Product Close-Up: Fertilizer Storage Tanks and Containment
Precision Tank, like its favorite NASCAR driver, appears to be on the right track in 2018. According to the company’s President and CEO, David Hemming, it’s been a “very good year” thus far.
It’s been an even better year for the guy who, on July 28 at Iowa Speedway, drove in the name of Hemming’s liquid storage company. Justin Allgaier finished second in the NASCAR Xfinity Series race while sporting the “Precision Tank” logo on the hood and rear quarter panels of his No. 7 Chevrolet Camaro. Ag retailer BRANDT, the primary sponsor of Allgaier, had offered Precision Tank the space that weekend.
“The Brandt family has owned a portion of Precision Tank from Day 1 in 1965,” Hemming says. “Due to that ownership, Rick Brandt is a member of the Precision Tank board of directors. Rick was gracious enough that he agreed to put the new Precision Tank logo on the No. 7 Xfinity car.”
Allgaier wound up winning the regular-season standings of the Xfinity Series with a field-high five victories. He was the top seed going into the seven-race postseason.
“For our company to have our new logo on the No. 7 car was extremely exciting. Our customers and employees truly enjoyed the race day at Newton, IA,” says Hemming, who attended the race with about 50 of his employees and customers. “Justin was so close to winning. Our entire group was cheering him on, particularly during the final laps. A lot of high fives ended the day.”
Precision Tank, based in Virginia, IL, isn’t the only fertilizer storage company driving toward an eventful 2018. CropLife® magazine interviewed the principals of four companies, including Enviropac, Heartland Tank Services, and Novid, regarding the current state of the industry.
Ryan Plett, President of Novid, says his Manitoba-based company — one of the largest manufacturers of stainless-steel fertilizer and chemical storage in North America — had little idea what to expect in 2018. “We’d seen some solid numbers in the previous two years and wondered if a correction was in store,” he says. “We were pleasantly surprised to see strong growth in the first three quarters and have every reason to believe the year will end well.”
Dennis Neal, Owner of Enviropac in Compton, IL, says the fertilizer storage industry has endured an “up-and-down year” in 2018. “With a great crop in many areas of the country, prices have been under pressure, and that has caused the storage market to experience a slowdown from the past several years,” Neal says.
Chris Brooks, President of Heartland Tank Services in Englewood, CO, says his year “started slowly,” but “we rapidly booked out our year by July for API 650 tanks and internal containment liners.”
According to Hemming, Precision Tank’s optimism this year revolves around his belief that some capital budgets have been released this year after a “couple of years of being clamped down.”
Three of the four principals cited the effect of tariffs.
Novid has enjoyed its success “despite the tremendous turmoil and volatility in the stainless-steel markets,” Plett says. “NAFTA negotiations, tariffs, and the threat of duties have been significant threats over the past year.”
Brooks and Hemming concur.
“The major market change has been the tariff effect,” Hemming says. “Both mild steel and stainless steel shot up in price after tariffs were announced. At this point the market has settled a bit but remains higher priced than the winter months. Large projected crops have obviously kept corn and soybean prices low, with soybeans adversely affected by tariffs.”
Adds Brooks: “We believe the placement of tariffs on imported steel had some impact, even as domestic steel prices accelerated. Many of our customers were worried about the possible higher price of quality, domestic mill-certified steel and moved forward on projects, trying to beat steel uncertainty and inflation worries.
Transportation is still a significant concern about acquiring enough product when needed. Having adequate storage to meet needs for the entire season is important to our retailer and wholesale customers.”
Specific to 2019, the outlook is “excellent,” Brooks says, at Heartland, which offers a full range of services for steel-welded above-ground storage tanks. “We are booking orders for completion in the fall of 2019. A busy year is forecasted. Specialty fertilizers are demanding more storage volume as well.”
The tank outlook at Precision Tank “remains strong,” Hemming says, particularly for field-erected tanks. “Fiberglass tanks are becoming the norm for 30,000-gallon tanks due to longevity, and we have a lot of them to build at this time,” he says.
Novid is already quoting many large projects for next year, Plett says. “Mergers of many large cooperatives and acquisitions by privately held corporations have all contributed to new plant construction and the expansion of many existing locations, both of which create opportunities in the tank and containment industry,” he says.
Neal remains cautious at Enviropac because of near-record corn and soybean production bringing about lower commodity prices. Couple this with fertilizer costs at their highest levels in a couple of years, he adds, and that puts further pressure on margins for retailers and growers. “This has put a slower demand being forecast for 2019,” he says.
Enviropac plans to better educate growers and dealers in terms of purchasing the correct storage tanks. “As more specialty fertilizer products are coming into the market, buyers of tanks need to be certain they are buying the style of tank that will store the correct products now and in the future,” Neal says.
Heartland Tank Companies will continue to work to meet customer deadlines for new tank construction and containment systems by adding additional certified personnel, Brooks says. Novid, meanwhile, is committed to the continued expansion of its market by entering new geographic regions, Plett says, stressing the development and commercialization of new product lines.
Precision Tank is focusing on the combined strengths of Precision Liquid Construction (formerly A&B Welding) and Precision Tank. “We are enjoying some synergy as a result,” Hemming says.
Fiberglass tanks continue to be the tanks of choice for both growers and retail dealers, according to Neal. “They last much longer than mild steel and cost much less than stainless steel. With a UV protection on the exterior, maintenance — inside or out — is minimal,” he says. “With an interest in stainless tanks, there are some companies offering stainless tanks that are extremely lightweight and are not built to API standards.”
Hemming endorses fiberglass tanks as well. “If you plan to keep a retail location for many years, please consider fiberglass tanks for their long-term cost effectiveness and low maintenance,” he says. “Our customers love the fact fiberglass does not rust.”
Plett, on the other hand, recommends steel. “Be sure to research all storage alternatives before making your next purchase. Products like stainless steel are much more affordable then you think,” he says. “The new technologies used to store and supply crop nutrients are safer than they’ve ever been.”
Enviropac offers “interior” tank protection for steel fertilizer tanks. Enviro-Coat Rust Resister floats on fertilizer products and provides interior protection of the tank walls from rust and corrosion, according to Neal.
“For dealers and growers that are delaying tank-purchasing decisions, maintenance of their current storage tanks is important to extend their useful lives,” he says.
Heartland Tank LLC and Heartland Tank Services are still building and installing heated field-erected tanks to maintain product temperatures through harsh winter months to maintain the product integrity with low energy costs, Brooks says.