Ethanol giant shifts focus

GRANITE FALLS, MINN. - Welders at Fagen Inc. will kick off the new year by using their torches to fabricate parts destined for an ethanol plant in Hungary.

Ron Fagen, the CEO of Fagen Inc., put this western Minnesota town on the national map by building 47 ethanol projects across the United States between 2006 and 2008. His family-owned company generated $2.2 billion in revenue in 2007.

"Corn ethanol has been the best thing that has happened to the farmers since the invention of the combine," said the 61-year-old Fagen, who grew up in the tiny community of Maynard near Granite Falls. "It gives them another market for their corn."

But the U.S. ethanol building boom is over.

"It all came to a screeching halt when our friends on Wall Street manipulated the commodity market," Fagen said, commenting on the volatility of corn and oil prices. Others would argue that it was ethanol's friends and enemies in Washington and state capitals who did the manipulating over subsidies and mandates. The Environmental Protection Agency last month, for example, postponed a decision on a proposal backed by the ethanol industry that would increase the amount of ethanol blended into gasoline from 10 to 15 percent.

Regardless, Fagen has been retooling his business model. The company will finish one more U.S. ethanol plant in Pennsylvania, but Fagen's attention already has turned to other forms of renewable energy -- biomass and wind. Going forward, Fagen said he thinks his business mix will be about 60 percent biomass projects, 25 percent wind energy and the remaining share coming from building other types of industrial facilities.

His company recently landed a job in Texas to construct the largest biomass power plant in the country. The Minneapolis office of Zachry Engineering is the design engineer on the project.

The 100-megawatt plant will serve customers in the Austin, Texas, area. "East Texas has more trees than northern Minnesota," Fagen said, but trees won't be harvested for the new facility. Instead, chips, bark and other wood waste from wood processing plants will be used to fuel the biomass facility.

"We are making use of forestry residue wood to produce electricity, rather than using coal," said Alison Cochrane, a vice president with Zachry Engineering. Work crews will start pouring concrete on the Texas site this month.

Cochrane said that Zachry has worked successfully with Fagen Inc. on ethanol projects before.

Ron Fagen "is a direct, real person, very approachable and upstanding," she said. "His name is on the company. It matters to him the quality of the work being done by his company, which is really representing him."

Going global

Fagen Inc., which was founded in early 1988, is owned by Ron, his wife, Diane, and his sons, Aaron and Evan, who all have leadership roles with the company.

The Fagen name is highly visible in Granite Falls, where Fagen employs about 200 people. The company's strategic direction is set from a modern tan brick headquarters building on the corner of Highways 23 and 212. Granite Falls is a regional center for area farmers who grow corn, soybeans and sugarbeets.

Fagen, an outgoing man with a fondness for World War II airplanes, said that he "stumbled" into the role of becoming a huge contractor of renewable energy projects because he wanted farmers to gain greater control over their incomes by selling their corn for ethanol.

Two decades later, he's part of a larger green movement that's going global. With a business partner from Ireland, Fagen will build an ethanol plant about 60 miles outside of Budapest on the Danube River. "We are now prefabricating pipe in Granite Falls and we are going to be moving dirt in April in Hungary," he said.

He is buying land in Hungary from agricultural giant Cargill and the new ethanol plant will be located adjacent to a Cargill grain elevator that will supply corn for the project.

"If we can show that this works fine, I think we will build more of them in corn country," said Fagen, who added that Europeans are showing more interest in growing corn.

source: startribune