Regenco rehabs generator turbines
Early last year, Vice President Dick Cheney said the US would need one new power plant every week for the next 20 years to keep pace with demand.
Independent power producers (IPPs) were heralded as the saviors of the system – market-driven producers of electricity using natural gas to power small generators that could come online quickly during times of peak demand. Power and natural gas would be sold to major utilities and power users in computer-administered real-time transactions brokered by a little company called Enron.
That was before Enron went belly-up, and before a cooling economy reduced demand for electric power and natural gas.
That fluctuation in the power-generation industry is being felt locally. Waukesha Electric, a Waukesha-based manufacturer of transformers and substations, in March laid off 130 employees. But while the cancellation of generation projects is a stumbling block to the $400 million Waukesha Electric, one West Allis firm is proving that there are two sides to every coin.
Regenco, in West Allis, has increased its number of employees by about a third in the course of the last year, according to John Bobrowich, company president. While Waukesha Electric’s sales are driven by the addition of new generation, Regenco rehabilitates and rebuilds existing generators for energy utilities nationwide.
In the wake of the Enron debacle, many of the plants proposed by IPPs have been shelved as lenders become more cautious about the industry.
"Many people are really trying to understand how this has tipped the balance between the traditional utilities and the IPPs," Bobrowich said of Enron. "It basically has caused the financial markets to change the requirements they are imposing on the IPPs – not allowing them to have as high a debt-to-equity ratio. Fundamentally, these industries have been highly leveraged. As a result, there have been a tremendous number of projects either deferred or canceled."
In the last year, Regenco revenues have almost doubled, but Bobrowich has mixed emotions about benefiting from market instability.
Regenco was "one of the few firms on the positive side of this," Bobrowich said. "Utilities now are more concerned about existing capacity. They fear that some of the capacity that was to be developed will not be developed. They take a look at units they thought would not have been running much longer due to the additional capacity."
Scott Patulski, Wisconsin Energy’s vice president of Fossil Operations, oversees all of the utility’s non-nuclear and non-hydro power operations. Patulski said market conditions inevitably give firms like Regenco – which Wisconsin Energy owns a minority stake in – a real boost.
"Whenever there is a narrowing of the demand versus the generation capacity for whatever the cause, be it financial issues or something else, it places a greater demand on existing resources," Patulski said. "When you place higher demand on existing generation, maintenance suppliers are certainly impacted from their perspective. Regenco will see a positive impact not only in the state of Wisconsin but in all the areas where generation growth has subsided."
While Regenco’s market is nationwide, the firm works extensively in the state. Regenco is the grandchild of an Allis-Chalmers generation and turbine manufacturing facility founded on the same West Allis site in 1902. About 25% of the existing generation turbines at Wisconsin power plants are Allis-Chalmers turbines. And Regenco knows them inside and out.
"They have a stronger background in Allis-Chalmers machines, but they certainly are technically competent and savvy enough to work on anybody’s generator and turbine sets," Patulksi said.
Of course knowing the units well helps when time is of the essence.
"We just responded to two emergency situations," Bobrowich said. "In Green Bay, there was a failure of an Allis-Chalmers unit in October. We rebuilt it in three months. In Port Washington, we responded to a failure in January and were able to help the customers and the units back online."
Impact beyond four walls
As is usually the case when one area business does well, there is a ripple effect that extends well beyond the four walls of Regenco.
Regenco manager of purchasing and logistics Jim Konopacki said the firm makes it a point, where possible, to work with local suppliers.
"For instance, we use American Industrial Motor," Konopacki said, referring to a business located at 235 W. Oklahoma Ave., Milwaukee. "We use some of their expertise, and some of their employees work here for a few weeks on end."
Other key suppliers include American Manufacturing — a machine shop, and Fusion Babbitting, which supplies Regenco with bearings and bearing repair. Both businesses are located in West Allis.
For nationwide heavy hauling of large turbine spindles and rotors, Regenco looks to Steve Kezman Transportation Services of Mukwonago.
"When Siemens pulled out, there were almost 800 employees, and a lot of businesses really took a hit," Konopacki said, referring to the 1999 divestiture by the company that purchased the Allis-Chalmers generator business in 1991. "Besides, it is more convenient for our engineers to go meet with these people if they are right here."
April 12, 2002 Small Business Times, Milwaukee
