Land of Lincoln

Last week, I attended a ceremony to dedicate the commissioning of a wind turbine at the corporate headquarters of Lincoln Electric (NASDAQ: LECO) in Euclid just east of Cleveland.

It’s not just any wind turbine.  For those who have driven on I-90 lately, the turbine is impossible to miss:  a 2.5 megawatt unit manufactured by Kenersys, towering 443 feet into the air just a few hundred yards south of the highway.  It’s certainly the largest turbine in Ohio, and may be the largest turbine installed for “behind-the-meter” use by a customer anywhere in the U.S.

Because of its size, the hurdles in the development process were unusually large for a customer-sited wind turbine installation.  Kudos must go to Seth Mason, Lincoln’s manager for energy procurement, assisted by many but especially Steve Dever of Cuyahoga County’s Great Lakes Energy Development Task Force, for utter perseverance in getting this project over the goal line since its conception a few years ago.

The motivation behind the project is also uncommon.  Of course, Lincoln wants to reduce its energy bills and exposure to future price increases.  Projections indicate that the turbine will supply about 90% of the annual energy requirements of Lincoln’s corporate headquarters.

But the project represents much more than a financial investment to reduce Lincoln’s operating costs.  In his remarks at the dedication, Lincoln’s CEO John Stropki extolled the symbolic virtues that the wind turbine represents in showing to local citizens that the region is not stuck in the past but is embracing and participating in the high-tech cleantech future. 

As a corporate citizen in the Cleveland area for over 100 years, it’s nice that Lincoln is concerned about the future health and dynamism of the region, and is making a non-portable investment that further cements their commitment to the area.

Or should I say “further welds their commitment”?  The corporate name “Lincoln Electric” is a bit misleading:  Lincoln Electric is not a utility like Wisconsin Electric or Hawaiian Electric, nor a household-name manufacturer of electrical products like General Electric or Emerson Electric.  Like many companies in the Cleveland area, Lincoln Electric is a multi-billion dollar corporation that nevertheless toils in relative obscurity, making products and offering services globally in the industrial sector – in Lincoln’s case, electric arc welding equipment and consumables (e.g., flux).

Wind energy is one of the biggest growth areas in Lincoln’s business:  they are an important vendor in towers for wind turbines, supplying welding machinery to the tower manufacturers as they fabricate the massive cylindrical tower sections.  The tower in their own Kenersys turbine installation utilized nearly 6,000 pounds of Lincoln’s flux.  It’s thus very much in Lincoln’s interests to support the growth of the wind sector.

The strategic dimensions of the project, and particularly the selection of a Kenersys turbine, are also notable.

A newcomer from Germany to the U.S. market, with a turbine design of a strong pedigree, Kenersys needs a good reference customer – a showcase, if you will – for prospective American customers.  The Lincoln wind turbine site, near a major city and airport – a hub for United Airlines (in the wake of its merger with Continental Airlines) – is good for this purpose. 

Presumably, eager to show its turbine in the U.S., Kenersys was aggressive on pricing and support for the Lincoln project.

More importantly, as their U.S. order book grows, Kenersys will also need a domestic location for assembly.  Lincoln has some spare industrial capacity at its corporate campus, and the hope is that Kenersys will utilize this already-extant capability to reduce start-up costs and speed-to-market – while providing an additional source of value to Lincoln.

Even so, that’s not in the bag yet.  It’s known that the state of Michigan is actively courting Kenersys for its future operations, with Kenersys already having set up North American headquarters (though no industrial operations yet) in the Detroit suburb of Troy.  Unlike Cleveland, Detroit is a nonstop flight away from Germany, which is a big advantage in minimizing the burden of executive travel to the U.S. from Kenersys headquarters.

For those of us who make the Cleveland area home and extol its virtues in the face of its challenges, let’s hope that Lincoln Electric truly feels as committed to the wind business and to our region as the company indicated last week in their comments, and steps up to the plate as needed when the time comes for Kenersys to decide on location for U.S. assembly and make an offer that Kenersys can’t refuse.

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