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The South Bend ethanol plant once faced an uncertain future as owners considered selling it for scrap.

However, Verbio North American Holdings purchase of the plant and their plan to invest $230 million into the property will convert the site into a state of the art bio refinery.

We'll dive deeper into what's planned at the site and hear more about how Verbio is leading the way in renewable energy industry.

Coming up on Economic Outlook.

Verbio, with headquarters in Germany, is a leading manufacturer of biofuels and bio energy.

The company began producing biofuel in 2001, and today has more than 1000 employees at locations in Europe, Asia and North America.

They recently purchased the former South Bend ethanol plant and have plans for significant improvements to the operations.

We're sitting down today with Greg Northrop, the president and CEO of Verbio North America, to learn more about what they are doing on site and what their expansion plans will mean to the regional economy.

Welcome, Greg.

Thank you very much, Jeff, for inviting us to be part of your show.

Greg, thank you.

You know, I'm pretty excited.

We had a chance to meet about a year ago and talk a little bit about this.

And folks who are in our region are very familiar with the South Bend ethanol plant.

If you're driving on the bypass, in particular, you've seen it.

but I think people have been unfamiliar with exactly what's going on on the site and especially now.

And so I wanted to talk a little bit about this.

So so first let's do a Verbio background a little bit.

Tell us is people unfamiliar with Verbio tell us a little bit about Verbio.

So the company has been around since about 2000. it was originally founded by a gentleman by the name of Claus Sauter.

and what's interesting about this, Jeff, is that Claus is from the agricultural background and is a grower himself.

And so as he was looking at the renewable energy industry, which we're going to talk about over the course of this interview, Claus became very interested in renewable energy.

Europe was talking about this as a critical subject.

And actually, I think the Europeans are probably 10 to 15 years ahead of us in terms of their thinking regarding, the impact of, energy sources, energy supply, energy reliability, diversity of supply.

and Claus, being the entrepreneur that he is, that this was an opportunity.

And so, he started all this, almost, about 25 years ago now, and has been very successful, in terms of developing the company.

When I started with Verbio back in 2018, we had 500 employees.

Today we have almost 1300 employees, because of the expansion that we've been doing internationally, principally as part of that process.

But Claus was looking at the European market, and didn't see many opportunities for additional growth over or over and above what he had currently been able to accomplish.

And so he had spent a couple three years looking at the U.S. market.

they've looked at markets besides the U.S as well.

we have a plant that we own in, India now, that's similar, with a different feedstock, but, started looking at the U.S. market back in 2016 15 and said, oh, well, maybe this is where I need to think about making my next series of investments.

And so lucky us.

Right.

Here we are today.

we have two operating plants now, that we can talk about, as we go forward, but, German engineering is a key component of who we are and how we operate.

the technology that we're using today in South Bend as well as in Nevada, Iowa has been in development for the last 10 to 15 years.

and there was a lot of work that was done.

on the anaerobic digestion process that we used to actually make methane gas from the waste streams that we put into the plant.

And that's our competitive advantage, is our knowledge of technology and our knowledge of how to do this technology at industrial scale.

we can talk more about the sources of renewable natural gas, which is one of our, primary products.

But, there's nobody in the US going to do what we do here in South Bend or what we currently do in Nevada, Iowa.

Great.

Now I'm excited to dive a little bit deeper into that.

So so let's before we dive into that, talk a little bit about historically here in South Bend.

So people familiar with South Bend ethanol plant.

And like I said, they've seen it on the bypass for 40 plus years.

All they remember is it had a funny smell sometimes.

And there was steam or smoke, look like, rising up through the air.

give us some background history on the local plant.

Well, the really good news for your audience, Jeff, is that we taken care of the smell issues.

All right, there we have it.

Here.

That is exactly.

I think since we took over the operation, over a year ago, we, received any complaints about odor issues?

In fact, I don't, and I was on site last month.

Didn't smell the things.

Yeah.

No, I think I think it's good, but hopefully that's what has been dealt with.

And I think that was that was before we came on board.

But yeah.

So talk historically because I think so the news for example, in recent years it's sort of painted a bleak picture of the future of that site a couple of years ago.

there was a lot of uncertainty about it.

Talk to us just about the history a little bit.

Yeah.

So the plant began operating, almost 20, 40 years ago now.

it's I think it's one of the if not the oldest, one of the oldest operating, ethanol production facilities in the United States.

And I think, my understanding of initially, they were they were very successful when, and ethanol industry was still starting to ramp up.

but at some point they things became difficult for the the previous owner and another company called the Courier bought the plant.

I think it's five, six, seven years ago.

The distinction is, is they were a trading company, so they had one operating plant.

They're typically a broker.

So they operate in the international markets, brokering energy products along with other kinds of, trade issues, commodities.

And, we're aware of mercury because of our relationships internationally with the trading markets and those kinds of things.

And so, I think we became aware of the fact that maybe there was an opportunity for us to purchase the plant, at what we thought would be a very attractive price.

And I think Mercury was ready to, to recognize that they're not an operating company, they're a trading company.

And so they weren't making that kind of capital investments in a facility that would allow them to continue to operate in a maybe more financially responsible way for their shareholders.

And so, happily for us, a little bit, about 18 months ago, we started discussions with them.

And, in May of last year, we actually closed on the purchase of the facility.

I think what people are going to see, is that we're going to make some significant investments, not only in the renewable energy side, to make renewable natural gas, but into the ethanol side.

So we're going to upgrade the facility, to today's standards from a production standpoint.

In fact, we hope to go they've been running about, I think, 60 million ethanol gallons of production per year.

We're currently at about 80 million plus, next year or in the next two years, we hope to be up to 100 million gallons of ethanol production.

So we're going to significantly ramp up the capabilities from the ethanol side and then add in the renewable natural gas side as the other really exciting piece about what's going on.

Great.

Let's talk ethanol for a second because because it sounds like with growing demand.

So consumers, for example, are embracing this or seeking out renewable like what's the what's happening there.

Yeah.

So from a historical perspective, 2005, 2007, the U.S. government has something called the Renewable Fuel Standards.

and that's really what started the creation of the ethanol industry.

And, obviously it's driven right now by the corn production.

And so the good news for the growers is, as the significant demand in corn, we use, to put in perspective, in South Bend, we use 28 million bushels of corn as the feedstock for the ethanol production facility.

There's over 250 ethanol plants in the United States, most of them based in the US.

Because of the access to corn, in the, the agricultural belt that exists in that area.

So, so it's a great market not only for the consumer that's using ethanol in their, in their, fuel purchases.

And pretty much you can get ethanol, called E10 at most filling stations.

I think they're trying to now get it to put to the point where it would be e-15.

So 15% of the gasoline would be ethanol.

And as in similar to any other product that was initially introduced, there was some skepticism about, well, do I want to put this in my car?

You know, if that's fine for somebody else's vehicle, but not mine, I the data all shows, that actually ethanol is a cleaner burning fuel, which is the purpose of it from an environmental standpoint.

But it's also better for your engine, in that it burns cleaner and so that for the internal operations of the combustion engine, it's it's been a great product for us.

it just becomes another source of our production process.

And so what happened in the ethanol industry?

The waste stream was called spillage.

Okay.

so think of you.

Put the corn in, you messed it up.

You made it into ethanol.

but the output then afterwards is called spillage.

Distillates currently is being used to make what's called distiller's grade grain.

we actually dry it.

We spend energy to dry the stowage because then it becomes a it's like a, food base for cattle.

chickens, poultry.

It's a dry bag product, per se.

So, what we're going to do, though, instead of using it as, distillers grain, we're going to use it as fuel for the renewable natural gas that we will make at the site.

So we'll be making natural gas out of it.

and then we'll still have a byproduct once we get done with that called humus, which then is a product that can go back to the, to the farmer for as a soil amendment.

So now we went full cycle.

We harvested the corn, we turned it into ethanol.

We turned the waste stream into renewable natural gas.

And then we're going to take the waste stream and it goes back to the soil, as a, as a soil amendment.

so now we're going full cycle with but there is no waste product coming off our facility, which is always kind of interesting.

And so, yeah, the science of this amazes me, I think when we were together on site, to hear a little bit about, like, all of this and kind of the different applications and how you don't leave any waste, I think is pretty phenomenal.

So, back to maybe us and Germany a little bit.

So these are scientists in a lab somewhere saying we could take this.

How does one decide to, take the spillage and and make other energy out of it?

Well, we've always known that, you know, even in our waste, waste management systems, we've always known if you have, biological material as it breaks down, it creates manure and methane.

Sorry.

Yeah.

it creates methane.

Well, if you can capture that methane in a constructive process.

An engineered process, then the methane can be used to make renewable natural gas.

But think of the scale question that we just talked about.

So there will be 16 tanks onsite, each one 2.5 million gallons in size.

if you stand behind it, you know, as a person, you look like a minuscule, like a piece of microscope, you know, process it.

They're huge tanks.

And inside those tanks.

So as the boxes are breaking down, it's a biological process that actually creates methane.

we take the methane, then we upgraded to pipeline quality.

so it's it looks no different than fossil based renewable natural gas or natural gas.

It looks no different.

In fact, when we put it in the pipeline, we have to meet the specifications in this case of Nipsco, because you and I can't tell the difference between our molecule and the molecule that came out of the ground is a fossil, based natural gas product.

And so when it goes into your home, you really don't know if you're using ultimately my gas or gas.

It came from a well, because all the molecules are going into this distribution system.

The United States is in a really wonderful position.

Now.

We have this huge integrated network of pipelines that moves natural gas across the country.

And so, it made it very easy for us because then we don't have a transportation issue.

We put it in the pipeline, it sits out our front door.

Yeah.

That's phenomenal to learn about that.

And I appreciate you sharing a little bit.

So you touched briefly in like a in the direction you're going.

So we celebrated last month the the beginning of your expansion project.

You put your, the company plans to make major investment.

Just talk to us a lot about, you know, kind of timing and, and, what people might see is your, as you're going through your improvement process.

Yeah.

So first of all, let me say to, Jeff, before we get down this road too far, I want to thank the city of of South Bend.

and the city council of South Bend for their support because, about a year ago, I was talking to the city council about our request for tax abatement to support the investment that we're going to make $230 million of investment that we will make in this facility.

And so, people sometimes things tax breaks our way, that the city shouldn't be giving away money that, you know, in fact, we should just be accepting that responsibly.

But this is an investment that we're making in the community, and we want the community to make an investment in us as well, so that we're both partners in this process.

So I, I see tax abatements not as a giveaway, but it's an investment in a partnership that we want to have with the city of South Bend and the citizens of this community.

So, yeah, if I could interrupt because I think you're in South Bend and in particular, probably we've done it better than others, recognizing that that your large capital investment upfront means you had to put a lot out the out the door.

And so if they can help soften that.

So so we always I love the tax phase and better than abatement.

You know sometimes because you're still paying taxes on what you were paying before on it.

But but the city deserves some real credit I think from getting it.

So yeah.

So I didn't want to get you fired anywhere without acknowledging the importance of that.

And it is, as you mentioned, it's it's public private partnership.

Right.

And, you know, I think this happens in it for the long haul and you're in it for the long haul.

And it anyway, it was nice to see that partnership come together.

So thanks.

And and we have, similar support from the state of Iowa or Iowa.

State of Indiana.

Yeah.

but, so $230 million, the majority of that will go into the construction of the renewable natural gas facilities that that 16 tanks that I talked about in the, they're the bulk of the capital investment that's going to be required to make renewable natural gas.

But as you would imagine, then there's lots of pipes and wires that have to all be connected, to make all this work.

And at the same time, some of the money will be spent, as I mentioned early in the conversation, to upgrade the ethanol facility so that now we have, a 21st century operating facility, that meeting today's standards for production, and then efficiency.

When I said that it's, it's what we do really well as a technology company.

and so I'm always confident in talking about what we do because we actually walk our talk.

I was as an anecdote, I was when we were, doing the facility out in Nevada, that is a similar design in the sense that we have ethanol production facilities there that we will match with renewable natural gas.

But when we first started there, we said, well, we should talk about this with, the community of the government.

And I said, we'll talk about what we're actually going to do once we start doing it.

So we bought that facility in 2018.

We started producing renewable natural gas, the equivalent of 7 million gallons annually of renewable natural gas.

In December 2021.

And that's what we talked about it.

and we will do the same thing here, here, which we're trying to educate people and let them know what we're doing.

But the real test will be are we producing 100 million gallons of ethanol, as we hope to do in 2026, and produce 2.8 BCF billion cubic feet of natural gas at the same time.

and we mentioned, I think, in our opening tease about you being a leader in this industry, as I think you and Claus both mentioned, not many people are doing this right.

You're you're kind of on this cutting edge of this, renewable energy phenomenon where you're trying to do some new things here that many people are doing is in the sense that one is doing this in a manufacturing sense and industrial scale.

So where does renewable natural gas come from today?

about half of it comes from landfills.

So what's going on in landfills?

They capture the methane that's been evaporating into the environment.

and now there's a real push to actually capture that gas.

methane gas, do the same thing, upgrade it to pipeline quality.

And it's and it's at landfills across the country.

The other major source of renewable natural gas comes from dairy farms.

and what they do there is they take the manure and they put the manure into anaerobic digestion tanks.

And again, it has a biological process that causes it to break down and make methane.

And the good news for us, you know, as a country is the dairy farms.

You know, you don't like to see it this way, but there's an environmental issue with manure that's that's actually degrading and causing people to smell the odor.

But what's really happening is degrading and sending greenhouse gases into the environment.

So by capturing the methane gas and making it and the manure and make it into methane, it's a really good thing not only for the environment but for the farmer, because now we've got a new revenue stream and we've got a source of renewable natural gas.

To put all that in perspective, though, to get the equivalent of what I will produce here in South Bend, you probably need ten dairy farms with 30,000 head of cattle each.

to get this same equivalent, value, so or the same equivalent output ultimately.

So so the scale is, is the big difference.

And we're doing it as a, as a technology where we control the processes.

And so, I'm really proud of what we do as a company.

And, and I'm looking forward to the growth opportunities that we will see kind of go forward basis.

Let me let me go personal for a second with you.

So so how does one find his way into this field.

so so you're you're running, the North American operations of this pretty important company.

How do you find your way into the space?

Well, the short history is I was an executive with an electric and gas utility company.

I did a lot of international work at the same time.

So I understand the electricity business and the natural gas business.

And and then, for a long time, I ran my own consulting business in the renewable energy sector.

and so those two things kind of were the launchpad into my relationship with Verbio, and a whole different story, but I met Claus, and, we hit it off pretty well.

I did a six month study for him, a market entry stage, and said, well, should you come to the United States, what's the benefit?

Etc., etc..

So after six months of, evaluation, in late 2017 Claus said, well, if you think this is such a good idea, I need a president CEO.

And I said, sign me up because I'm ready to go.

It's very exciting.

And for me, I'm kind of great here.

You can see them towards the end of my career, but this is just an exciting time for us.

And this is what keeps me young.

Yeah it is.

It's very exciting to see.

So, so Claus or.

I mean, Greg was we were out on site with you and Claus.

You get to meet a number, your employees.

Let's shift to work for us because you, like every employer in the marketplace, are trying to find top quality workers, trying to find that team, plug them in to do all the important things you need to do.

Talk to us a little bit about just the kinds of jobs that you have on, on at the plant, the kind of skills that you need for workforce.

Give us that kind of summary for somebody who's not for me.

Yeah, yeah.

And maybe what people would be more familiar with if they're familiar with oil refineries and those kinds of facilities.

This is the same thing.

It's a bio refinery in the sense that we're making renewable energy, but it's a refinery in the sense that you need engineers to understand process.

You need skilled technicians that actually run the operating systems.

we need skilled maintenance people in terms of the skill sets of electricians, plumbers, all those kinds of people that you would think, that are important to these operations.

And, and for us, even though we have a lot of money invested in capital, we always believe that the people capital is the most important investment we can make.

And so we're we, like other employers, are kind of in some sense struggling to find well qualified people, which then requires us to make sure that we have good packages.

I, I think I can safely say, Jeff, though this is interesting.

I actually, I was at the plant just before we came to do this, and, I talked to a lot of the management staff at the plant and said, we're really fortunate to have a really good crew of people, but now we need to build on that crew.

Yeah, we have currently, about 61 employees.

And, over the next couple of years, we're going to go up to 90.

So we need to find the right people to to do this in the right way.

And so, if anybody's got engaged for us on downs, we'd be happy to talk to them.

Sure.

So.

So are there, you maybe our conversation today piqued the interest of some.

Maybe folks don't think they have the, the skill set.

You have some entry level kind of positions that you train and sort of get people on the path.

Or do you need a more specialized.

it's a combination of both.

Yeah.

I'm big on I did a lot of work with interns at one point in time, and I'm.

I'm big on interns, so I'm big, big on bringing people that are in the educational field, but then trying to understand what is the business sector looking for in terms of the skills.

And so I think there's a mix of people that we're trying to hire that have prior experience and background in the industry, but at the same time, we want to build our own team of people that are coming to us because they want to be.

I find a lot of people want to be in the renewable energy business because we're, you know, we're doing the right kinds of things for our country.

and if we can do it successfully financially, which, which is what we're all about, because we have shareholders just like anybody else.

that makes it very exciting for people, particularly young people looking for a future that says, am I doing the right kinds of things to help society?

with the benefits that we're producing at this plant?

So I think, maybe I'm a little bit biased, but I but I think people can feel good about working for us.

And so I do think, you know, having been there and being a novice in this space, just being really impressed with the the whole sustainability, the, the impact on the environment, the the lack of waste, the creating a product that there's a growing demands for it.

There's a lot of things that I do think could make people feel really interested in getting up and going to work every day doing that.

Yeah, it's it's, it's just very rewarding, you know, and, I think that's what's important.

And that's what I like to talk about is where we start from ag residue or waste streams or corn, and then we go full cycle all the way back to the grower.

one of the, you know, one of the markets is important is the grower, because that's our source of feedstock.

And so we want a healthy AG sector.

we try to be fair in terms of our purchase prices, for corn, for our input.

in the same case, out in Nevada, we use corn stover, which is the waste stream from corn, as the feedstock for that plant.

So it's a little bit different model, but, similar in the sense that growers are benefiting from what we're trying to do, an AG sector.

And it's a way to complement ag and and energy together.

That's why when I first talked about Claus's background, he came from a and then into renewable energy.

And now we've made this marriage between the two major things that are critical to our country ultimately.

Yeah.

You know, it's interesting, especially on the bypass, sometimes you can see the trucks full of corn ready to ready to unload there because the busy thing.

So, so as we get close to the end and our last couple of minutes here to talk, talk a little bit.

So I was a couple of years ahead of us.

And in terms of where you're at in that process.

Right.

So any lessons learned along the way that have helped you better prepare for, investing in South Bend and growing, expanding here?

actually, I think the two plans are complementary, that the Iowa plant, that we bought was designed to be what's called a.

So the ethanol plant, it, unfortunately for the it wasn't successful.

Unfortunately for us, it was a really good buy.

So the ethanol majority of the ethanol assets were already there.

But we built the renewable natural gas assets first.

We started producing renewable natural gas.

And now the ethanol commission is is basically is underway as we, as we speak.

So it will be by refinery in this case, the ethanol facility was up and running.

So we're able to benefit off the revenue streams that are generated from the existing business while we build that renewable natural gas business.

So I think the two, differences that complemented us as it relates to the natural gas versus the ethanol, and we have people with expertise in both and it's the integration of the two capabilities that really make us different in terms of the others.

But, I say the lesson learned is this is a fun business, but you got to pay attention to that.

The eyes cross the T's and make sure you stay within the confines of the regulatory process.

Great.

So, Greg, as we start to wrap up.

So if people if we if we peaked their interest, they want to learn more about Verbio and the careers and such, where would where should we go to our website www.verbio.us.

and on their website they'll find a page that would direct them to our human resources people.

If they're interested in an employment opportunity, and we'd be interested in talking to them.

Great work.

Thank you for sharing your story today.

Really appreciate this.

We're excited about the progress.

We'll have you back for an update.

We'll get out of the site maybe when you're done.

That'd be perfect and show our viewers what's going on there.

So I thank you very much, Jeff, for the time.

That's it for our show today.

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