Truckin' Wind

In early March 2018, General Electric (GE:  NYSE) announced plans to invest more than $400 million over the next three to five years in offshore wind power technology development that will bring the world largest wind turbine to the market.  GE expects to achieve a power generation capacity of 12 megawatts from a turbine that will have blades longer than a soccer field and stand 260 meters tall.  Another $160 million will be invested in manufacturing capacity in GE’s plants to modernize blade and nacelle production lines.

In September 2017, GE introduced the largest on-shore wind turbine with a rotor diameter of 158 meters, 240 meter height and a power generation capacity of 4.8 megawatts.  The turbine was developed by GE’s wind subsidiary GE Renewable Energy, which touts the model’s lower noise emission levels in addition to size leadership.

GE’s interest in off-shore wind technology is driven in part by limitations on land.  Transporting ever longer blades and ever larger generator nacelles presents challenges.  At least a dozen loads are needed to move a wind turbine and tower from manufacturing site to installation site.  Two or three of these loads will be oversize and overweight.  Blade trailers needed to move wind blades from the manufacturing facility to the wind farm site must be 120 feet to 130 feet in length.  Such trailers require five axles and can weigh more than 20,000 pounds.  A generator nacelle requires a specialized rig with thirteen axles and a weight of 120,000 pounds. 

In the U.S. most wind component sources require routing through major urban areas.  Most highway intersections have signage and poles that will affect tail swing of the blade tips.  This is a critical impediment because the blade tip feature is positioned on the rear pull out of the trailer.  That said, larger blades can be imported into U.S. Gulf and West Coast seaports.  Yet multi-modal transport schemes increase complexity and present particular risks. 

Local jurisdictions in the U.S. as well as Europe and other countries require permits for such large, heavy rigs, adding to the complexity in the moves.  Special escorts are often required as the oversized and overweight vehicles move across the landscape.  It is not an easy, smooth effort.  Just ask any motorist who has been caught behind a blade truck on a two-lane highway.

Thus, even as a top competitor in the on-shore wind industry, GE is turning its eyes to the sea.  As it is land transportation is also a factor in the final cost and construction timeline for off-shore wind projects.  Turbine blades destined for an off-shore wind in Germany were recently moved from GE’s manufacturing site at LM Wind Power in Spain to the port at Castellon, Spain.  GE provides a documentary of the trip that took three and a half hours at a driving speed of 15 kilometers per hour. 

There are a number of trailer manufacturers that have been attracted to the fast-growing market to supply blade and nacelle trailers.  Suppliers are helping their customer carriers to modify their trailer fleets to accommodate blade and nacelle configuration.  In the North America market, Trail King Industries was the first to market with a blade trailer and now has majority market share.  International Specialized Trailers followed and is now in second place.  IST has been actively creating new trailer designs to meet industry needs for blades longer than sixty fee.  Kalyn Siebert and Talbert Manufacturing have fallen in line in third and fourth place, respectively. 

Trail King built its leading position through a series of acquisitions that provided both manufacturing capacity and expertise.  Trail King itself was acquired in 2010 by CC Industries, Inc., a privately-held holding company that has given Trail King access to management expertise and capital.  The company has continued with its largest deal to date, the acquisition of Dakota Trailer Manufacturing in Yankton, South Dakota.

In other markets, Cometto S.p.A. and Faymonville Group are dominants in the South American market.  Tomisko Trailers and K-Line Trailers focus on the Canadian market.  The European Union is also served by Goldhofer AG, which specializes in oversize and overweight hauling solutions.

With the large number of players in market, investors can expect some consolidation of the sort started by Trail King.  It is yet to be determined whether that would produce large enough operations to support a public company.  In the meantime, getting a taste of the transport aspect of the wind power industry is still only for private investors.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.