Irwin Jacobs intends to take pioneering boat-building technology and use it to make more durable blades for wind turbines.
Irwin Jacobs, chairman of VEC Technology, held a cutout from a wind turbine blade that contains 65 layers of compressed fiberglass. Jacobs said he intends to produce blades that will solve the durability problems that have plagued wind turbine blades.
Minneapolis businessman Irwin Jacobs just placed his boat business into bankruptcy, but he's already taking action to launch an expansion for another one of his companies.
And he's thinking big.
He plans to manufacture durable wind turbine blades with the same high-tech fiberglass technology that he has used to build more than 85,000 boats.
Within the next three years, Jacobs said, he intends to open three to five factories in the United States to manufacture blades that will generate $450 million to $750 million a year in revenue.
"It's a revolutionary new product," said Jacobs, who keeps a chunk of a wind blade with 65 layers of compressed fiberglass in his 29th-floor IDS Center office.
Minnesota is among multiple states being considered for the location of the first factory, expected to employ 500 to 600 people. Jacobs said he'll choose the site within 30 days.
"Minnesota would like to have us," said Jacobs. "Because I live here that would be my preference, obviously. But I can't sit here and just rule out any other state. It's a commercial transaction."
But Jacobs, who will travel to Europe this week to meet with potential investors, is looking at national and international arenas to market an array of fiberglass products he wants to build through VEC Technology, a Pennsylvania-based company of which Jacobs is chairman.
Jacobs' Genmar Holdings Inc., the world's second-largest builder of consumer boats, filed for bankruptcy earlier this month amid a recessionary downturn in the industry. Genmar owns 93 percent of VEC, which is not in Chapter 11.
VEC is an acronym for virtual engineered composites and Jacobs has been an apostle of the process for about a dozen years. He discovered the technique when he was trying to build a better boat. "I said, 'We've sent men to the moon, and, yet, we're still building boats the same way we have for 75 years."
He crossed paths with a young entrepreneur named Gene Kirila, who developed a floating mold manufacturing process that required less labor on the factory floor, got rid of gas emissions and relied heavily on computers to turn out an identical product over and over.
Jacobs acquired the rights to the technology and in 2004 VEC Technology became a freestanding company valued at about $350 million. The 7 percent minority owner is Interplastic Corp., a St. Paul manufacturer.
Jacobs has been using the closed-mold manufacturing process to make boat hulls in his Little Falls, Minn., plant for several years. "We created a science out of building boats, rather than an art," Jacobs said.
Now he wants to take that science and apply it to the wind energy industry, which has been plagued by cracking in turbine blades.
Because those blades are made with a lot of hand labor, Jacobs said they are not produced with uniformity, and cracking has ensued. To work properly, he said, the three blades on a turbine need to be the same weight and have the same thickness at different places along each blade.
A year ago, India-based Suz- lon Energy Ltd. announced a retrofit program to address blade cracking problems with some of its wind turbines in the United States. A six-month retrofitting program was expected to cost about $25 million, and Suzlon said it would use its blade manufacturing and service facility in Pipestone, Minn., to carry out the remediation.
Citing weak demand in the first half of 2009, Suzlon notified 160 employees at its Pipestone operations earlier this month that they will be laid off this summer. Some wind energy projects also have had trouble getting financing in a tough credit market.
Because of the global recession and tight credit markets, demand for wind turbines and blades has "dropped dramatically" in the short-term, said Michael Reese, who directs renewable energy research at a University of Minnesota-Morris center. But he said "wind energy has a great upside" for 2010 and beyond.
Reese noted that there are many incentives in federal legislation passed this year that will encourage the growth of wind energy. In addition, he said, "A lot of states have renewable energy standards that they must meet."
Before the downturn, Reese said, blade cracking had become a business "impediment for the newer manufacturers that are trying to penetrate the market." Companies need the financial wherewithal to stand behind the blades they make.
"We can build a perfect blade," Jacobs said. He maintains that the VEC process won't face the cracking problems faced by other blademakers. "We can build the same blade, the same size, the same specifications without any variation," he said. "There is no other blade in the world, or manufacturing process in the world, that will give the exact repetition each time."
Now he just needs money -- up to $100 million, he said. Jacobs isn't allowing the Genmar bankruptcy to deter him from devoting time to VEC fundraising. "We have many people who are talking to us right now, everybody from people who are in the alternative energy area of investing to people who are in the wind energy business," Jacobs said.
On his European trip, he'll meet with people in the wind turbine business. "What we want are partners to come in who are going to be beneficiaries of our process. We're not just looking for hedge fund people," Jacobs said.
Officials in multiple states have offered Jacobs incentives to locate the first blade factory in their state, but Jacobs declined to name the states. Genmar's boat factory in Little Falls is not in the running for building the huge blades, which can be 150 feet long. But Jacobs said it is "highly probable" that Little Falls workers would make smaller parts associated with the wind energy turbines because Little Falls already has the VEC technology.
He also is optimistic he will be able to open a separate factory in the United States that's dedicated to building military containers using the VEC process. Jacobs said the National Guard is now testing 70 large VEC containers. He refers to that product as the "James Bond container" because it has a device built into it that can be used to track a container in the post 9/11 era.
"We are talking to both Homeland Security and the Army," Jacobs said. "I would say every branch of the Armed Forces needs what we believe to be the next smart container." Jacobs points to drawings that show that a mobile container, which could be 8 by 10 feet or larger, can have a generic exterior, but its interior could be outfitted as an office, a bedroom or a kitchen out in a field setting.
On his immediate agenda, Jacobs is moving forward with the wind blade business. "Look, with oil prices back up to $70 a barrel, wind energy is becoming a factor again," he said.
Jacobs, a veteran deal maker, is clearly energized by his new industry and visions of his first blade factory. He said, "It will be the state-of-the-art blade factory like no other blade factory in the world."
Liz Fedor • 612-673-7709