north. And although the Chicago container market still continues to trade, the volume pales in comparison to the fervor we saw in that market last year. The price spread between the per-ton cost of shipping containers versus bulk has narrowed dramatically, and more bulk business is expected. Given the export prices being paid, domestic demand has dissipated. There is
Regional Gasoline Prices ($/gallon) by Sean Broderick
very little, if any, DDGS moving toward places like the U.S. Southeast poultry market. It is just too expensive and it is quickly becoming noncompetitive in a lot of the other delivered markets as well, including Canada and Mexico. Locally, trucks are still moving to the cattle and hog customers but are now even starting to feel some pushback from them. Looking ahead for DDGS, the normal questions of how many acres of corn will be planted, and what the weather is going to be like, are going to take a back seat to questions about the longevity and depth of the Chinese demand.
Front Month Futures Price (RBOB) $1.797 Region
2.321 SOURCE: DTN
DDGS Prices ($/ton) May 2015
292 SOURCE: CHS Inc.
Corn Futures Prices
(June Futures, $/bushel) Date
Mar 20, 2015
Feb 15, 2015
Mar 20, 2014
4.83 1/2 SOURCE: FCStone
Cash Sorghum ($/bushel) Location
Ethanol prices gauging gasoline direction March 23—Ethanol prices have gained momentum at the end of March, following renewed spring support in corn futures prices. Even though ethanol inventory levels are nearly 30 percent over year ago totals, the reduction of supplies over the past four weeks has created additional support through the ethanol complex. Gasoline prices are trying to regain market support lost as they slipped lower from highs seen at the end of February. It
by Rick Kment
is uncertain if the energy complex has hit its seasonal highs, as demand is starting to build with traders focusing on increased driving activity through the months of April and May. Traders are looking for additional, longer-term direction over the next couple of weeks in both ethanol and RBOB gasoline futures contracts, while still trying to not overpace the significant growth in crude oil supplies through the recent months.
Feb 20, 2015
Mar 21, 2015
Mar 21, 2014
SOURCE: Sorghum Synergies
Natural Gas Prices ($/MMBtu) Jan 31, 2014
Mar 23, 2015
Mar 24, 2014
SOURCE: U.S. Energy Services Inc.
U.S. Ethanol Production (1,000 barrels) Per Day
SOURCE: U.S. Energy Information Administration
MAY 2015 | Ethanol Producer Magazine | 23
Ethanol News & Trends
Golden Grain Energy reaches 1 billion gallons
Economic impacts of ethanol in 2014
Golden Grain Energy LLC has reached a new milestone. Earlier this year, the facility produced its 1 billionth gallon of ethanol. “The 1 billion gallon mark is certainly a reason for celebration and we are proud of each and every gallon of high-quality ethanol we produce,” said Jim Boeding, board member at Golden Grain Energy, a 120 MMgy facility in Mason City, Iowa, that broke ground in 2003. Bob Dinneen, CEO of the Renewable Fuels Association was on hand when the facility broke ground more than a decade ago. The industry was just beginning to visualize a bigger, brighter future, and nobody could have dreamed about 1 billion gallons being produced from this facility, much less a time when the industry would be producing 14 billion gallons annually, Dinneen said. Brian Jennings, executive vice president of the American Coalition for Ethanol, also congratulated Golden Grain Energy on its achievement, noting the facility is the first locally owned plant in Iowa to reach 1 billion gallons of production.
(million 2014 dollars)
SOURCE: ABF ECONOMICS
Study: Ethanol benefits the US economy The Renewable Fuels Association released a new ABF Economics study, titled “Contribution of the Ethanol Industry to the Economy of the United States in 2014,” in February. The study quantifies the economic, national security, and job-creating benefits of domestic ethanol production last year. According to the study, the ethanol industry was responsible for 83,949 direct jobs and 295,265 indirect and induced jobs last year. The industry also added $52.7 billion to the national gross domestic product (GDP). In addition, the 14.3 billion gallons of ethanol produced last year displaced 515 million barrels of foreign oil, which has a value of nearly $49 billion.
Some chemical companies focus on this
“The ethanol industry continues to make a significant contribution to the economy in terms of job creation, generation of tax revenue, and displacement of imported crude oil and petroleum products,” said John Urbanchuk, author of the study and managing partner of ABF Economics. “The importance of the ethanol industry to agriculture and rural economies is particularly notable. Continued growth and expansion of the ethanol industry through new technologies and feedstocks will enhance the industry’s position as the original creator of green jobs, and will enable America to make further strides toward energy independence.”
Buckman takes a wider view. Some chemical companies focus only on process. Some focus solely on water treatment. Buckman takes a comprehensive approach and looks at the bigger picture — return on investment and environment. We look at every aspect of your plant’s operation,
© 2014 Buckman Laboratories International, Inc. All rights reserved.
24 | Ethanol Producer Magazine | MAY 2015
(million 2014 dollars)
tailoring chemistries to boost production and increase profitability — from evaporator efficiency to corn oil recovery to water treatment issues. To find out more or to schedule a system audit, contact your Buckman representative or email firstname.lastname@example.org.
Green Plains subsidiary files IPO In March, Green Plains Inc. announced that a newly formed subsidiary, Green Plains Partners LP, had confidentially submitted a draft registration statement with the U.S. Security and Exchange Commission. According to Green Plains, the registration statement is for a proposed underwritten initial public offering (IPO) of common units representing limited partner interests in the newly formed partnership. It is anticipated that the IPO will raise approximately $200 million to $250 million in gross proceeds. However, the company also noted that the date, number of common units to be sold and the price range for the proposed IPO have not yet been determined and are subject to several factors, including market conditions. Green Plains said the initial assets of the partnership are expected to consist of its downstream ethanol transportation and storage assets, which are located in 12 states throughout the Midwest and Southeast.
Brazilian ethanol statistics 2013
Fuel imports (million liters)
Fuel exports (million liters)
Fuel ethanol production (million liters)
Number of refineries SOURCE: USDA FAS GAIN
Ethanol increases ethanol blend level In mid-March, Brazil increased the ethanol blend in regular gasoline from 25 percent to 27 percent. A statement published by UNICA, the Brazilian sugarcane industry association, called the governmentâ&#x20AC;&#x2122;s announcement a positive decision. According to UNICA, the increased blend level is expected to increase demand for anhydrous ethanol approximately 1 billion liters (264.17 million gallons). The decision to increase the blend level was made following testing and review performed by Petrobras with the cooperation of several stakeholder groups.
The Brazil Ministry of Mines and Energy said that last year Petrobras was asked to evaluate the impacts of increasing the ethanol blend level. Tests conducted by the Petrobrasâ&#x20AC;&#x2122; research center did not show any technical problems arising from the use of 27.5 percent anhydrous ethanol. Information released by the ministry also indicates the federal government, motor vehicle manufacturers, motorcycle manufacturers and ethanol producers participated in a working group formed as part of the evaluation.
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MAY 2015 | Ethanol Producer Magazine | 25
USDA finalizes BCAP rule
2015-'16 2016-'17 Planted corn acres (millions)
Yield (bushels per harvested acre)
Ethanol and by-products (million bushels)
USDA forecasts corn-ethanol production, feedstock, E10, exports, planted acres The USDA recently released new 10-year projections for the food and agricultural sector, reporting that approximately 35 percent of total corn use is projected to go to ethanol production through 2024. The USDA predicts ethanol production will remain near current levels over the next decade, with corn remaining the primary feedstock. While E10 is expected to continue to remain the primary gasoline fuel blend over the next decade, the department’s forecast shows moderate gains are expected for U.S. ethanol exports. According to the USDA, more than 5.13 million bushels of corn went to ethanol and
byproducts in 2013-’14. That volume is expected to increase through 2015-’16, when it reaches 5.2 million bushels, drop off for several years, reaching 5.08 million bushels in 2018’19 through 2020-’21, before gradually increasing again through 2024-’25, when it reaches 5.2 million bushels. Planted corn acres are expected to remain relatively steady over the next 10 years, ranging from a low of 88 million acres in 2015-’16 to a high of 90 million acres in 2016-’17 through 2018-'19. Bushels per harvested acre are expected to increase steadily, from 158.8 in 2013’14 to 185.3 in 2024-’25.
Graphic design www.marierio.fr
The USDA recently published the final rule for the Biomass Crop Assistance Program. Although the general scope of BCAP has not been altered, some key changes are being made to the program, including matching payment and funding amounts, material eligibility and project areas. According to the rule, matching payments have been reduced from $1 for each $1 per ton provided by the biomass conversion facility up to $45 per ton, to no more than $20 per dry ton, for a period of up to two years. Bagasse—which includes sugarcane and sorghum—and other materials not harvested directly from the land are no longer eligible crops. The rule provides the example of manufactured wood wastes, such as sawdust or sawmill residues, as not being eligible woody material. In addition, the rule expands the scope of eligible material as materials that can now be used by a biomass conversion facility for the purpose of research, in addition to the four previous categories of heat, power, biobased products and advanced biofuels. Additional changes were made to project area selection criteria and other aspects of the program.
USDA 10-year projections
Leaf Technologies is the business unit of Lesaffre dedicated to the biobased ethanol and chemicals industries. At Leaf Technologies we are starting a new path in our development with the will to offer our partners more specialized products and services, to continue innova-
ting in the field of first and second generation ethanol and to exceed the industries expectations. Based on our expertise in genetics, scaling up, fermentation, yeast production and through technical support we will be focused on turning science into industrial reality.
Study: Pigs can regulate sulfur retention when fed DDGS Researchers at the University of Illinois have conducted research to investigate effects of high levels of sulfur in diets for pigs. A team led by Hans Stein, professor of animal sciences at the University of Illinois, used distillers dried grains with solubles (DDGS) that contained 0.3 percent sulfur. One of the experimental diets in the study contained this low-sulfur DDGS at an inclusion rate of 30 percent. The other diet had calcium sulfate added to simulate the use of high- (0.9 percent) sulfur DDGS. The sulfur content of the second diet was 0.38 percent. The study showed pigs fed the diets containing DDGS did not have elevated concentrations of sulfur in their organs compared with pigs fed the control diet. Instead, Stein said excess sulfur was excreted in the urine.
Apr 2011 Sriya Innovations changes its name to Renmatix
Sept 2011 Renmatix unveils the Plantrose process
Jan 2012 BASF invests in Renmatix
Jun 2013 UPM and Renmatix enter JDA
Dec 2013 Renmatix and Virent announce strategic
Dec 2013 BASF and Renmatix sign JDA
Mar 2015 Total and Renmatix sign JDA
Total invests in Renmatix, signs agreement Renmatix Inc. recently announced an investment by the New Energies Division of Total. The two companies have also signed a joint development agreement (JDA), under which Renmatix and Total will utilize Renmatixâ&#x20AC;&#x2122;s proprietary Plantrose process with specific feedstocks to extract sugar for use in producing biobased products of interest to Total. In addition, Total has joined the Renmatix board of directors. The Plantrose technology uses supercritical water to reduce the costs to convert biomass to cellulosic sugars. â&#x20AC;&#x153;Having a global oil and gas major like Total join our ranks signals the important role
cellulosic sugars play in enabling growth of the bioeconomy, and the transformative impact of Plantrose technology. Our licensing business model allows us to work with the pacesetters of the chemical, forestry, and fuels industriesâ&#x20AC;&#x201C;namely BASF, UPM, and now Total,â&#x20AC;? said Renmatix CEO Mike Hamilton. â&#x20AC;&#x153;Totalâ&#x20AC;&#x2122;s investment, partnership, and leadership are integral links in helping Renmatix redefine the economics of second-generation sugars that will fuel profitable biorefineries.â&#x20AC;? Existing Renmatix investors, including BASF and Kleiner Perkins Caufield & Byers, joined Total in the initial tranche of the Series D fundraise.
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MAY 2015 | Ethanol Producer Magazine | 27
28 | Ethanol Producer Magazine | MAY 2015
Ethanol Producer Magazine’s
2015 Ethanol Industry Salary and Satisfaction Survey
A sampling of employees working in ethanol plants paints a broad picture of an industry with hard-working, well-educated, generally well-satisfied and well-paid men and women. By Susanne Retka Schill
Ethanol Producer Magazine periodically takes a look at employment in the ethanol industry. In March, 234 individuals responded to
an email request to participate in an online survey. How good is the sample? The response rate is considered extremely good at 23 percent. The profile of respondents by plant capacity is very close to the industry’s as a whole, but the data was self-reported and gathered without random sampling techniques. While all job functions are represented in the sample, it is weighted toward management positions, with 14 percent of respondents being CEOs, chief operating officers, chief financial officers or general managers and another 14 percent being plant managers. The survey was comprised of 38 questions. Respondents who said they are corporate management or general managers were directed to a set of additional questions regarding the plant as a whole, such as reporting the salary ranges for multiple plant positions and recruitment methods.
Who Are They?
Respondents represent a range of plant sizes, with nearly half working at midsize plants with annual capacities between 40 MMgy and 69 MMgy. Another 40 percent represent larger plants, worked at just 1 plant which can be further broken down into 7 percent from plants 70 MMgy to 99 MMgy, 16 percent from 100 MMgy to 119 MMgy, worked at 2 and 16 percent from plants larger than 120 MMgy. The number of respondents from plants smaller than 39 MMgy was 14.5 percent. The distribution of survey responses by size of plant is nearly the same as the industry’s capacity profile calculated from plants appearing on Ethanol Producer Magazine’s spring plant map. The last time we conducted the survey, in mid-April 2013, a question arose about capacity utilization as the industry was in the midst of a slump. At that time, 77 percent said their plants were operating between 90 to 100 percent capacity and 3 percent reported their plants as idled. The largest plants tended to be running at close to full capacity, with a clear trend showing lower levels of capacity utilization as plant size decreased. Not surprisingly, in early March of this year, a greater proportion—85 percent—of survey respondents report plants running between 90 and 100 percent capac-
MAY 2015 | Ethanol Producer Magazine | 29
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PERSONNEL ity and another 9 percent report running between 80 and 89 percent. Only 1 percent of those responding to the survey now report being idled.
The survey provides an overview of ethanol industry demographics. As would be expected, male employees far outnumber women at 78 percent of the total. The 22 percent of females responding has remained steady over past surveys, comparing to 23 percent two years ago and 24 percent responding in the previous survey conducted in late 2009. Respondents to the survey are a welleducated lot. If you combine those with four-year or advanced degrees and studies, it amounts to 62 percent of the workforce. Combining those with some college with those reporting post-high school vocational or technical training, itâ&#x20AC;&#x2122;s another 28 percent. Ethanol industry employees are a hard-working crew as well, with 98 percent of respondents working full time. Of those, over a third report working 45 to 49 hours a week, and roughly 20 percent work 41 to 44 hours. The vast majority, 75 percent, receive no compensation for hours worked over 40 per week while 20 percent report getting time-and-a-half. Given the ethanol boom began at the turn of the century and really ramped up in 2007, it is no surprise that 29 percent of respondents report 10 to 14 years of experience in the ethanol industry and another 29 percent report 7 to 9 years of experience. The work force does not move around much, either. We asked how many plants the respondents have worked at in the past 10 years, and nearly 70 percent have worked at just one facility and another 20 percent have worked at just two facilities. As for previous work experience, personnel came to the ethanol industry with a very broad range of previous jobs. Respondents named roughly 50 prior occupations. The two biggest categories for prior experience are agriculture (19 percent) and industrial manufacturing (15 percent). The
next closest categories were chemical processing and construction at about 6 percent each, on down to food and beverage, food processing or milling, accounting, business and pharmaceuticals all coming in around 3 to 4 percent each. Recent graduates account for 4 percent and those reporting their previous work experience as being in the military accounted for 2 percent of respondents. Overall, ethanol plant employees are satisfied with their jobs. When asked to rate their satisfaction levels on a scale of 1 to 5, with 5 meaning extremely satisfied, the weighted average was 3.69. That response was virtually identical to what respondents reported two years ago, when the weighted average was 3.68. Respondents were also asked to rate how important 11 different work-place conditions or values are to job satisfaction. No one factor clearly stands out, though job security is named as very important by 59 percent. In looking at the weighted average for each factor, job security edges out the others at 4.42 (5 being very important). Just behind that, and rated roughly the same at around a 4.3 weighted average, are competitive salary, good benefits and a positive atmosphere. The lowest ranked value is having a short commute at a weighted average of 3.28. Other workplace values between those mentioned include working for the renewable fuels industry, manageable workload, flexible hours, recognition by employers and opportunities to advance. Another way of viewing job satisfaction is to ask whether the respondent is considering a different job. Just over 13 percent are actively looking or seriously considering launching a job search. Nearly 40 percent arenâ&#x20AC;&#x2122;t considering a different job, but 46 percent would consider one if a good opportunity came along. Most, at 60 percent, say they are compensated about right, while 36 percent say they are compensated too little.
Letâ&#x20AC;&#x2122;s Talk Dollars
Payroll cost, including benefits, for even the smallest ethanol plants range be-
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MAY 2015 | Ethanol Producer Magazine | 31
(owner, partner, president, CEO, COO, etc.))
17% % 14%
20 0% % 20%
Operations manager Plant manager
Plant engineer Boiler technician
42% 220% 0%
Operator Lab technician Maintenance technician
% 27% 27%
5% % 18% 5%
Environmental health and safety ty
6% 30% 30%
24 4% 24% 4% 2% 16% 0,000
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Salary Ranges for 15 Positions
As reported by 59 senior managers. The highest percentage salary range for each position is highlighted for emphasis.
2% 2% 2% 10% 30% 2%
4% % 9%
35% 255% 25% 16% % 35% 00 0,000-$59,0
43% 43 3 336% 6% 6%
20% 7% 33% 33%
47% 447 7% 46% 444%
MILLION average payroll
2% 25% 34% 3%
40,0 Lessss than $
with a PAYBACK for ETHANOL PLANTS
OF SENIOR MANAGERS expect to hire 2 or more in the year ahead tween $1 million and $2 million. Payrolls for the larger plants, 70 MMgy and up, range from $3.6 million to over $5 million. The average annual payroll for the 37 senior managers responding to this question is $3 million, albeit responses to this question are dominated by plants in the 40 to 70 MMgy size category, which have an average annual payroll of $3 million. Senior managers reporting for the plant as a whole gave salary ranges for 15 job functions. This was the one question where one can see a significant change from the 2013 survey, with most job functions seeing more employees in higher salary ranges. In some cases, there is a big shift. In 2013, for example, 37 percent of the top corporate managers (owner, partner, president, CEO, COO) received salaries of $200,000 or more and 26 percent reported a range of $150,000 to $199,000. In 2015, there is a big jump to 59 percent reporting salaries in the $200,000 and higher and 28 percent are in the $150,000 to $199,000 range.
General managers also jump a bracket. Two years ago, the dominant salary range was $100,000 to $149,999 with 45 percent in that salary range and roughly equal numbers getting salaries in the next two higher brackets. This year, the dominant bracket for general managers moves up to $150,000 to $199,000 with 56 percent reporting in that range. About 20 percent are in the lower bracket and just under 20 percent higher. Operations and plant manager positions also see shifts into higher salary brackets. The only job function not seeing a shift to higher salary ranges is operator, which possibly indicates new hires are starting in this position at lower salaries and experienced operators are moving up. Promoting from within is considered the most effective way to fill open positions, senior managers report, and recruiting new people by word of mouth ranks high as well. Other recruitment methods ranking in the middle are newspaper classified ads, personally recruited from related industries, headhunters, Internet job sites,
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MAY 2015 | Ethanol Producer Magazine | 33
Experience, education, job satisfaction nearly identical for men and women PERSONNEL
Self-Reported $200,000 or more $150,000 - $199,999
$100,000 - $149,999 $75,000 - $99,999 $60,000 - $74,999 $50,000 - $59,999 $40,000 - $49,999 Less than $40,000 5% 10% 15% 20% 25% 30%
80% GOT A RAISE LAST YEAR
Less than 3%
OF YOUR LAST RAISE 4%
JOB SATISFACTION 66% Very or
60% 36% 2%
say compensated say compensated say compensated too much too little just right
34 | Ethanol Producer Magazine | MAY 2015
RECEIVED A BONUS
BONUS RECEIVED IN THE PAST 12 MONTHS
$1,000 - $2,499 Less than $1,000
$50,000 or more $25,000 - $49,999 $15,000 - $24,999 $10,000 - $14,999 $7,500 - $9,999 $5,000 - $7,499 $2,500 - $4,900
15% or more 10%-14%
personally recruited from other ethanol plants and job service. At the bottom of the list for effectiveness in recruiting is job fairs. A strong majority of senior managers, 65 percent, expect to be hiring two or more people in the next 12 months.
Raises & Bonuses
Moving back to analyzing questions posed of all survey respondents, annual salary reviews are the norm in the industry, with 77 percent reporting that practice at their plants. Another 15 percent say there is no regular schedule, but only a handful say they donâ&#x20AC;&#x2122;t get salary reviews at all and a similar number report six-month reviews. That said, 80 percent of respondents got a raise in the previous 12 months, and just 12.5 percent said the raise was associated with a promotion or change in responsibility. Half of respondents got a 3 percent or smaller raise and another 28 percent got 4 or 5 percent raises. There were higher raises as well, with 12 percent getting between a 6 and 9 percent raise, 6 percent getting a 10 to 14 percent raise and 3.5 percent getting a 15 percent raise or higher. Given the extraordinarily strong margins in the industry last year, it is not surprising that 90 percent report having received a bonus in the past 12 months. Those bonuses ranged all over the board, with roughly the same percentage getting bonuses in each of the seven categories from $2,500 to $5,000 on up to $50,000 or more, and the smallest number reporting bonuses of $2,500 or less. Nearly all respondents, at 97 percent, receive health insurance as part of a benefits package. More than 75 percent report benefits such as bonuses, life insurance, disability insurance, dental insurance and a 401(k). Among less standard benefits, 65 percent report receiving a cell phone as a benefit and 42 percent get long-term care insurance. Another 28 percent have profit sharing and 14 percent receive incentive pay. Continuing education benefits are offered to 31 percent of respondents. Other benefits hovering around the 10 percent mark each include stock options and flex MAY 2015 | Ethanol Producer Magazine | 35
HIGHEST LEVEL OF EDUCATION COMPLETED .37%
Some high school
43.75% College graduate
High school graduate/GED
10.29% Post high school...
17.65% Some college
DEGREE OF DECISION-MAKING 50%
I authorize/approve selections I recommend selections I am part of the decision-making team My opinions are asked I am involved in some other way I am not involved
single job function stands out as having a large number of people nearing retirement
98% work full time 59% say job security is very important 4% are recent graduates
Guys & Gals
The survey tool was also used to compare responses by gender and age. While no women general managers appear in this sample of the ethanol industry, women work as plant mangers and in senior management positions. (CEO, COO, CFO, owners, were categorized together.) Women outnumber men in two job functionsâ&#x20AC;&#x201D;lab and quality control and human resourcesâ&#x20AC;&#x201D;and are well-represented in accounting, commodities and environmental-health-and-safety job functions. No women report working in maintenance or plant operations. Men and women give similar respons36 | Ethanol Producer Magazine | MAY 2015
es to many survey questions. Both sexes report working in the industry for similar periods of time and have similar education levels. They report nearly identical job satisfaction levels and rate the various factors impacting job satisfaction in virtually the same pattern. In the question about their involvement in decision making, the profile is very similar for the women as for men. When looking at gender and salaries, it shows women in all but the very top salary categories. One comparison, though, shows the proportion of women in lower salary categories is much higher than for men. Among males, just 4 percent report annual pay of $50,000 or less while 34 percent of the women report that. When looking at salaries between $50,000 and
PERSONNEL $100,000, 60 percent of the men are in that salary range compared to 50 percent of the women. Of the 60 women responding, just three report working in receptionist or general administrative job functions. When looking at hours worked, 23 percent of women work 40 hours a week, compared to 4 percent of men reporting the same work week. On the other hand, similar percentages of women (51 percent) and men (59 percent), report work weeks between 41 and 49 hours.
Age Vs Job Function
To get an idea whether any particular segment of the ethanol industry is soon to face more retirements, we cross-referenced reported age to job function. A handful of individuals are working beyond age 65 in various positions. When looking at top management—CEO, COO, CFO, general managers—there is a good distribution across age categories from age 35 on up. Plant managers tend to be younger, a good thing if that is a likely spot to look for promotions. Of the plant managers reporting, 10 percent are age 30 to 34, 55 percent are 35 to 45 years old and 20 percent are older. One plant manager responding to the survey is over 65. Younger respondents report job functions in lab and quality control, environmental health and safety, engineering and commodities. The 30- to 40-year olds are spread across all job functions, including top management positions. In general, no single job function stands out as having a large number of people nearing retirement. About half the senior managers report their facilities have succession planning in place for the top leadership positions at their plant.
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38 | Ethanol Producer Magazine | MAY 2015
Connecting Compensation To Performance
How can employers motivate employees to reach for continual improvement? By Holly Jessen
As a company seeks to position itself for longerterm sustainability and take advantage of new opportunities, the stakes for success and failure keep going up, says Scott McDermott, partner and chief operating officer of Ascendant Partners Inc. That’s why it’s so
important that companies take a hard look at whether its employees are motivated to help the company be successful. “In its minor form, the cost of complacency is lost earnings. Companies are leaving money on the table,” he says. “In its extreme, the cost of complacency is the equity in the company. Those that do not stay competitive, or make bad decisions on the big issues, will destroy value in the business by a forced sale at a low value or the total loss of the company.” There are many reasons companies don’t take the steps necessary for change, says Jennifer Infantino, director of sales for P4 Consulting LLC. Maybe board members and executives are too busy dealing with the day-to-day emergencies to slow down for self-examination. Maybe they don’t know what to do to start. Maybe they don’t understand the cost. “I think it would rank higher on the list of things that are urgent if the cost of not doing it was better understood,” she says. Infantino clarifies that she’s not talking about a situation where there are a few bad apple employees, causing problems. She’s talking about a company culture that “throws a wet blanket” over what employees really want to and can achieve. “I think it’s easy to overlook MAY 2015 | Ethanol Producer Magazine | 39
What Motivates Workers? 1. Autonomy, the urge to direct our own lives. 2. Mastery, the desire to get better and better at something that matters. 3. Purpose, the yearning to do what we do in the service
of something larger than ourselves.
SOURCE: DANIEL PINK, AUTHOR OF “DRIVE: THE SURPRISING TRUTH ABOUT WHAT MOTIVATES US”
how much energy gets taken up by employees that are not engaged or are distrustful of the company for reasons that can be fixed,” she says. “That’s draining. It’s taking up the executives’ time and managers’ time, and that costs money. It tends to be difficult to quantify, but it is quantifiable.”
Money is one thing that can either be a motivator or demotivator for employees. EPM conducted a survey of workers at ethanol plants (see page 28 for that story) and found that, of 234 respondents, 36 percent feel they are compensated too little. Infantino recommends that companies complete a compensation study to find out how its compensation system stacks up to the industry as a whole and the geographic area where it is located. “You need to know whether or not you are paying your folks fairly,” she says. Once that information is known, the company can determine the next steps. “Here’s really the bottom line about money,” she told EPM. “People have to perceive that they are paid fairly and what they are being paid makes sense compared to coworkers, and to the marketplace, and once that requirement is meet, then money really becomes very much less of a motivator.” She adds that if the company pays its employees fairly and is transparent about that, it takes money off the table as a distraction. And, for employees who are paid fairly but remain unmotivated to do their best, giving them a raise won’t fix the root problems anyway. “You can pay someone a lot more and get them to stick around longer than maybe they would have but ultimately, it’s usually not enough for people to stay in a job they dislike,” she says. Of course, it’s not all about salary. To look at the broader picture, compensation 40 | Ethanol Producer Magazine | MAY 2015
includes salary plus everything else a company is spending on its employees, she says. That means bonuses, vacation time, insurance, retirement plans as well as other, more difficult to quantify things like, accommodating a flexible schedule, free health screenings or even gym memberships.
Employee evaluations are a potential stumbling block in motivating employees. It can be very frustrating for employees when they don’t have a clear idea of how to reach for promotions or obtain raises, she says. One avenue for this is a review, which looks back over the past six months or year. That’s important, but Infantino says an individual development plan (IDP) is actually more useful because it’s forward looking. An IDP plots what the employee wants to reach for and how their manager can help them get there. “You’re putting power in your employee’s hands,” she says. “Autonomy is actually one of the big motivators for people, so this a way you can give people info they need to know to affect change in their careers.” Companies with a poor evaluation process can actually demotivate their employees because it can feel useless. P4 Consulting has worked with some ethanol production companies that struggled in this area. “Part of why they weren’t strong was that they didn’t have job descriptions that included skills and knowledge for each level,” she said. “If that’s not outlined well, what am I getting evaluated against? It’s not clear. People don’t know how to get better and advance.” Change starts at the top. The boards of ethanol production companies can manage by objective, McDermott says, by setting strategic objectives for the business and putting a performance compensation system in place to reward staff for reaching those objectives. Company profitabilitybased compensation can also be a piece of a compensation programs, although it shouldn’t be the only piece. Financial performance is affected by some factors out of employees’ control, such as commodity prices. Things employees can influence, such as operational and cost improvement, should be rewarded as well. “A successful compensation program tries to find a way
to get company staff to perform well in all areas,” he says. Infantino talked about some of the same concepts in terms of company culture. All employees need to have a clear understanding of what the company values are and what behaviors correspond to those values. That means sitting down and establishing what those values are. Many things, including job descriptions, can be aligned to company values. P4 Consulting has helped
companies come up with job descriptions by setting up cross-functional task forces, made up of employees from different departments. “People are less likely to push back and reject something if they have been involved in the creation,” she says. Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 firstname.lastname@example.org
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HANDS ON: A Southeast Community College student works on Bayport distillation and evaporation training equipment during Energy Generation Operations training. PHOTO: SOUTHEAST COMMUNITY COLLEGE
42 | Ethanol Producer Magazine | MAY 2015
s l e u biof ^
Top Of Class Training programs around the U.S. offer opportunities in the biofuels industry for part- and full-time students. By Holly Jessen
Todd Finneman’s career has gone through several transformations, thanks to ongoing education and on-the job training. After owning his own garbage removal service, he went back
to school at Bismarck State College, where he completed a degree in process technology in 2003. That led him to a job at Chippewa Valley Ethanol Co. where he worked for six years before he started his own hydroblasting business, cleaning ethanol plants. Finneman had only been working at CVEC a few months when an industrial cleaning company came in to perform services. Although he didn’t know it at the time, the exposure to that type of ethanol plant service business was key to his future. Since the company was shorthanded, he and other ethanol plant employees were recruited to help out, something that bothered many of his co-workers, who complained cleaning wasn’t what they had prepared for in school. Finneman saw it as an opportunity to learn. “’It’s a great way for you to understand the equipment that you are going to be running,’” he told his co-workers. “Because you are going to be in cleaning it, you are going to know what that piece of equipment is all about.’ That’s how I looked at it, not knowing that it was going to be training that I was actually going to be using in my own company.” In 2009, after working at CVEC for six years, Finneman took the plunge and started Enviro-Dyne Industrial Services Inc. Continuing education and training remains important to him. In 2013 he completed a 40-hour hazardous communication education program at Ridgewater College in Willmar, Minnesota. Recently, he hired someone who will handle training for his employees in-house. Mick Miller, president of NuVu Fuels and general manager of DENCO II in Morris, Minnesota, also went through the program at Bismarck State.
MAY 2015 | Ethanol Producer Magazine | 43
‘Once I got into the ethanol industry, I had no desire to get into an oil refinery or power plant.’ Mike Miller
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Unlike Finneman, who was a nontraditional student going back to school later in life, Miller started the program not long after graduating from a nearby North Dakota high school. Although his original goal was to gain experience working at an ethanol plant and use that to get a job in another industry, that never happened. “Once I got into the ethanol industry, I had no desire to get into an oil refinery or power plant,” he says. Two years after starting out as an operator at DENCO, Miller worked his way up to a plant manager position at only 21 years old. He and his brother, Mitch Miller, both graduates of the Bismarck State program, were plant managers at the same time. Today Mitch Miller is the CEO of Carbon Green BioEnergy LLC and a managing partner of NuVu Fuels. Over the years, the brothers have hired a number of staff members who have gone through the Bismarck State and other technical programs, Mick Miller said, adding that those students can be difficult to come by since there’s a high demand for workers with technical skills.
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The various programs offer different options for students with different needs. Southeast Community College, in Milford, Nebraska, for example, offers students training that can be completed in 18 months. Although some classes are online, the program is designed for students living nearby while completing the program. Southeastern Illinois College, in Harrisburg, Illinois, on the other hand, offers its Biofuels Technology Programs courses all online, so students can take them from any location. Both programs attract traditional and nontraditional students. John Pierce, program chair of Energy Generation Operations training at SCC, estimated that 70 to 75 percent of students in that program are retooling their careers later in life. Renee Loesche, Building Illinois Bioeconomy, SIC program director, confirms that older students are more common, although some high school juniors have taken it and done well. “Most of our students have advanced degrees and have been working in the industry,” she says. “We’ve had plant operators, plant managers, human resource personnel, bench chemists responsible for fuel testing, veterans looking for a career pathway and those with a general interest.”
SIC started its program at the Nebraska school in January 2011 and, since then, 92 students have graduated. Pierce knows of 20 of that number who are currently working at an ethanol plant or in a biofuels-related industry. â&#x20AC;&#x153;Actually we have quite a few more working in biofuels than graduating in the biofuels focus,â&#x20AC;? he says. One of the unique things about this program is that, although students graduate with a focus on one of three industries, the first five quarters of the program are the same for all. Students in the Energy Generation Operations program are taught the same core skills and knowledge for the majority of the program and only split out into biofuels, nuclear or fossil fuels focuses for the last quarter. â&#x20AC;&#x153;It has turned out to be a winning strategy because employers frankly donâ&#x20AC;&#x2122;t care what focus the students take because theyâ&#x20AC;&#x2122;ve got five quarters of common curriculum,â&#x20AC;? he says, adding that students have also been hired to work at water treatment facilities, at pet food and food processing companies, or heating and cooling plants for hospitals and schools, to name a few. In Illinois, SIC is part of a federally funded $9.9 million grant project, called Building Illinoisâ&#x20AC;&#x2122; Bioeconomy, to develop and enhance training for bioprocessing and water management. SIC, the National Corn-to-Ethanol Research Center and its host university, Southern Illinois University Edwardsville, Lewis and Clark Community College, Lincoln Land Community College and Carl Sandburg College have formed a consortium and started work on the project. As part of the grant, SIC is working to develop self-paced courses that will allow students to earn a fast-track certificate in six months or less, with the same high-quality instruction currently offered in a nine-month program, Loesche says. The goal, she says, is to eventually offer a standardized program that other U.S. schools can access and build on, a model that is already working in Europe. The consortium of schools is also working with industry, trade and community partners. â&#x20AC;&#x153;We have major ethanol producers, biorefineries and national associations who have committed to providing content reviews and consider graduates when hiring,â&#x20AC;? she says. That list includes Adkins Energy, Lincolnland Agri-Energy, Big River Resources, Abengoa Bioenergy, Illinois Renewable Fuels Asso-
â&#x20AC;&#x2DC;Most of our students have advanced degrees and have been working in the industry.â&#x20AC;&#x2122; Loesche %QOOQFKVKGU
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MAY 2015 | Ethanol Producer Magazine | 45
Biofuels Training Opportunities Lewis and Clark Community College Bioprocess Technician Training Godfrey, Ill. National Corn-to-Ethanol Research Center Bioprocess Technician Training Edwardsville, Ill. Southern Illinois University Edwardsville Bioprocess degrees in management, science and engineering Edwardsville, Ill. Southeastern Illinois College Biofuels Technology Programs Harrisburg, Ill.
Indian Hills Community College Iowa BioDevelopment Ottumwa & Centerville, Iowa Metropolitan Community College Process Operations/Power Plant Technology Blair, Neb. Southeast Community College Energy Generation Operations Milford, Neb.
Minnesota West Community and Technical College Process Plant Technology Granite Falls, Minn. Ethanol Technology Institute The Alcohol School, Biofuels Academy (varying locations)
Bismarck State College Process Plant Technology Bismarck, N.D.
ciation, National Corn Growers Association and Growth Energy. The grant money came from the U.S. Department of Labor Trade Adjustment Assistance Community College Career Training program. The Taaccct grant program was authorized in 2009, as part of the American Recovery and Reinvestment Act. In 2010, President Obama signed a bill into law that included $2 billion to fund the program over four years. â&#x20AC;&#x153;Through these multiyear grants, the Department of Labor is helping to ensure that our nation's institutions of higher education are helping adults succeed in acquiring the skills, degrees, and credentials needed for high-wage, high-skill employment while also meeting the needs of employers for skilled workers,â&#x20AC;? according to the Department of Labor. Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 firstname.lastname@example.org
46 | Ethanol Producer Magazine | MAY 2015
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Lightly staffed businesses are often nimble and innovative. Here are seven to size up at this yearâ&#x20AC;&#x2122;s International Fuel Ethanol Workshop & Expo. By Tom Bryan
Today's Yeast For Tomorrow's Ethanol
TITLE: â&#x20AC;&#x153;Novel Yeasts For Cellulosic Ethanol Productionâ&#x20AC;? SPEAKER: Thomas Jeffries, president WHEN: 8:30 am, Wednesday, June 3 â&#x20AC;&#x201C; Track 4
Jeffries Xylome President Thomas Jeffries says existing, natural yeasts are capable of unlocking the hard-to-get sugars in cellulosic and hemicellulosic feedstocks, and they could move corn ethanol producers closer to next-generation biorefining. He will join an FEW panel titled â&#x20AC;&#x153;Starch Ethanolâ&#x20AC;&#x2122;s Cellulosic Sequel Also Begins With Biology.â&#x20AC;? Jeffries will talk about how converting spent corn hulls from distillers wet grains (DWG) could increase ethanol production by as much as 10 percent per bushel of corn. He will introduce FEW attendees to the yeasts that make corn fiber conversion possible. â&#x20AC;&#x153;Our focus is on alternative yeasts for unconventional substrates,â&#x20AC;? he says. â&#x20AC;&#x153;We focus on substrates that canâ&#x20AC;&#x2122;t be consumed by saccharomyces.â&#x20AC;? 48 | Ethanol Producer Magazine | MAY 2015
Xylome works with both non-GMO and GMO yeasts. The non-GMO strains the company starts out with, such as Spathaspora passalidarum, are capable of producing ethanol and other liquid chemicals from cellulosic and hemicellulosic sugars. â&#x20AC;&#x153;A lot of people arenâ&#x20AC;&#x2122;t aware that there are native yeasts out there that will handle semicellulosic sugars like this,â&#x20AC;? Jeffries says. HOW IT WORKS: Traditional yeast such as Saccharomyces cerevisiae cannot ferment the five-carbon sugars that are abundant in spent grain hulls, but yeasts like Spathaspora passalidarum can. Each ton of DWG contains approximately 200 pounds of cellulosic and hemicellulosic sugar that can be converted into about 13 gallons of ethanol. MAY 2015 | Ethanol Producer Magazine | 48
3. Bion Analytical:
Defensible Lab Data 2. Ener-Core:
Self-Paying Clean Power
PRESENTATION: “Reusing Process Waste Gases As A Source Of Energy To Reduce Costs, Improve Profitability And Establish A New Environmental Standard For Ethanol Production”
TITLE: “How To Generate Results In Your Lab That Your Operations Team Can Trust” SPEAKER: Kristi Plack, director of technical operations
WHEN: 10:30 am, Wednesday, June 3 – Track 2
SPEAKER: Alain Castro, CEO WHEN: 8:30 am, Wednesday, June 3 – Track 1 When Pacific Ethanol announced in January that it had signed an agreement with Dresser-Rand to install a 3.5 megawatt cogeneration system at its Stockton, California, ethanol plant, the payback was implicit. The $12 million system, due for completion next year, will convert the plant’s waste gases into electricity and steam, lowering its annual energy spend by up to $4 million a year. It will allow PEI to use poor-quality gases laden with volatile organic compounds (VOCs) as an energy feedstock. The enabler behind this innovative clean energy play is the Power Oxidizer engineered by Ener-Core. Alain Castro, company CEO, will present at this year’s FEW, joining a panel titled “Wonderful Widgets: Technologies Available For Plants Looking To Drive Out Process Expenses And Increase Profits.” Castro calls the Power Oxidizer “an environmental solution that pays for itself.” CLIMATE DRIVEN: Natural oxidization of gases in the atmosphere takes up to two decades. “We can’t afford to wait that long,” Castro says, explaining that his company’s technology artificially accelerates oxidation from 12 to 20 years to 2 to 3 seconds. “When you do it that fast, you destroy those harmful contaminants and, in the process, generate an immense amount of heat.”
Ethanol plants depend on lab data to optimize operations, troubleshoot and ensure final product quality, but what if their lab results can’t be trusted? FEW speaker Kristi Plack of Bion Analytical says there are several sources of error that impact the accuracy of lab data, including sampling error, instrument error and human error. “Some of it is unavoidable, but the error experienced in an ethanol plant lab can and should be managed to ensure the highest quality data possible,” Plack says. “We can never totally get away from error, but we can minimize it.” Plack will present on an FEW panel titled, “Sharpening Your Staff Saw: Training And Tools To Get The Very Best Performance From Your Team.” Her presentation will focus on reducing lab data error by adhering to analytical standards, reference materials, sample duplicates and related control charts. She intends to offer producers specific and practical strategies for producing lab data that is both reliable and defensible. “If you’re trying to make value-added optimizations, you have to start with accurate data.” ETHANOL FOCUSED: Sioux Falls, South Dakota, based Bion Analytical has tailored many of its products and services for ethanol plants. Plack says Bion has worked with more than 100 U.S. ethanol plants since its startup in 2008. MAY 2015 | Ethanol Producer Magazine | 49
4. xF Technologies:
Make Another Product
PRESENTATION: “Upgrade Of Ethanol To A Diesel Oxygenate” FOUNDER: Len Rand, president & CEO WHEN: 10:30 am, Wednesday, June 3 – Track 3
Rand Blending ethanol into diesel has always been a challenging proposition. Incompatible boiling points, vapor pressures and energy densities have made the fuels reluctant associates. Now, the founder of a New Mexicobased technology firm says his company has developed a way to transform ethanol into an eight-carbon oxygenate that plays well with diesel. Len Rand, president and CEO of xF Technologies, is ready to talk to ethanol producers about licensing his company’s thermochemical process to upgrade ethanol to a diesel oxygenate blendstock called Ethyl 408
(ethyl furoate). “It offers producers a pathway to take corn and corn stover processing into the diesel market, which will be as large as the gasoline market within 25 years,” Rand says. Dave Sams, vice president of business development at xF Technologies, will speak about Ethyl 408 at the FEW, joining a panel called “Diversifying Product Streams And Determining Their Impact To Plant Bottom Lines.” Rand says he thinks the economics of producing Ethyl 408 will capture the attention of FEW attendees. “The cap-ex is about
the same as a conventional corn ethanol plant,” he says. “Diesel is 50 cents to $1 more than gas, so that gives you an idea of the higher margins that producers could capture, along with D4 RINs.” COLOCATION POTENTIAL: Rand envisions his technology being colocated with existing ethanol plants. Corn and ethanol would be routed to the xF plant where both feedstocks would be consumed in the production of Ethyl 408. Downstream, the product would be blended with diesel at 5 percent.
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5. Drying Technology Inc:
Money-Saving Moisture Control
TITLE: “Fuel Alcohol Industry Losing Millions Due To DDGS Overdrying”
SPEAKER: John Robinson, owner & president WHEN: 1:30 pm, Tuesday, June 2 – Track 3
John Robinson believes the U.S. ethanol industry is failing to capture $50 million to $100 million annually because of poor coproduct moisture control, and he’s got a system to stop it from persisting. “You can call it overdrying, but it is actually the result of weaknesses in industry drying methods,” says Robinson, the founder of Texas-based Drying Technology Inc. On an FEW panel titled “Deploying Hardware Solutions To Maximize Coproduct Profitability,” Robinson will discuss his company’s three-prong approach to more efficient DDGS drying.
First, the company deploys an insidethe-dryer moisture sensor that reduces “dead time” and final moisture control variation by no less than 30 percent. Next, another sensor is installed for detecting dryer load swings. And finally, the company uses a precise mathematical method for continuously recalculating the set point necessary for maintaining optimal moisture control following evaporative load changes. “When these three exclusive solutions are put to work, moisture control variation is reduced by as much as 49 percent,” Robinson says. “This allows producers to leave
more water in their product knowing that it is not exceeding the upper specification limit.” GOOD PAYBACK: Because most plants have poor moisture control, they typically keep their target moisture below specification— usually less than 12 percent—to be on the safe side. Robinson’s company narrows the moisture control curve and tightens up the process. “It translates into a $1-per-ton net increase in income,” he says. “This saves a 110 million gallon plant at least $350,000 a year.”
MAY 2015 | Ethanol Producer Magazine | 51
Speedy Biomass Analysis TITLE: “Use Of Near-Infrared Spectroscopy For The Rapid Low-Cost Analysis Of A Wide Variety Of Lignocellulosic Feedstocks” SPEAKER: Daniel Hayes, director WHEN: 10:30 am, Wednesday, une 3 – Track 4
Hayes Biofuels companies using third-party labs for feedstock analysis often wait up to two weeks for test results. Now, with near-infrared spectroscopy (NIR), Limerick, Ireland-based Celignis can provide full compositional data on virtually any biomass sample within one day of receiving it. Daniel Hayes, the company’s director, says the super quick process is also accurate and affordable. “It’s a screening method that allows customers to evaluate more samples within budget and timeframe,” he says, adding that NIR is a great fit for
cellulosic ethanol developers because the composition of feedstocks and pretreatments producers deal with varies widely. So far, Celignis has processed over 1,000 biomass samples using NIR. The company has analyzed miscanthus, peat, straw, waste paper and cardboard, sugarcane bagasse and may other raw materials, developing NIR models for many key ingredients found within biomass—glucan, total sugars, lignin and ash, for example. Hayes, who will join an FEW panel titled “Lignocellulose’s Sweet Side: Converting Biomass Feedstocks Into More
Easily Processed Sugar Streams,” says it is the most wide-ranging demonstration of NIR for biomass analysis ever conducted. DOWN THE ROAD: Currently, Celignis does NIR biomass testing in its own lab. Ultimately, Hayes says, Celignis’ intellectual property could be applied in an online basis within a biomass processing facility so that process data can be provided on a real-time basis.
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52 | Ethanol Producer Magazine | MAY 2015
7. Bio-Process Innovation:
TITLE: â&#x20AC;&#x153;Directed Evolution Fermentation Process For Improved Yields, Rates & Production In Corn Ethanol Facilitiesâ&#x20AC;? SPEAKER: Clark Dale, president & CEO WHEN: 1:30 pm, Tuesday, June 2 â&#x20AC;&#x201C; Track 1 The simultaneous deployment of multiple yeast strains could give ethanol producers a big fermentation boost, says Clark Dale, president and CEO of Indiana-based BioProcess Innovation. Joining an FEW panel titled, â&#x20AC;&#x153;Exploring Best Practices For Yield Maximization,â&#x20AC;? Dale will explain how directed fermentation (DE) fermentation relies on different yeasts to be more assertive under different conditions. â&#x20AC;&#x153;If youâ&#x20AC;&#x2122;re running your fermenters a little warm, the yeast strains that are more thermophilic will be more dominant,â&#x20AC;? he says. â&#x20AC;&#x153;DE improves and adapts to the specific way the plant is running.â&#x20AC;? Four yeastsâ&#x20AC;&#x201D;one patented strain and three propriety strainsâ&#x20AC;&#x201D;work together in DE fermentation, which would be possible with only minor changes to the way an ethanol plantâ&#x20AC;&#x2122;s fermenters are run. Dale says the results at lab scale look promising. â&#x20AC;&#x153;It would potentially give a producer a 50-percent boost in productivity from every fermenter in the plant,â&#x20AC;? he says, explaining that the technology would also decrease fermentation time, decrease bacterial infection, lower cleaning and bring down yeast expenses. IMPLEMENTATION COST: Dale and his team have been working on DE fermentation for about five years. Heâ&#x20AC;&#x2122;s ready to talk to ethanol producers about proving the technology at demonstration scale. â&#x20AC;&#x153;The investment would be small, and the payback would be almost infinite,â&#x20AC;? he says, adding that he will discuss the associated capital and operational costs of the technology at the FEW.
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High Performance More Marathon Than Sprint
Lessons in creating a high-performance culture in ethanol companies. By Scott McDermott
Senior management changes at ethanol companies come about for many reasons. Sometimes it is a retirement situation or natural attrition and other times it can be a separation due to differences in management philosophy or style. Ascendant Partners has observed, and sometimes assisted in, senior management transition at several ethanol companies. These transitions have provided some very good lessons about how to create a highperformance culture coming from the talented people who have become the new managers. Leadership is an often-used buzz word, but it is acknowledged as the single, critical success factor for creating a high-performance culture in ethanol companies. Managers leading a transition must step up with a
plan about where they want the organization to go, lay the tracks to get there and almost always do it in the face of resistance at every juncture. A change in culture does not happen without some combination of conviction, force and finesse. Often, the biggest hindrance to culture change is a single disruptive employee. We have observed that companies sometimes go to great lengths to adjust the whole organization around one problem employee, often at the burden of productive employees. Other times, it is not a problem employee as much as a good employee in the wrong role. Good managers have a talent for knowing the difference between a bad company fit and a good person in the wrong role. A good change leader has the ability to get the right people in the right roles and, when required, make the tough decisions. For
CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
54 | Ethanol Producer Magazine | MAY 2015
example, one company had an incredibly talented engineer who was also a manager. The company, however, was more focused on head count than effectiveness. The general manager eventually replaced the talented engineer with a good manager. The company lost a talented individual, but gained a functioning organization. The best managers understand they are impacting people’s lives with their business decisions and agonize at great length before making staff changes.
Board support is another feature that affects new senior management’s ability to change the culture of the ethanol company. Most boards understand it is their job to hire the general manager or CEO. Effective boards also understand they need both to empower the new leadership to manage the business and hold the new management accountable for results. Good senior managers engage the board in aligning the strategic direction for the company so all understand where the board wants to go and plans can be put in place to drive the business forward. There have been instances where high-performance managers with a good track record of business success have failed to transition the business. One of the biggest drivers of a failed transition to a performance culture is when the manager is undermined by divisions amongst the board or alternative agendas at the board level. Superior financial and operational information is another common element leveraged by high performance managers in the ethanol industry. Many companies that struggle lack sufficient information to make informed business decisions. When a company lacks quality information, there is no way to discern fact from opinion, which is very frustrating to all. The old adage, “If you can’t measure it then you can’t manage it,” is a critical driver for getting buy-in and empowering staff to make better business decisions. High-performing managers use data and analysis to undo the business myths holding the organization back and empower the high performers to excel. In one case, an ethanol company had a long history of not using data to make business decisions. Relatively little information was available and management did not value using data and information to manage the business. Everything was run on gut feel. It worked in the early years, but over time the company fell well short of its business potential. Eventually, the ethanol company was so disadvantaged the board had to replace management to try to save the company. The new manager immediately put robust information management systems in place for accounting and manufacturing, but in the end, it did not get the business back on track. However, the information helped the board and management team realize they could not improve the business enough to make it competitive again. Instead, they pursued innovative technology to provide a competitive advantage. The gamble paid off and the information systems they developed helped guide them to prove out the technical innovation, which saved the company.
Company performance measures also set the stage for positive reinforcement for high-performance staff, which in return reinforces the culture change. Once the new manager has a financial and
operational baseline for business performance, the information helps with identifying and supporting good decisions, as well as correcting bad decisions. The staff who seek high performance use the information for improvement because they want to excel and increase compensation. We have observed that high-performance employees are a catalyst for increased company pride. This is reinforced by managers who look for ways to celebrate success as the business improves. Good people generally want to contribute and be a part of a company that they can be proud of. You can’t talk about employee performance in an organization and not discuss the role of the compensation program as a catalyst for change. Managers who are driving culture change in the organization can’t use high-level profitability or subjective compensation programs to incent behavior. They have to utilize programs that allow staff to see the tangible performance measures that they will be held accountable for and then follow through on rewarding employees who meet or exceed the performance objectives. Compensation and incentive programs that are subjective or focus strictly on how well the company does financially can be too simplistic. In the ethanol industry, market prices are such a material part of profitability, and mostly out of the staff ’s control. The highperformance manager understands that financial performance is a combination of market margins (corn, ethanol and coproduct prices), operational performance, operational and cost improvements, as well as steps being taken to position the business for future success. Highperformance managers seek compensation programs that find ways to tie staff performance compensation to all of these areas. Another observation is centered on the actual process of the high-performance culture change which has nothing to do with the manager’s style or effort and everything to do with human nature. I call it the perpetual motion pendulum. The transition to a highperformance culture is not typically a smooth path. It has fits and starts. The resistance to change has some staying power until the positive momentum is strong enough to shift attitudes. The positive momentum is the perpetual motion and the shift in attitudes swings the pendulum to the other side. When it finally happens, it almost feels like an overnight change in the attitudes from resistance to acceptance. Finally, these high-performance managers seem to have a trait I admire most—patience. All of these managers have patience, usually gained from experience. Occasionally, an exceptional young leader is both smart and patient, but this is a rare trait. Most of the highperforming change managers have come to their wisdom via the battles and war wounds of their experiences in fostering new business cultures. This is not to say they don’t push the organization to change. It only means they understand culture change in an ethanol company to a high-performance business model is a marathon and not a sprint. They seem to find balance between the constant pressure to improve and the wisdom to do it at a pace that brings everybody along in the journey. A special thanks to the men and women leaders who inspired this piece. Author: Scott McDermott Partner, Ascendant Partners Inc. 303-221-4700 firstname.lastname@example.org
MAY 2015 | Ethanol Producer Magazine | 55
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Setting The Table For The Big Score By David VanderGriend
In baseball, they often refer to the leadoff man as the igniter, whose job is to get the offense going: get on base, start a rally and set the stage for a lot of runs. In many respects, that’s the role of the renewable fuel
standard (RFS), to set the stage for a bigger score for biofuels. But rather than focusing on a big inning, the ethanol industry may be playing small ball as we await the final rulemaking renewable volume obligations (RVO). The U.S. EPA stated it intends to package 2014 with the 2015 and 2016 volumes in what could be one heck of an announcement by the end of June. I am encouraged by numerous recent statements out of EPA that it remains committed to making the RFS all it can be. But at the same time, let’s not kid ourselves. Do we really think there are going to be any surprises? We know that the 2014 RVO will be exactly what was consumed and 2015 is not likely to be any different. EPA will be hard-pressed to do anything more than take what was used the first half of 2015 and multiply by two, so we probably know that number as well. Sure, there might be a little more due to an increase in E15, midlevel blends and E85. For 2016, there might be a slight increase, if total gasoline use goes up. But for now, it is clear we will wind up somewhere in the 14 to 15 billion-gallons-per-year range for corn ethanol. There may be another billion or two gallons in the export market, but would the corn ethanol industry be satisfied with a 17 billion-gallon cap, when the motor fuel market is 125 billion gallons plus? I certainly am not. I have always viewed the RFS as an important building block, assuring a base market. Whether wearing my hat as CEO of ICM or as president of the Urban Air Initiative, or as a member of most ethanol trade organizations, I support the RFS. However, it should not be viewed as what defines the value of biofuels, a value which can only be realized if we get the fuel into the market. How do we get access to the market? How do we maintain the RFS and build on it? The answer lies with carbon controls and protecting public health—the new value proposition. One element Congress got right with the RFS was to reward fuels that reduce carbon emissions. While the corn cap is law and, to some extent, EPA's hands are tied, the carbon footprint of corn
58 | Ethanol Producer Magazine | MAY 2015
ethanol is demonstrably better than the credit given by EPA. Our work at ICM and other new, and constantly evolving, research clearly shows that corn ethanol can attain advanced biofuel carbonreduction levels, one of the primary objectives of the RFS. If refocusing on achieving carbon reduction is one way to create new demand, another is the critical issue of improving fuel quality and emissions of gasoline. Ethanol's greatest strength is its high octane. This is an issue of public health in that ethanol used in midlevel blends like E15 or E30 can replace some of the most harmful components of gasoline—if we have access to the market. At ICM and Urban Air Initiative, we have concluded that EPA is blocking access to the market for midlevel blends and we are challenging them. In legal action along with the Energy Future Coalition, ICM has asked the courts to agree that the certification procedures adopted by EPA are keeping E30 out of the market. In another challenge, UAI is calling EPA out on its antiquated modeling used to guide states on how to control pollution that includes an unwarranted penalty for ethanol. Our research, supported by auto industry experts, clearly shows many of the negative emissions attributed to ethanol are, in fact, changes made to base gasoline. Splash blending ethanol always improves gasoline quality and EPA’s outdated models simply need to be updated. Why is this so important? Gasoline is the source of some of the most dangerous and harmful pollutants linked to a range of health and respiratory ailments, including lung disease and even neurological disorders. Infants, the elderly and expectant mothers are particularly at risk. The RFS is the platform to launch and engage the environmental and health communities in this discussion. Let’s get past the RFS numbers game—as important as it is—and look at additional ways to reduce carbon and protect public health. Author: David VanderGriend, CEO, ICM Inc.; President, Urban Air Initiative DaveV@icminc.com 316-796-0900
New Rule Offers Whistleblowers More Protections
By Daniel Kaufman
Though the ethanol industry makes a tremendous positive impact on the economy, including creating numerous jobs, it is not immune from the challenges of preventing, managing and defending against employees’ retaliation and whistleblower claims.
Despite employers’ best efforts, such claims continue to grow. Employers in the ethanol and other industries also must contend with the law’s ever-evolving interpretation of which activities and parties are covered by federal and state retaliation and whistleblower laws. A prime example of this challenging and developing area of the law is the U.S. Department of Labor’s recently released final rule, outlining the OSHA procedure for handling retaliation complaints under the Sarbanes-Oxley Act, known as SOX. Developed in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), the final rule makes it easier for whistleblowers to trigger an OSHA retaliation investigation, thus potentially increasing the retaliation claims employers brought by whistleblower employees. As many employers subject to SOX already know, both the statute and the DOL’s anti-retaliation regulations protect whistleblowing employees who complain of bank, mail, securities and wire fraud violations of any Securities and Exchange Commission regulation, and violation of any federal law relating to shareholder fraud. The new final rule provides key guidance on the procedural provisions OSHA has adopted. However, the new final rule also makes it easier for whistleblowers to bring retaliation complaints and provides them with greater protection from retaliation. Below are some of the final rule’s highlights. • Whistleblowers generally have 180 days (as mandated by Dodd-Frank) to file a retaliation complaint after the alleged retaliation occurred, or after the date when the whistleblower became aware of the alleged retaliation. • Whistleblowers, or anyone authorized by them, may file a retaliation complaint verbally or in writing. If a whistleblower makes a verbal complaint, OSHA, and not the whistleblowing employee, will transcribe the verbal complaint into writing. The DOL’s new final rule essentially expands the U.S. Supreme Court’s decision in Kasten v. Saint-Gobain Performance Plastics Corp., which held that verbal complaints qualify as valid complaints under the Fair Labor Standards Act as long as they are sufficiently clear and detailed to put a reasonable employer on notice of a protected assertion of rights. 60 | Ethanol Producer Magazine | MAY 2015
• If OSHA decides there is reasonable cause to believe the allegations in a retaliation complaint, it will assess a penalty calculation that could force the employer to, among other things, pay back pay with interest and the whistleblowing attorneys’ fees, as well as preliminarily reinstate the whistleblowing employee before a final determination of the employer’s liability. An employer thus could start paying a penalty before the agency, or a court, finds it retaliated against the whistleblowing employee in violation of SOX. If OSHA determines that preliminary reinstatement of the employee is not feasible or desirable, the agency could order the employer to provide front pay (known as economic reinstatement) to the complaining employee. Even if the employer succeeds in defeating the whistleblowing employee’s retaliation complaint, under the new final rule the employer has no right to recover the costs of the economic reinstatement from the employee. As these procedural protections illustrate, the DOL’s new final rule presents employers subject to SOX with added challenges because the rule provides whistleblowing employees: greater protection from retaliation by employers; and, secondly, a lower standard for making an effective retaliation complaint. It also is possible that these changes are a harbinger of a DOL plan to liberalize complaint reporting requirements under other employment laws, which would have an even broader impact on employers in the ethanol and other industries. In any event, the DOL’s new rule serves as a poignant reminder to employers—publicly traded or not—about the importance of properly responding to whistleblower complaints. Because of the significant risk of liability and reputational damage in cases involving whistleblowers, employers’ failure to adopt and implement appropriate anti-retaliation and whistleblower policies and procedures can become costly mistakes. For these reasons, an audit of anti-retaliation and whistleblower policies and procedures can be invaluable in helping employers in the ethanol and other industries to prevent, manage and defend against retaliation and whistleblower claims. Author: Daniel Kaufman, Partner, Michael Best & Friedrich LLP 312-836-5077 email@example.com Contributor: Y. Douglas Yang, Associate
5 REASONS to Love the RFS
Reason 1 – Ethanol and the RFS save us money In 2013, consumers saved between $700 billion and $2.6 trillion*
Reason 2 – RFS means less imported oil
Last year, ethanol displaced $49 billion worth of imported oil**
Reason 3 – RFS cuts greenhouse gas emissions Today’s conventional ethanol reduces GHG emissions 34-48%***
Reason 4 – RFS creates jobs
The ethanol industry supports nearly 380,000 direct and indirect jobs**
Reason 5 – RFS means investment and innovation The RFS works for everybody
* Energy economist Philip K. Verleger, Commentary, Renewable Fuels Legislation Cuts Crude Prices, pkverlegerllc.com **ABF Economics, “Contribution of the Ethanol Industry to the Economy of the United States,” February 2015. ***Wang et al. (2012) using the Department of Energy’s GREET model
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Call Now (402) 770-5416 62 | Ethanol Producer Magazine | MAY 2015
(605) 428-4300 www.Direct-Automation.com
I B E LI EVE I N
For years, we’ve been told that cellulosic ethanol is a “fantasy fuel.” And it is.
And now it’s going to change the world. For real.
So we’ve spent a decade planning, researching, and working hard to make that fantasy a reality.
% w/v in hours Why compromise on yield? TPS
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