Astec Inc. expanding to build biomass fuel factories in ChattanoogaCompany announces construction of new $5 million, 25,000-square-foot bay
White afternoon cloud cover reflected off the shiny convex surface of an Astec Double Barrel asphalt drum dryer and mixer, as Malcolm Swanson, president of Chattanooga-based Astec Inc. stood on a metal platform nearby above a blacktop parking lot and talked to a gathering of employees about how soon all of this would be under roof.
Inside and gathered around a corral of temporary orange construction fencing, dozens of Astec workers paused from their day's work to hear Swanson's short speech, and to watch as he and others struck ceremonial red dirt in preparation for the construction of a new, roughly 25,000-square-foot, $5 million expansion at the company's south Chattanooga campus.
"We have some room to grow," said Swanson, "and we intend to be doing that."
The expansion will add vital space needed to build and assemble primarily wood pellet production machines and equipment.
When the new expansion is done, Astec Inc. will occupy more than 500,000 square feet of manufacturing and warehouse space in Chattanooga alone. Chattanooga-based MPL Construction and Architecture is handling the project.
Astec Industries, the publicly traded parent company of Astec Inc., hit roughly $980 million in sales last year, and expects to exceed $1 billion in sales this year. Astec Industries employs roughly 4,000 employees across 18 companies.
Astec Inc. - the largest subsidiary of Astec Industries, specializing in asphalt and wood pellet production factories - did roughly $180 million in sales last year.
Building on the sharp upward trajectory of Astec Inc.'s sales figures, company officials on Tuesday said last year was nearly record-setting. Astec and other road building equipment makers got a boost from the new, long-term federal highway funding bill . But even more important could be the company's newfound foothold in the wood pellet production sector, in which Astec has become a major supplier of machinery and factories for the manufacture of wood pellets.
Michael Swanson, vice president of manufacturing at Astec Inc., said officials expect wood pellet factory production to represent roughly a third of the company's sales this year.
Wood pellets are densely-compacted bits of wood made largely from sawmill scraps and junk commercial tree crops, collected during crop thinning.
Wood pellets are an increasingly preferred source of residential and industrial biomass energy in Europe, where governments and companies are phasing out coal. According to the U.S. Energy Information Administration, the U.S. exported more than 3 million tons of wood pellets in 2014, most of which went to the United Kingdom to help satisfy new clean energy standards there.
A single power plant in the United Kingdom used 80 percent of the country's American pellet imports as Britain transitions from coal to wood pellet power. The U.S. recently surpassed Canada in number of wood pellet exports.
Astec Inc. is uniquely positioned to capitalize on the rise of wood pellets, due to the similarities between the industrial machines used to make pellets and the industrial machines long made by Astec for the production of asphalt.
In fact, it was an Astec customer who years ago first suggested to late Astec-founder J. Don Brock that the company consider getting into wood pellet factory production. And company officials saw the dovetail made a lot of sense for them.
"We kind of realized we already make most of the stuff in different forms," Swanson said.
Also, U.S. Industrial Pellet Association statistics show the Southeastern United States is where most wood pellet harvesting happens. Consequently, wood pellet production plants - customers of manufacturers like Astec - are also located throughout the region.
Earlier this year alone, Astec secured a $122.5 million order for a wood pellet production plant in southeast Arkansas.
Astec's Chattanooga expansion will accommodate a pair of 60-ton cranes, a pair of 20-ton cranes and a pair of 10-ton cranes and will add around 15 feet of ceiling height. The expansion will add 40 to 50 welding, fitting, electrical and machining jobs as well as potentially a couple of engineering positions.
"We've got the work," Swanson said. "I wish we had the bay already built, because we could already be using it if it was already built."
Contact staff writer Alex Green at email@example.com or 423-757-6480.