Whitefish capitalist eyes CFAC for transformer factory

A Whitefish businessman is trumpeting plans to build a manufacturing facility in the Flathead Valley capable of supporting 1,000 new jobs. While the proposed venture has been met with cautious optimism from local business and community leaders, a number of significant hurdles stand in the way.

Andy Techmanski, chief executive of Whitefish Energy Holdings LLC, is exploring the possibility of building a transformer manufacturing plant at the former Columbia Falls Aluminum Co. site. In the first phase, Techmanski says the facility could employ about 250 people, while climbing to 1,000 employees once at full production.

But before breaking ground, Techmanski is banking on a list of external factors to support the project in different ways.

In order to develop the factory that is estimated to cost up to $40 million, Whitefish Energy needs utility companies like Flathead Electric and NorthWestern Energy to purchase approximately $20 million in pre-ordered transformers before production begins.

So far, efforts to secure those contracts have been fruitless since Techmanski began speaking with those companies in the last year. If he successfully secures the pre-orders, Techmanski hopes those contracts will comfort potential loan officers and investors.

If the company gains the financial support from utilities, banks and investors, Techmanski plans to make a pitch to the Governor’s Office of Economic Development with an eye on millions of dollars in cash grants, tax credits and financing guarantees. He plans to pitch his business as a template for a program that could be used to attract other businesses to Montana.

“There are several hurdles, by far the biggest one is getting into agreements with utilities,” Techmanski said.

Still, he remains confident in the plan.

“No one else is talking about bringing 1,000 jobs to Montana,” he said. “No one has talked about that in 30 years.”

TECHMANSKI AND two representatives from a Brazilian transformer company met Dec. 12 with local and economic development leaders about the project. Whitefish Energy Holdings is a servicing company that was established 18 months ago to work on power-line construction, substation construction and environmental mitigation projects. According to a company prospectus, Comtrafo, a Brazilian transformer manufacturing company, recently purchased 51 percent of Whitefish Energy, shifting the company’s focus toward production of large-scale transformers for the U.S. market.

“Whitefish [Energy Holdings] was essentially established to carry through with this vision,” Techmanski told the Inter Lake. “We’ve known for several years that the logistical advantage of having the factory in the United States is where our company needs to be.”

Raphael Minato, sales manager of Comtrafo, and his uncle, Comtrafo Chief Financial Officer Irineu Minato, made the weekend trip to survey the North Valley and meet with the business community. Back in Brazil, Comtrafo currently runs its own transformer manufacturing facility, which employs approximately 1,000 people. Techmanski and the Minatos want to build a mirroring facility in Columbia Falls, employing the same number of people building an expanded product line.

WHITEFISH ENERGY and Comtrafo are looking to outside sources to help gain financing, but Techmanski said, “We’ll be the biggest investor in the business, for sure.” He did not specify how much either company would contribute to the development in total, but did add that the factory would operate under the Whitefish Energy name, rather than Comtrafo.

Techmanski and the Comtrafo representatives on Monday visited the Columbia Falls Aluminum Co. facility — Techmanski’s first choice for the new factory. While the Environmental Protection Agency three months ago listed the property as a Superfund site, he hopes to use the existing buildings on the property to house the transformer factory. Techmanski said he wanted to use every building on the property, but not develop in the waste area currently undergoing a remediation process.

If the CFAC property falls through, he said he’d consider the Columbia Falls Industrial Park and the former Plum Creek mills now owned by Weyerhaeuser Co.

John Stroiazzo, project manager at Columbia Falls Aluminum, who was not present during Monday’s gathering, said Techmanski has been in contact with the company about the project. Columbia Falls Aluminum Co. is open to seeing the property redeveloped, but Stroiazzo said that Techmanski would have to begin coordinating with the EPA on future plans in order to make that happen.

“We have no firm information from him about exactly what he wants to do,” Stroiazzo said. “We’re willing to listen, but like I said, we’re not the only decision-maker at this time. He’s got to blend in with the regulators.”

Techmanski said he doesn’t want to get involved in the Superfund cleanup, so he’s looking for an investor to purchase CFAC land, then lease from the investor. On Monday, he said Columbia Falls businessman Mick Ruis has been supportive of the project and that they had talked about Ruis investing. When approached about the transformer business, Ruis had this to say: “I told him I’d be very interested.”

TECHMANSKI AND the Minatos also met with Columbia Falls City Manager Susan Nicosia and Montana West Economic Development President Jerry Meerkatz last week; both will be essential to Techmanski succeeding in grant and loan programs.

“It went well,” Nicosia said. “Obviously it’s still a preliminary discussion.”

She said the aluminum plant is too far from the city to annex, but the property could be connected to city services. Nicosia also said the city would work with Montana’s congressional delegation, adding that U.S. Rep. Ryan Zinke’s office has already reached out to her about the project.

Meerkatz said after meeting the Brazilians, he’s ready to begin building a team of economic development affiliates to pool resources for the project as more details emerge about the project.

“Now, we basically try to coordinate the next step,” he said.

But Meerkatz also underlined how critical the backlogged transformer purchases by local utilities will be to the project’s success.

“I think that’s very key,” he said. “If we don’t have a backlog or some degree of backlog, I’m not sure we have a project.”

FLATHEAD ELECTRIC spokeswoman Wendy Ostrom-Price said the utility company’s engineering staff met with Techmanski earlier this year. Although Flathead Electric bids out its transformer purchases from producers around the country, Ostrom-Price said the company would continue talks with Techmanski.

Techmanski on Thursday said he spoke with Flathead Electric General Manager Mark Johnson, but was unable to secure any sales commitments.

A NorthWestern Energy employee actually traveled to Brazil to meet with Comtrafo officials, according to NorthWestern Energy spokesman Butch Lacrombe. This is pretty typical for NorthWestern when engaging with companies it hasn’t done business with before, Lacrombe said. NorthWestern also bids out its transformer purchases and hasn’t committed any purchases to Whitefish Energy Holdings.

“There’s a lot to be done before we enter into agreements with them, but we’re definitely open to what they have to say and seeing if it could work,” Larcombe said.

For now, Techmanski is coordinating new meetings each day, waiting to see who will buy in.

“This is kind of the kick-off to this venture or investment,” he said. “This is where it begins.”

Hungry Horse News Editor Chris Peterson contributed to this story.