BASF’s Baxxodur portfolio is utilized by customers as highly efficient curing agents and chain extenders in epoxy and polyurea applications for the wind, electrical, composites, adhesives and flooring industries. The company’s Lupragen products are highly efficient amine catalysts for polyurethanes. Read more.

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Prometheus Group, which has locations across the globe, provides specialized software for chemical and manufacturing plants. While financial terms of the deal were not disclosed, Prometheus Group CEO Eric Huang says the purchase is a strategic milestone that will position Prometheus Group to grow its client base.

Turner Industries developed MobilOps roughly 10 years ago. Turner Industries CEO Stephen Toups says the sale and collaboration between the two companies will “result in a seamless transition for MobilOps’ clients while also taking care of their evolving needs.” See the announcement.

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The three paths under consideration for the new Mississippi River bridge, all in Iberville Parish, are in the second half of environmental assessments. Along with surveys for construction suitability and utilities clearance, a toll and traffic analysis will take place to measure the potential of user fees to help pay for the new bridge.

Kara Moree, project manager for Atlas Technical Consultants, provided an update Monday for Capital Area Road and Bridge District commissioners, a group of local leaders overseeing the project and its funding. A final route is expected to be chosen later next year.

When asked about the ongoing toll research, Moree acknowledged the recent roadblock for a toll-funded I-10 bridge over the Calcasieu River in Lake Charles. In October, state lawmakers rejected a financing plan for the $2.1 billion bridge dependent on tolls. The vote put the project on hold until officials can figure out a new funding approach, one that would likely require plenty of state dollars.

“It keeps me up at night a bit. I’m worried about it,” Moree says with a slight laugh before she explains how the proposed Mississippi River bridge differs from the Calcasieu project.

For starters, the Iberville span is not an interstate bridge, and the trucking industry, which led opposition to the Calcasieu toll, won’t rely as heavily on the Iberville bridge, Moree says.

Given the close proximity of industry along the Mississippi River to the Iberville bridge, it was recommended that consultants look into “mitigation” in case similar opposition to tolls emerges.

Moree added that the Mississippi River crossing doesn’t replace an existing bridge, “which I think is a little bit easier to swallow than something that you’ve been using for your whole life but now have to pay for it.”

District chairman J.H. Campbell Jr., an appointee of Gov. John Bel Edwards, says $300 million has been allocated for the Iberville bridge project along with a portion of the state vehicle sales tax.

Additional public hearings on the bridge path options are expected to take place in the spring as they move toward the next stage of environmental approval, Moree said.

Read the full story from Louisiana Illuminator.

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The company plans to expand its utilization of 3D technology and meet increasing demand from customers in the paper, energy, mining and petrochemical industries, LED says.

The company expects to create 26 direct new jobs with an average annual salary of more than $59,000, while retaining 22 current positions.

“Howell Foundry combines modern day 3D innovations with proven craftsmanship in one of the oldest known trades to produce rapid and reliable solutions to its valued customers who are primarily located on the Gulf Coast,” Howell Foundry President JB Shoaf says in a prepared statement.

To secure the project in St. Francisville, the state of Louisiana offered Howell Foundry an incentives package that includes a $400,000 performance-based forgivable loan for infrastructure repairs contingent upon meeting investment and payroll targets. The company is also expected to participate in the state’s Quality Jobs and Industrial Tax Exemption programs.

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The completed transaction date is set for Dec. 1, when the company will purchase the ammonia plant and related assets for $1.675 billion. The site was first commissioned in October 2016 and has a capacity of 880,000 tons of ammonia per year.

Per the deal, the companies will allocate approximately $425 million of the purchase price to a long-term ammonia offtake agreement under which CF Industries will supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel subsidiary at production economics.

The facility has 90 employees is located about 60 miles southeast of CF Industries’ Donaldsonville Complex. Read more.

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Material prices continued to rise in the latest monthly data available at press time, increasing by 1.5% in August, according to the Bureau of Labor Statistics’ Producer Price Index. That continues a trend that shows no sign of stopping.

“Anyone who thought that excess inflation would simply go away later this year has been rudely awakened,” ABC chief economist Anirban Basu noted in a press release. “Price growth continues to be problematic. While energy prices will grab headlines, items like concrete and switchgear have also exhibited inflationary tendencies.”

Escalating interest rates are bringing their own challenges, particularly for contractors that depend heavily on loans to fund their projects. For many, the Federal Reserve’s aggressive rate hikes have led to organizational changes and an increased focus on cash management.

The rising interest rates pose a specific threat to a contractor’s profitability, since their performance is profoundly affected by the management of cash flow.

No matter the business environment, though, laying the groundwork for a profitable project begins during contract negotiations, says Jay Montalbano, managing partner of accounting and consulting firm Hannis T. Bourgeois in Baton Rouge. One thing is for certain: Given the wildly fluctuating material prices of the last couple of years, contractors should ensure that their contracts don’t lock in prices for more than 90 days.

Fortunately, “contractors have a bit of an edge right now,” Montalbano says, because of the current construction boom and ongoing labor shortages. “They’re in a better position to negotiate. In one instance, a plant owner went to the contractor and asked what it would take to keep their people on site. They’re recognizing that they need to pay more.”

Owners are also negotiating over increased benefits, such as insurance and time off, particularly with those “nested” industrial contractors who have had a presence in the plant for years.

INTEREST RATES AND CASH FLOW

Managing cash flow is another critical piece of the profitability puzzle, but it can be a tricky proposition in today’s high interest rate environment. That’s because many contractors need credit to finance working capital.

It was a different scenario just two years ago. “You almost didn’t need cash flow management because interest rates were so low,” Montalbano says. “Now, rates are creeping up and cash flow management is huge because that interest expense will kill you.” That, in turn, can negatively impact a contractor’s ability to price projects competitively.

The situation is prompting many contractors to reexamine their contracts.

“Those contractors that are heavy into ‘cost-plus’ contracts [whereby they are reimbursed for expenses plus a pre-determined profit], experience more of a cash flow drain,” he adds. “They are billing the customer monthly and the plant might pay 60 days later, so they’re floating two to three months’ worth of payroll at any given time. That’s difficult from a cash flow perspective.”

On the other hand, contractors who predominately enter into lump sum (fixed price) contracts have the ability to “front-load” billings.

“Lump sum contracts have risks, but you have more flexibility,” Montalbano says. “You can bill by milestones, by percentage of completion or put clauses in the contracts to allow for upfront mobilization or material purchases. It allows the contractors to be cash heavy at the front end of the contracts.”

For Performance Contractors in Baton Rouge, the importance of cash flow depends upon the situation. “In markets where we’re growing our operation, we’re consuming more cash and therefore cash flow becomes more important,” says Performance Chief Financial Officer Dane Bailey. “And if it’s going to be an aggressively scheduled project, we push a little harder on the payment terms … even if we must make concessions in other parts of the contract.”

That has led to some rather innovative approaches to generating cash flow. One area of recent success for Performance? Getting a cash advance from the owner before a project begins.

The idea originated when the contractor needed a “cash positive” situation to execute a project. “We partner with a surety to bond the advance, thereby giving the owner a level of comfort that their advance payment is not at risk,” Bailey says. “In the process, it gives us the working capital to go out and staff those aggressively scheduled projects.”

THE COST OF CHANGE ORDERS

For industrial contractors, money can be made or lost based upon how well they manage change orders. Mismanaged change orders—a failure to recognize or communicate when a change in scope has occurred—can lead to disputes with project owners and increased project costs.

Contractors should therefore ensure that they are not overexposed to unapproved scopes of work. That’s a difficult proposition at the job site, as supervisors executing a fast-paced project might be tempted to delay documenting changes to avoid slowing the project.

“It can be a challenge, but we preach to our folks that they should have a disciplined and established procedure at the front end of the project,” Bailey says. “As part of the project kickoff with the owner, we lay out the expectations around change management, including the process for getting changes approved prior to the execution of the work.

“There’s a temptation sometimes to get the job done and let the dust settle at the end,” he adds. “It’s about fighting against that urge, to make sure we’re taking care of our business along the way.”

To facilitate the process, Performance uses tools that provide more transparency and visibility into the status of change orders and change order requests. “That way, there’s visibility at a higher level into the pending change orders on a particular project,” he says.

The company has also made a significant push to remove “information silos” in the organization to facilitate the cross sharing of data. “We’re making sure that we’re getting the data that’s being collected out in the field in a format where we can report on it, meet about it and monitor it on a weekly basis,” he adds.

OTHER TIPS

It seems simple, perhaps, but efficiently managing the billing and collections process throughout the entire cash cycle can have a huge impact on cash flow and profitability.

“When you get busy you do have those issues,” Bailey says. “You have to stay on top of the billing and stay on top of purchase orders from clients so that there are no nasty surprises. Then make sure that collections is a regular part of the site discussions and weekly updates, and keep that in front of the owner to make sure that they’re aware of where every invoice is in the payment cycle.”

Hannis T. Bourgeois’ Montalbano says value engineering input can also provide a significant boost to project profitability. In that case, the contractor finds ways to introduce cost effective alternatives before a project begins.

“The owner can benefit from that when it’s a time and materials contract [which sets prices for materials and an hourly rate],” he adds. “And if we’re talking about a significant amount of savings, that’s going to change the output. The owner can then share the savings.”

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Corey Blanchard of Fox-Nesbit Engineering filed the application with the Planning Department, which says the industrial electrical and instrumentation provider plans to remove an existing 5,000 square foot building from the property and build a new 62,216-square-foot office building in its place. The application lists Brian Bordelon, with The Newtron Group, as the property owner. Bordelon was unable to be reached for comment before this morning’s deadline.

The Newtron Group bought the 9.9-acre tract, tucked off Airline Highway and Castille Road, in 2016 for $2.65 million, with executives at the time saying it was an investment in the group’s future growth. The organization currently maintains its national headquarters out of offices on El Cajon Drive, further down Airline Highway closer to Choctaw. The Newtron Group has another four offices in Baton Rouge, which house different departments of the group.

The Newtron Group was recently named the 14th largest electrical contracting firm in the nation. Founded by Newton B. Thomas in 1973, Thomas was inducted into Business Report’s Hall of Fame in 2018. It employs about 4,500 from a dozen locations across the nation and was also named a Business Report Company of the Year in 2012.

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In the early years of the annual Tec-Next Conference at Baton Rouge’s Shaw Center, ideas such as digital twins, generative AI, robotic inspections and virtual reality-based training were being tossed around, but they seemed more academic than practical in the industrial space. 

That’s all changed now, and tech experts warn that if industrial owners don’t get on board they’ll risk being left behind. In many ways, the industrial market was late to the game, says Eric Allen, CEO & founder of San Francisco-based Environmental Intellect (Ei). “I graduated in mechanical engineering just as the iPhone launched, and Google Maps would help get me to the refineries,” he adds. “But once I got to the sites, I’d have to leave my phone in the car and use paper maps. 

“That got me wondering, why wouldn’t a high-risk environment such as a refinery have the best in technology? It was then that I began looking for better ways to serve our customers.”

At the time, his then-fledgling company was digitizing CAD drawings for industrial clients. Then, in 2016, Allen’s workload quickly accelerated as his customers began looking for ways to utilize 3D scans of their facilities. “We began developing a way to view our customer’s existing data in a web browser,” he says. “It became a platform for delivering and using digital information.”

Today, many of Allen’s clients are situated along the I-10/I-12 corridor, where he builds tools for industrial facilities between New Orleans and Baton Rouge. Ei employees first identify the problem and determine how far along a customer is in their digitalization journey before proposing a solution. 

“We’re big on usability,” Allen says. “The technology must be packaged in a way where people can actually use it. We’ve learned you can’t be too ahead of your users. We take more of a targeted approach in solving problems.”

The world is changing, he says, and industrial owners need to change, too. “People in maintenance, operations or heavy engineering are saying it’s hard to find people because they don’t want to show up at the plant every day and use old legacy tools,” he adds. “They’d rather go work at Amazon or some other tech company. When a company is behind in technology adoption, it makes it harder to recruit people.”

Tools of the Trade

Today, Allen’s company markets its proprietary digital twin tool, which his customers use for everything from maintenance to capital projects to operations. “Some are using it to commission units after a turnaround,” he says, “while others use it for training so they can understand the unit without going out in the field.” 

AI is a key component of the tool. For example, one of Allen’s south Louisiana customers has deployed machine learning technology to identify vessels and track greenhouse gas emissions. 

“We went into some of these facilities and scanned them for a couple of days, then trained the algorithm to find leak points in the model,” he adds. “Something that usually takes months we did it in a couple of weeks in the field.”

They’ve also begun to assist some plants with studying the implementation of ChatGPT or generative AI to identify and prioritize potential uses. “Large Language Models (LLMs) can do a good job of mining key information out of a large amount of legacy documents,” Allen says. “There are a lot of opportunities for ChatGPT in that space.”

Michael Brauer, vice president of operations at BBP Sales in Baton Rouge, is excited about the potential of emerging tech, especially now that many industrial plants’ data connectivity issues are being resolved. 

BBP has taken a deep dive into the wireless and IIOT (Industrial Internet of Things) side of the tech world, helping customers connect wireless sensors to their existing systems and providing other end-to-end solutions. 

“We have a ton of IIOT and OT knowledge up and down the river from Baton Rouge to New Orleans to leverage,” Brauer says. “It’s one of the best places in the nation to take advantage of some of this technology.”

Today, plants have digital transformation teams that seek better insight into their processes, while also reducing the labor hours needed for logistics, predictive maintenance and reliability functions.  

“In the past, it would’ve cost tens of thousands of dollars to deploy vibration monitoring,” he adds. “Now, they can deploy low-cost OT sensors to provide baseline data to let them know which asset they should monitor. It’s making existing assets and investments smarter and helping people make sense of large amounts of data.

“And with data in a central place and standardized in the same way, AI algorithms can help automate the insights that a company is looking for.” 

Bauer says some of the new AI technologies, such as ChatGPT, have potential in the industrial space, but warns that owners should be cautious. 

“I would never put my customer’s data into ChatGPT because a lot of that could get published into a public model. We take security very seriously here,” he says. 

“Although we do see its value in the automation of repetitive tasks … such as when you have code in one programming language and need to change it over to another project. That’s huge in an industrial environment because programming time is hard to come by.” 

ChatGPT can also index and provide access to information faster than other search engines.

It’s Getting Real

Some of Louisiana’s larger petrochemical complexes have become true trailblazers in the tech arena by going beyond mere beta tests to the full implementation of technology into their processes. 

Coila LaFleur, enterprise architect at ExxonMobil Baton Rouge, is tasked with finding ways for technology to support various businesses strategies at her facility. Given the size of the Baton Rouge complex, “we’re a great playground for new solutions,” LaFleur says. They’re currently using a pipe inspection robot—developed by a third party—that crawls autonomously along a length of pipe to perform inspections. Other ExxonMobil facilities even use robotic dogs to make rounds and take laser scans of the facility. “You can attach so many different things to a robot to enable it to detect gas leaks or go into some other dangerous situation where you don’t want to send a human,” she says. 

LaFleur says the Baton Rouge complex is currently “on a journey” to implement digital twin technology. “One of the big challenges is how do we take all of our 3D scans, all of those data-driven models, and bring it to a place where people can get to it?” Their hope is to create a central repository for the 3D data, then develop an industry data standard that will allow them to collaborate and share data with other companies. “Using that same data standard will allow us to do that seamlessly,” she adds.

Only then will ExxonMobil be able to move fully into the digital twin world, “where we will have a full-scale model of the facility with real-time data flowing through it. That’s when we’ll be able to see a particular pump, for example, and the current pressure on that pump. We’re not there yet, but we are on that journey.”

ExxonMobil also has AI experts in offices in Houston and Argentina that are researching practical ways to implement LLMs such as ChatGPT. 

“We’re trying to figure out how to use them to our advantage,” LaFleur says. “And then, of course, there are concerns around cybersecurity, so we’re trying to figure out what’s the best technology to use that will provide more functionality, as well as be secure.”

A technology trailblazer in its own right, Shell has made noteworthy advances in the implementation of digital twins.

David Mustain, Shell’s digitalization and innovation lead in Geismar, says it all began during a Tex-Next Conference a few years ago. “Someone asked, ‘Who will be the first to build a functional digital twin and keep it up to date?’ We took that as a challenge and began making local investments to move in that direction.” 

Shell’s Geismar plant has now implemented a digital twin and can “walk” through some of its units using virtual reality. 

“Our project designers, maintenance engineers and support inspectors can all go to one spot to search for a tag, then find the associated process drawing and specs related to it,” Mustain says. “They can fly to that spot in a 3D model or pull up point cloud information and see a 3D visual of the area. We are still at the early phases, but we are already seeing significant gains in our ability to avoid trips to the field and maximize efficiency of maintenance planning.”

Globally, Shell has also had success using remotely controlled ground robotics, and the Geismar site has used a robotic pipe crawler for inspections. AI also has significant potential, Mustain says. The Geismar site is utilizing multiple AI models developed by other Shell sites and co-developed with Baker Hughes and Bentley Nevada. 

Additionally, Shell’s partnership with technology provider C3.ai enables it to deploy enterprise AI solutions at scale.

“AI and ChatGPT get a lot of focus these days but there are other subsets of AI, such as machine learning, that have real current potential,” he adds. “Our global team developed a predictive machine learning model to track the performance of equipment. We took that and used it to track performance of control valves and other equipment. 

“These tools can give us early indications that something is changing. We can then make corrections without disturbing the plant or requiring a shutdown. The model is actually teaching itself what normal looks like. We turn the model on and let it track the equipment over time.”

Envisioning an AI Future

Equipping both workers and managers to implement and utilize emerging technologies will be the next big challenge for industry, particularly given the speed in which these technologies are evolving. 

In that respect, Andrew Schwarz, a professor in LSU’s E. J. Ourso College of Business, is ahead of the game. Some five years ago, Schwarz envisioned that AI would become immensely important in the corporate world.

That’s when he spearheaded a new “Emerging Technologies” specialization in the school’s Executive MBA program and included a course in AI strategy as part of the curriculum. The coursework also focuses on cloud computing, cybersecurity, policies, programs and governance.

In his MBA class, Schwarz focuses less on the technical components and more on “making the business case” for AI. He has students complete an applied project where they incorporate AI into their own organizations. They then talk about how they would go through a transformation to achieve their objectives. 

Most of those in his class are executive MBA students and online executives, many coming from the petrochemical space. 

“The class requires them to understand the tech and the organizational challenges associated with it,” he adds. “It’s more about building resiliency in your organization. There’s a misconception that AI will automate processes and therefore be used to cut jobs. But if you’re using tech to cut jobs, you will be disappointed. You’re merely repurposing your workers to higher level positions. It’s making your workforce more competitive by allowing them to focus on the insights that matter.”

Nevertheless, determining what objectives can be accomplished with AI is not an easy task for industrial owners. 

“You have to figure out if you’re using AI to grow your business, smooth your processes or if there’s some other underlying driver,” he adds. 

“You must start with the business case first. Once you start to unpack that, you start to identify sources of data and figure out where the data will need to come from to meet those objectives. That’s the beginning of adopting AI. The mechanisms and modeling are a whole different category of decisions.”

Schwarz predicts that AI will ultimately be integrated into all organizations, and that manufacturing and the industrial market will be revolutionized in the process. “But you don’t have to go all in,” he adds. “You can start small and learn, then expand based upon what’s good for your organization. The more you get into it, the more you’ll realize its potential.”

Overcoming Resistance

New technologies are great but mean nothing if companies can’t get “buy in” from those using them, says ExxonMobil’s LaFleur. 

“If your users don’t understand the benefits of the new technology, then you’re not going to get any value out of it,” she says. “Adoption is something that we heavily focus on at ExxonMobil, and I think we’re doing a good job at that.”

ExxonMobil assigns a change management advisor to every IT-related initiative, who in turn works closely with the end users to ensure that the change is fully implemented. In the process, they seek to show them how the technology will make their lives more productive, as well as generate value for the company. 

Additionally, they support workers through the transition process by providing the training or tools that they’ll need. Equally critical, they incorporate the new technology into the onboarding process for new hires. 

“If you don’t get people ready to change the way they work, then the technology won’t be integrated into their daily processes,” LaFleur says. “We have multiple examples of good solutions that were developed, but we didn’t target the change in the right way, so they never got used.” 

Shell’s Mustain says there are other obstacles to overcome, including a sometimes-steep technical learning curve and a certain amount of financial risk should the technology be deployed too soon or unnecessarily. 

“Is it more important to be the first to apply the technology or more important to guarantee long term success? Then there’s a change management side of it … are we willing to change our behaviors and trust the technology?”

Henry Hays, co-founder of DisruptREADY in Baton Rouge, agrees that implementing technology for the sake of technology can be counterproductive. “But companies shouldn’t sit on the sidelines either,” Hays says. 

“We always tell people that AI won’t take your job; someone who knows how to use AI will take your job. People with a positive mindset on this change will probably win.”

DisruptREADY is a strategic advisory firm that helps executive teams keep up with the rapidly evolving world of technology. 

“New technologies will come at you fast so you need to have the ability—under roof—to assess and figure out what to do with it, as well as help decide if you should start using it,” he adds. 

“If you spin it the right way, the young folks will come looking for you as opposed to other businesses. The time is now to step into this. Kodak should’ve been Instagram today, but they decided to keep selling camera film. And Blockbuster waited on the sidelines as its industry evolved and now they’re no longer in business. They did not see the warning signs.”

ExxonMobil’s LaFleur is excited about a future where new technologies will transform the industrial workspace. However, some owners are failing to realize its full potential. 

“We’re underutilizing things such as AI and robotics,” she adds. “I talk with my industry counterparts a lot about that. These technologies are going to change the way people work in a good way. Humans will be able to do what they do best, and these new technologies will handle all the mundane, repetitive and dangerous tasks. That’s what gets me up in the morning.”

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The proposed facility is expected to cost more than $2 billion and would be developed jointly by CF Industries and POSCO Holdings, South Korea’s largest steelmaker.

If the project moves forward as outlined, CF Industries expects to create 50 new jobs with average annual salaries of more than $106,000, while retaining 541 current positions, according to Louisiana Economic Development. 

The companies are exploring the use of autothermal reforming ammonia production technology for the proposed facility. ATR technology, when combined with carbon capture and sequestration, is expected to reduce emissions from the ammonia production process by more than 90% compared to conventional plants without CCS.

CF Industries and POSCO expect to complete an initial front-end engineering design study on the proposed site in the second half of 2024 and make a final investment decision for the project shortly thereafter. In 2022, CF Industries announced two major projects in Louisiana: a $198.5 million plan to add carbon capture and sequestration capability to its existing ammonia production facility in Donaldsonville, and a proposed $2 billion world-scale low-carbon ammonia production facility in Ascension Parish.

The state of Louisiana is offering CF Industries an incentives package that would include LED FastStart’s workforce development programs and a $3 million performance-based grant for infrastructure and project development. The company is also expected to participate in the state’s Quality Jobs and Industrial Tax Exemption programs if the project moves forward as planned. See the announcement.

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During a news conference Thursday with Gov. John Bel Edwards, Mayor LaToya Cantrell and other elected officials, local executives from the London-based energy giant said they have leased a custom-designed office building in the development upriver of the Ernest N. Morial Convention Center.

When the mid-rise building is completed in early 2025, Shell’s 800 local employees will relocate there from the Hancock Whitney Center, the skyscraper that has housed Shell’s local operations since 1972 and until recently was known as One Shell Square. Read more.

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