Northeast Wood Products ready, waiting to ramp up production

By Katie Fletcher | May 18, 2016

Northeast Wood Products LLC commenced pellet production in December at its retrofitted 120,000-ton-per-year pellet plant located in the Jasper Industrial Park in Jasper, Tennessee. Now, poised for ramp up, the company is waiting on the sidelines until the market rebounds.

Guy Mozzicato, president of NWP, said some modifications are being done to the feed system at the Jasper plant to fix dust issues, as well as some adjustments are underway to contain fugitive fiber. “Aside from that, the plant is ready to function at its designed capacity of 120,000 tons per year,” Mozzicato said. He added extensions are in place to house additional pellet mills. “Basically, the entire infrastructure is there,” he said. “Given the market conditions—the strength of the dollar, the soft demand for the export markets—we’re just seeing where heating oil goes this year and where temperatures go. We’re all dressed and ready to play, we are just sitting on the bench right now.”

Although production commenced on schedule late last year, it’s at a restricted level. “We have a well-trained crew there that’s functioning, but instead of running the anticipated number of hours, we’re running at a fraction of that,” Mozzicato said.

In addition to the latest acquirement of the Jasper pellet manufacturing facility, NWP previously acquired two 65,000-ton-per-year plants in Peebles, Ohio, and Ligonier, Indiana. Due to market conditions, these two facilities are running abbreviated schedules as well. The plant in Indiana has larger motors ready for install at the site, but this conversion has been put on hold. “We’re holding off on that until we see where the industry and where this coming season will take us,” Mozzicato said. He added that this time last year the company had hundreds of tons in stock and it’s currently reached thousands of tons of inventory. Because of this, NWP has decided not to increase capacity at any of its plants for the time being. Decisions like this are being made across the industry.

It was last April when NWP began retrofitting its third plant in Jasper. The facility was previously an ethanol plant owned by Tennol Ethanol. The property is in excess of 230 acres and is shared between NWP and Cartbellus, a company that manufactures industrial products including tractor tire ballast fluids, acid oils, yellow greases and biodiesel feedstocks. The pellet facility has the storage capacity to house 10,000 tons of pellets. Nine silos were acquired with the property and NWP has refurbished five of the nine to store pellets. In addition, the site has 40 rail car siding and some cars have already been loaded and moved. A rail scale, truck chippers and other infrastructure are available to double plant capacity to 240,000 tons per year. Mozzicato shared that a terminal handling company is in the process of installing dock capabilities as well, with an estimated operational date in October. “We’ll have onsite barge siding, making us export viable,” he said. “We have the ability to increase capacity—the infrastructure is already there, the utilities are in place—it’s just a matter of dropping a few machines and conveyers in place to double the capacity.”

The company is sitting in a good position, but has chosen to pull in the reigns until the right time. Mozzicato added that although they’re not running at capacity, the company is cognizant that they don’t want to lose their primary suppliers of feedstock to each of the facilities. “We have a wide range of supply coming from a number of different sources, so we’re paying attention to make sure that we keep all of our vendors happy,” Mozzicato said. He added that although he doesn’t think anyone appreciates the situation, it’s industry-wide and there are not many options. “Everything is depressed right now, so it doesn’t make sense committing capital,” he said. “It’s better to just sit on the sideline, wait for a rebound and we’ll be quick to respond.”