Astec adapts with wood pellets

Astec adapts with wood pellets

February 12th, 2012 by Ellis Smith in Business Around the Region

When the U.S. and state governments started to run out of money during the recession, new road construction slowed down dramatically.

For Astec Industries, which derived 85 percent of its revenue from public and private infrastructure projects, the indefinite postponement of a new highway bill could have meant disaster.

Astec makes the machines that power infrastructure projects all over the world, and when road construction slows down, so does the demand for Astec's machines.

But instead of digging in its heels, Astec hit the gas on its energy and mining products, which have grown dramatically.

"We have challenged our companies to pursue more than one end market," said Steve Anderson, vice president of administration and director of investor relations.

The company still maintains what he calls "a dominant share" of the asphalt market, but began looking toward ways it could use its heavy technology toward green energy projects and the gathering of precious materials.

"Over the last few years, the private work has decreased because real estate has been down," Anderson said. "But parts of the world that have natural resources and commodities such as oil and gas seem to have weathered the recessions better than others, and a lot of our existing product lines can be used in those industries."

For instance, acquisitions in the mining sector meant that before Astec entered, there was only one other major equipment supplier. Miners were happy when Astec's equipment gave them another option, Anderson said.

Further, new U.S. rules mandating cleaner coal energy have pushed Astec to create a massive prototype system for a wood pellet machine. The wood pellets can be substituted for coal in the coal plant, up to about 20 percent of its fuel load, Anderson said.

"In a large coal plant, you can put scrubbers on it, but in some of smaller ones you can't, so this makes cleaner emissions more viable," he said.

In 2011, the company's product mix was 65 percent infrastructure, down from 85 percent 15 years ago. The balance is made up of mining and energy. Over the next five years, Astec will continue to adapt, with about 40 percent of sales from infrastructure, 30 percent from mining and 30 percent from energy-related products, Anderson said.

"We think these other areas have got great opportunity to grow in the future," he said.