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May 07 Businessexcellence Golden Grain Energy 57 Golden Grain Energy is about to double its production of ethanol after extending its facilities. Walter Wendland, president & CEO, tells Linda Seid Frembes about the growth of this unusual cooperative With global warming dominating news headlines, the attention given to alternative fuels has once again shone a spotlight on ethanol. Ethanol is a clear, colorless alcohol fuel made from the sugars found in grains, which can be mixed with traditional gasoline to fuel vehicles. But it’s not a new fuel source. It was used as early as the 1850s as a lighting fuel. In 1908, Henry Ford designed his Model T to run on a mixture of gasoline and alcohol, calling it the fuel of the future. We do not know how far Ford could see into the future, but here we are 100 years later, looking at ethanol again. Golden Grain Energy (GGE) of Mason City, Iowa is a privately-held company dedicated to adding value to northern Iowa’s corn production by turning locally-grown corn into clean-burning ethanol. Founded in 2002, the company is headed by Walter Wendland, president & CEO. “I was asked to attend a meeting with the Chickasaw County Board of Supervisors. The county was funding a feasibility study and a steering committee to explore ethanol production,” he explained. “The committees explored different types of corporate structures and technologies, sizes of plant and different processes. The fact-fi nding phase took several months. We looked at 30 different locations in eight counties. On March 18, 2002, the LLC was formed and the directors and offi cers were chosen. Between 2002 and 2004, several committees were formed to review fi nancing, insurance, and other business requirements.” From September 2002 to May 2003, the company proceeded with the federal registration process. “The SEC had developed new post-Enron rules so it took longer than we expected,” said Wendland. “In June of that year, we started raising money; through September we raised $23 million. The construction phase lasted from October 2003 to December 2004.” The company currently produces more than 60 million gallons of ethanol annually. Shifts run in two 12-hour rotations, with teams running seven days on and seven days off. Last year, the plant ran 360 days with some minor shutdowns a few days each spring and fall for maintenance and state inspections. GGE is a unique entity in that it is owned by more than 750 members, the majority of whom are northeast Iowa farmers and businessmen. “The minimum investment was $10,000. We Copronwer

kept it low to give everyone the opportunity for ownership,” said Wendland. “Once our member/ owners numbered over 500, we became a publicly reporting company through the new rules of the SEC. The advantage of publicly reporting is that members can keep up with the company; there is openness and transparency.” Member/owners can privately trade shares on their website. Shareholders can post either a buy or sell inquiry to the group. Once a deal is made, the transfer application goes to GGE and transfers are approved at board meetings. The marketing of GGE’s ethanol is done under a marketing company called Renewable Products Marketing Group (RPMG). GGE and 15 other ethanol producers across 10 different states are part of the company. The ethanol producers pool production and have RPMG evaluate the best plant to service the customer base of blenders, oil companies and ethanol retailers. Wendland noted: “Golden Grain Energy just focuses on production. The marketing company lines up the trucks and/or rail transportation and pays us a pooled price for the ethanol.” GGE has hired a commodity specialist for the other side of its business. In addition to ethanol, the company produces both wet and dry distillers grains as a feed source for local livestock producers. The company is currently experiencing an expansion of its plant and plans to double production by May 2007. The company received its Title V permit in April 2006, allowing it to produce 150 million gallons of ethanol. In May 2006, GGE started the expansion process of building a new 40 million gallon plant onto the existing 40 million gallon plant. According to Wendland, the capacity at the original plant exceeded 60 million gallons and there are similar hopes for the new plant. “The new plant has greater effi ciencies and larger tanks and dryers,” he said. “We should have no problem maximizing our output. We have great experience optimizing production and focusing our attention on bottlenecks. We have brought refi nery processes into the ethanol industry with much success.” A recent GGE newsletter reports that much of the work currently being done for the plant Businessexcellence May 07 58 The Indeck Group of Companies is involved in the design and manufacturing of steam generation systems as required for the global ethanol industry. These include watertube package boilers, thermal oxidizers/waste heat boilers, fi retube boilers and solid fuel boilers utilizing stoker and bubbling bed technologies. In addition, Indeck also owns the largest inventory of stock boilers available for rent or purchase. Indeck Power Equipment Company “We have great experience optimizing production and focusing our attention on bottlenecks. We have brought refi nery processes into the ethanol industry with much success”