Helping a Company’s Big Idea

UW–Whitewater center provides critical assistance to North Prairie Productions’ biodiesel production plant

By Amanda Kramer

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Call it fate — or call it coincidence. Either way, Bud Gayhart, director of the University of Wisconsin–Whitewater Small Business Development Center (SBDC), was in the right place at the right time.

It was January 2006, just a few weeks into Gayhart’s new job at the university when Mike Robinson and Jeff Pieterick appeared — unannounced — at his door. The two were seeking guidance to launch a biodiesel refinery that could impact an entire Wisconsin community, if not the entire state.

“They asked me what services we could provide … and wanted help on their business plan,” Gayhart says, pointing out that during his previous position in Cleveland, Wisconsin, he’d helped write a successful business plan for a refinery in nearby Kiel. “I said to Jeff and Mike I was aware of the industry and happy to work for them … to assist them however they felt it was appropriate, so that launched our relationship.”

In less than two years, and with support from the SBDC, Pieterick and Robinson’s North Prairie Productions (NPP) has secured a location for its new soybean crush facility, and its biodiesel and glycerin production plant, in Evansville, a city of 5,000 just west of Janesville. The reportedly $60 million facility, located on approximately 20 acres of farmland just south of Highway 14, is expected to produce nearly 45 million gallons of biodiesel fuel from soybeans each year. In addition, the plant, which will produce the alternative energy source to fuel diesel trucks, cars, buses or tractors, should employ 25 workers with annual salaries of $50,000.

And the impact doesn’t end there. An economic study that Gayhart created for NPP estimates that fuel produced at the plant will to be sold for approximately $2.60 per gallon, resulting in annual sales revenues of $117 million. Moreover, Gayhart calculates that Wisconsin could see a “total impact” of $127.5 million generated from business-to-business transactions across the state, and wages, salary and profits earned by employees.

Close relationship
According to Pieterick, NPP’s vice president of communications and marketing, he and company president Mike Robinson began meeting with Gayhart regularly in March 2006, seeking help in researching where best to locate their facility to position the company for rapid growth. They also wanted to better understand the competition in the market and to get help identifying new competitors that could potentially launch other refineries.

“From there, we very soon had [Gayhart] on my quick dial,” Pieterick laughs. “He really helped us with our business plan to move it forward.”

First, Pieterick explained, the SBDC helped facilitate meetings between NPP and various municipalities, allowing the group to eventually select a location that was ripe for the plant. Second, Gayhart constructed a comprehensive economic impact report.

“Maybe if we’d struggled with [economic data], we would have discovered the means to do it,” Pieterick says. “But it was a resource that was there at the SBDC and that [data] is important when approaching a city and the state when you’re looking for grant dollars.”

Pieterick notes that biodiesel fuel production directly contributes to Wisconsin’s rural economic development, because plants are not built in urban locations. He says the plant produces an excellent market for soy oil used in the making of biodiesel, an often underused byproduct of soybean processing. Noting that Wisconsin is currently the 13th largest soybean production state, Pieterick says that the state does not have a commercial “crush,” or processing, facility, but the development of the Evansville plant will now change that.

In addition to the approximately 25 direct jobs the facility will support, Gayhart estimates the plan will create nearly 100 “indirect” and “induced” jobs.

“Evansville is really going to get a kick in the pants out of this thing,” he says.

“This [biodiesel project] is something Gov. Jim Doyle is very interested in,” says Tony Hozeny, communication director with the Wisconsin Department of Commerce. “We worked with the city of Evansville to provide them a $125,000 Community Development Block grant to extend a water main to the plant.”

Pieterick says UW–Whitewater’s SBDC also played a key role in developing a relationship with a potential community.

“Things were kind of blowing up in Milton at about the same time,” Pieterick says, referring to the city where an ethanol plant — which uses corn to produce fuel — opened in April 2007 amid frustration from residents over how the plant owner dealt with the local community. “We talked about this once we’d made our sight selection — how do we avoid problems that other towns had … because Milton wasn’t an anomaly.

“For openers, we had an understanding that [biodiesel] does not have near the issues as ethanol. But, there’s certainly the concern the two are so closely related. It was really [Gayhart] that we got talking to about how to avoid it.”

Pieterick says they first learned how to identify a community that was looking for economic development or at least inclined toward supporting development. Next, he says, they learned to be proactive with Evansville residents.

“We had an open house very shortly after Evansville was selected, right there at the high school,” he says. “The estimate was that around 700 attended. There were also regular updates in the media about where the project was at. We worked closely with the city itself … and identified groups in the city to work with.”

Pieterick says NPP also was required by the state to raise more than $25 million in equity funding, and their open-book approach to the project made the equity drive in Evansville a success, ultimately earning $26 million to put toward the plant.

Gayhart says he was impressed with Pieterick and Robinson’s approach to the plant and its evolution. “They weren’t coming in trying to seek all kinds of concessions from communities,” he says. “They wanted to work collaboratively to benefit everyone.

“Early on they started working with the DNR,” he continues. “They worked with people in Madison and took that info back to their planning team and developed a model for their refinery that would be very much green. They really did their homework on this. Their plan has virtually no emissions, and it’s been green light through the process … that brought a lot of comfort to anyone at hearings, and to investors.”

Valuable resource
Pieterick says NPP’s experience with the SBDC was vital to the success of the undertaking, and he believes it could be the same for other new business owners who have big goals in mind.

“This was really a startup company, and with us being new entrepreneurs, we really, at times, just required somebody to confirm that we’re on the right track and that we’re taking the right steps,” he says.

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