Fertilizer Storage Tanks and Containment: Suppliers Experience Strong Demand Amid Challenging Year
November 2, 2020 When 2020 is finally finished, when the books are closed many will breathe a heavy sigh and move cautiously into 2021. Not many will be reluctant to see 2020 relegated to historians. One group though that might be just a tad sad to see this year end are the businesses that sell tanks and containment systems.
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That group, at least the ones that spoke with CropLife® magazine indicated that 2020 has had a pretty positive year from a business perspective. That’s not to say everything has been perfectly smooth, but what year is?
A Look at 2020
While many ag companies have been touched by the COVID-19 pandemic, it seems to have had little effect on the tank and containment field.
“The Heartland Tank Companies expected 2020 to be a good year for tanks and containment systems, which in our case are internal tank liners,” says Salvador Villagran, General Manager.” Given the ongoing pandemic, there has been minimal disruption to demand. While 2020 will be lower than 2019, that was expectation going in, but 2020 has exceeded our overall projections.”
Customers for Enviropac Inc. products have been past the immediate issues at the long-term.
“2020 has been an interesting year,” says Dennis Neal, President of Enviropac Inc. “With the nationwide issues going on, the agricultural market has continued at a brisk pace. Adding tanks to facilities has been important for future growth at the dealerships. They continue to handle more ‘specialty’ products and these products require tanks designed for the special needs. Both fiberglass and stainless steel tanks meet these demand needs.”
Shawnee, OK-based Agra Liners did see a brief dip, but nothing that disrupted the operation.
“The year started out great and then slowed down significantly for a short time,” says Dale Pedersen, Business Development Manager, Eastern Division. “Thankfully we did not have to lay anyone off during this lull. It has picked back up better than what we expected, and we have even hired more employees. It helped we were told back in the early spring we were considered an essential industry.”
Precison Tank President and CEO David Hemming echoed those sentiment.
“So far, our business has remained steady, for which we are grateful,” he says.
Ag has always been an essential business. No matter what’s going on in the world, people need to eat.
“2020 has had its share of hiccups but on the whole has been surprisingly steady,” says Ryan Plett, President of Manitoba, Canada-based Novid. “While there has been uncertainty across the globe the need for food has not changed, so agriculture and the ag economy has not taken the same hits that we’ve seen in other market segments. Some of the larger corporations pressed pause on facility construction wanting to get clarity on how the pandemic would affect these major investments, and then fuel prices dropped dramatically and our production capacity got filled up by customers wanting storage to take advantage of that opportunity.”
In a move that might seem prescient now, a few years ago, Novid make some changes that made dealing with COVID-19 a bit easier.
“We reshaped our technology infrastructure to allow our office staff to work remotely so we were well positioned to do that when it became a necessity this spring,” Plett says. “However, the production aspect of our business can’t be done online so there have been changes to some protocols and the creation of many new ones. We’ve always run a pretty clean facility but now the standard for cleanliness has to include disinfecting shop tools and time clocks and dozens of other things that would never have occurred to us previously. Six months ago, a common cold wouldn’t keep our guys from toughing it out and coming in for the day; now we require that they stay home if they are under the weather.”
The pandemic did force part of the Precision Tank to close briefly.
“With COVID, we at Precision Tank had one shop-built tank plant that had the virus to an extent we shut the plant down for two weeks. Thankfully every is back to work, with one individual having a very serious case,” Hemming says.
JC Ramsdell also saw a slight dip early in the year.
“If asked in January of 2020, things appeared slightly up from 2019 — pandemic, depressed ag markets and varying weather condition across the Corn Belt slowed customer thought processes,” says Todd Kringen, Sales Representative for JC Ramsdell. “With that said, our customers came alive in late-March with expansion and new facility requests coming from many directions. 2020 has been a great year for us in both agricultural and petroleum secondary containment requests.”
Trends
Tanks and containment systems are a long-term investment. Much like heavy equipment, growers hold on to these products for an extended period of time.
“Several companies we deal with are starting to look at repairing tanks and having Agra Liners build a liner for the tank to extend the life of it,” Agra Liner’s Pedersen says. “The cost of the repair and the cost of the liner is always much less than tearing a tank down and building a new one.
“We also still expect to see more consolidation within the fertilizer industry than what has already taken place. In a few areas the independent guys are still hanging on and even expanding.”
While 2020 has been kinder to the tanks and containment industry compared to many others, companies are looking to improve moving forward.
“We are seeing more dealerships putting in multiple shop-built tanks, in place of single large tanks. Five 50,000-gallon tanks will take the place of one 250,000-gallon tank and give the dealership the ability to handle multiple specialty fertilizer products rather than limited to one product,” Neal says.
Novid has seen a shift in materials the tanks are made from.
“The awareness of stainless steel and how well it holds value over time has spread over the last few years,” Novid’s Plett says. “Once people find out that the cost can be less than a dollar per gallon, the ROI calculation makes the decision to buy a Novid stainless steel tank a really easy one.”
Like all business, providing new and improved solutions is key to continued success.
“We have made several improvements to the design our tanks based on the feedback from our customers,” says Heartland Tank’s Villagran. “The more time and effort we can save our customer is more time they have to focus on their business and their customers. Everywhere we turn, we hear of more and more people needing further storage capacity. With delays in transportation and more demand for local storage, we are still seeing an increase in demand for more tanks.”
“In terms of product offerings, Novid now offers matte finish stainless steel tanks in addition to our polished finish,” Plett says. “It is the same 304 material and provides the same high-quality corrosion resistant storage for liquid fertilizer at an even more competitive price. The functionality remains completely unchanged and most of our customers think the form is still pretty sharp looking.”
While consolidation throughout ag might limit some opportunities, JC Ramsdell sees it as a positive.
“I recently spoke with one individual that has driven to the same office/facility for 30 years and has witnessed four mergers/name changes from his original employer,” JC Ramsdell’s Kringen says. “It is hard to say if the trend in consolidation will ever slow. As mergers and new alliances grow, so does the heavy investment in single large location storage facilities and improved logistics.”
Challenges
While the pandemic did throw up a couple of roadblocks there are more pressing concerns for the industry moving forward.
“Companies are starting to store more types of products, which are not very compatible with steel,” Agra Liner’s Pedersen says. “The various liquid manufacturers are trying to come up with their own unique blends to generate more income. There are also a lot of existing tanks that do not meet the 653 code requirements for a welded steel tank, so there will be some cost to get them into compliance. Agra Liners is starting to see 12-year-old tanks condemned because the owners did not put a liner in them when they were first built, and the stored product has eaten the steel.”
Whatever the challenges, anticipation and communication are key.
“There will always be challenges in this industry. We face shortages in steel availability or liner materials, but we are proactive enough to see these changes on the horizon and can notify our customers of any potential setbacks which may occur and help plan accordingly,” Villagran says.
When we discuss the governmental agencies on these pages, we’re normally focused on crop inputs, but the tanks and containment industry certainly must deal with regulatory concerns as well.
“Some customers are starting to see their state department of agriculture show up and demand documentation regarding their tanks and containment,” Pedersen says. “They have been cited for no containment, outdated containment, no current tank inspection, etc. It appears the states are looking for additional revenue so more enforcement. People are also commenting how they wish people would have told them about the benefits of liners several years ago and how it would make their tank last longer.”
As companies grow their tank and containment needs change. Not everyone has managed that well.
“The industry’s ability to help customers efficiently and cost effectively manage environmental risk,” Kringen says. “Driving across the upper Midwest, I see more high-capacity facilities than 10 years ago. Unloading of up to 30 railcars at a time and simultaneous loading semi tankers can pose great risk in some locations that have not matched facility safeguards with continued growth. Load pad and traffic design along with effective high capacity railcar secondary containment is something that should be reviewed. Many businesses are outgrowing their expectations and have fallen short in looking far enough into the future to match facility safeguards with their success. An experienced design team should thoroughly review and understand your long-term goals. Increased interest in JC Ramsdell railcar secondary containment has been seen in these high through put liquid fertilizer facilities.”
According to JC Ramsdell’s Kringen, one role providers can play is to help customers understand when it’s time update vs replace their systems.
“Many containment systems date back to the late 1980s and early 1990s, or around implementation of secondary containment guidance,” he says. “Systems of that age can be near or at life expectancy depending on their care over the years. Coupling that with business consolidation and staff changes, there are some management teams that are challenged to find information about the installer and age of newly acquired facility secondary containment systems. At JC Ramsdell Enviro Services, Inc. we pride ourselves in our record keeping which goes back to our first install in 1988.”
Opportunities
Of course, every roadblock generates a new path for businesses to find solutions for their customers.
“By being able to offer fiberglass, mild steel and stainless steel in expanded sizes to 50,000 gallons, has opened up opportunities in a number of market areas,” Enviropac’s Neal says.
Heartland’s Villagran has seen a similar trend.
“There is an increase in demand for additional storage throughout the country,” he says. “We are also seeing a shift in demand from smaller storage tanks to tanks with more capacity to allow retailers and wholesalers to meet their growth goals and projections.”
As with any new technology, understanding and communication are key.
“Careful growth with new tanks and refurbishing existing tanks,” says Agra Liner’s Pedersen. “Continued education between the grower and the agronomy professionals is critical and will help both of them.”
Even if 2020 has been pretty good for the tanks and containment industry, that doesn’t mean some won’t be unhappy to see it go.
“Communication skills were challenged with the COVID-19 pandemic,” says JC Ransdell’s Kringen. “Ag is such a people business; I cannot wait to take the masks off and see some smiles again. Constant this year has been a focused effort to utilize recommended tools (masks and hygiene) to keep our customer’s safety in mind as well as our own.”
Precision Tank’s Hemming offers this thought for those in the tank and containment segment.
“I think everyone in our industry should pause for a moment to reconsider how blessed we are to be serving the essential agriculture industry,” he says.
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