By Michael F. Carmichael
Feb. 18, 2010
Getting a mention in a gubernatorial state of the state address is likely not a bad thing for a business. In the case of Energetx Composites, being called out was definitely a good thing.
Energetx Composites was named the day before in Governor Jennifer Granholm’s State of the State address as one of the potential templates for the “new Michigan.”
The day after her address, Granholm personally visited Energetx, one of two companies owned by the Slikkers family in Holland, Mich. The other, S2 Yachts, represents another of the Governor’s target sectors- recreation and tourism.
The two organizations are linked not only by family ownership, but by a long history of experience with composite materials.
“Back in 1946,” says S2 CEO David Slikkers, “Dad went into the boat building industry.” That was when “boats were boats, made of meticulously hand-crafted mahogany,” he recalls with a chuckle. The prime example was Chris-Craft, in Holland, Mich., and that’s where the elder Slikkers started as a carpenter. Early on, his craftsmanship and leadership abilities were recognized and by 1955, Leon Slikkers was leading a team of 70 craftsmen. Then he resigned and started his own company.
The Slikkers lived in a small apartment over the new boat building shop during the early days. “Every morning was a board meeting, as was every evening,” says David. “I learned the business from both the ground floor - and the second floor as well. I’m sure the workers were not pleased when they would get to work and discover that after they had gone home the previous day the boss’s kids had been using their tools and leaving them all over the shop.”
By the late ’50s Leon Slikkers had started to experiment with epoxy and composites and by 1959 had completely abandoned wood in favor of fiberglass hulls, while retaining wood decks. Two years later even the decks were made of composite material.
This proved to be a major competitive advantage, says David. “The big old boat makers were faced with the problem of having to completely retool their product line in what they considered ‘a Tupperware world,'” he laughs. “We were smaller and we embraced what this material was capable of doing, the shapes, the styling, the performance.”
Today, the company is recognized for its fiberglass and composite work. “It’s become a hallmark of the Tiara and Pursuit brands,” says Slikkers. “We just don’t have failures. We’ve been at this long enough to do it right. Structurally, we just don’t have issues. People have no question about the hull’s capability in big water.”
When Slikkers talks about ‘big water’ he doesn’t limit that to oceans. “The Great Lakes are serious bodies of water and need to be treated with respect,” he says. “Everybody that is not familiar with them tends to think of them as puddles or small inland lakes. They have no concept of what they can do from a punishment standpoint to boats or their owners.”
Slikkers says that to get to the roots of the company’s diversification it’s necessary to look at a bipartisan effort by Congressional leaders back in 1991. “In an off-campus meeting at Andrews Air Force Base a dozen leaders from each party met with then-President George Herbert Walker Bush to craft a luxury tax on purchases by the wealthy. It had unintended consequences.
“In the first month of implementation of the tax,” continues Slikkers, “we sold one boat.”
At the time, the company employed more than 800 people in Michigan and a plant in Florida.
“Five industries were impacted by the 10 percent excise tax. Private aircraft, boats, luxury cars (in excess of $30,000 - that’s almost a starting point for many today), jewelry and furs.”
Slikkers tried to form a multi-industry coalition to lobby for repeal of the tax, but was unsuccessful so he led the boat manufacturers on a quest of their own. “We made it a jobs issue,” he says. “We had lost nearly 200,000 jobs in the industry.”
It took two-and-a-half years before they were able to get the tax repealed and, he says with a straight face, “we were the only industry to get the tax repealed.”
Though the boat manufacturing industry started to recover, Slikkers and his family began to hold internal discussions about diversification. It took until 2007 for that discussion to gain enough traction to be considered seriously.
By 2008 they reached a decision that the wind industry provided an ideal way to “leverage the competencies, the skills, the knowledge and the abilities that we had from five decades of composite experience to make blades and nacelles for utility-scale wind turbines,” Slikkers explains. So they founded a separate company, Energetx Composites.
“We had discovered that there were a lot of blade failures in the field, and issues with reliability and dependability,” Slikkers continues. “We also discovered that the majority of wind turbines were manufactured in Europe in what was a very small, very closed circle of companies.”
Logistics was becoming a problem as more and more American utilities began to finally look seriously at renewable alternatives to generating plants powered with coal and other fossil fuels. Simply transporting a set of utility-scale blades by ship from a European manufacturer was in the neighborhood of $130,000 - on top of the purchase price.
It was at this time that Slikkers began discussion with the Michigan Economic Development Corporation (MEDC). “We made the business case that diversification into wind turbine manufacture would be beneficial to the state. We got a tax credit in June of 2009 and in December received a U.S. Department of Energy advanced manufacturing grant. That was critical for us to be able to sign a license agreement with a major European blade designer within the past month.”
Energetx, thanks to its boat building heritage, knew how to manufacture wind turbine blades, but lacked the decades of experience in design possessed by the European companies, so forming a license agreement was vital to moving forward.
The giant wind turbines you see on the news - or in person if you visit Michigan’s Thumb area, or almost everywhere in Europe - actually are very much like the propellers for boats. Their size and the way they bite into the air to generate the maximum possible energy depends on their design characteristics, and where they are located physically.
“They can vary from 30 to 55 meters in length,” explains Slikkers, “and the pitch can vary considerably, depending on the size and the average speed of the wind at a location. So, it’s science, not art. That’s why we’ve partnered with a company that has 15 years of experience with that kind of science. We’re thrilled to have Aeroblade of Vitoria, Spain be that partner.”
Does that mean that Energetx and Aeroblade will be offering a ‘one-stop-shop’ for the utility companies that will be buying wind turbines? “We are a tier-one supplier of blades and nacelles to the companies that build the turbines,” explains Slikkers.
There’s a huge push to make the country less dependent on foreign oil and fossil fuel says Slikkers, “and wind turbines, while not the complete solution, are an important part of the mix.
“Our job is to become the highest quality manufacturer of wind turbine blades in North America.” he continues. “The best way to do that is to get onshore blades up and flying to demonstrate what we’ve been saying all along.” After that will most likely come offshore use because, as Slikkers says, “The Great Lakes have a significant wind presence, but it probably won’t happen without some controversy. Everybody’s in favor of renewable energy but nobody wants it in their backyard. We as citizens have to realize that if we’re going to make a commitment we have to do this, but do it with sensitivity, a balance.”
“When you put good minds in a collaborative, cooperative spirit I think resolution can be found. That’s if people come in wanting to find a solution, as opposed to having a desire to embrace the new world. You can’t have it both ways. You can’t be about renewable energy as long as it’s in Colorado. As long as it happens in New York, I’m okay. It has to become part of our landscape as a country. Most Americans would be amazed to see how many wind farms - both on and off shore - there are in Europe today. It’s mind-blowing.
“The OPEC countries are playing us like a fiddle,” he continues. “They know if they keep oil costs between $60 and $80 a barrel we’re not going to be moving real fast. Our sense of urgency has waned since 2008, but if that cost gets closer to $100 you’re going to see a more compelling reason to move more rapidly.”
Despite his experience with the Bush tax in the early ’90s, he still believes “government has a role to set policy and then the free enterprise system has to interpret that policy in a creative fashion. We as consumers vote with our checkbooks as to whether that free enterprise system has been successful in interpreting the policy.
We just have to be open to change. We have to come up with good solutions that will have good benefits for all.”
So, what’s it like to get both a mention during the State of the State message and then a visit from the Governor?
Slikkers explains, “I have to confess, getting a call from the Governor’s office about that is a pretty humbling experience. We view ourselves as a pretty innovative and creative company that’s doing great things in the marine industry and being aggressive and creative in our diversification efforts. To have that recognized at the state level - we’re honored with that distinction. And to have Energetx viewed by the state as a template and model for the state we feel truly blessed. We have a tremendous passion for business, for West Michigan and for the state of Michigan. Being recognized by the Governor is a reward for our employees who’ve had to endure not only economic compression, but the uncertainty of change”