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Reputation innovation

The man behind Chippewa Valley Ethanol Company’s move to biomass power is a sandy-haired chemical engineer with a slow Tennessee drawl and a quick eye for new opportunities.

Bill Lee leads the Chippewa Valley Ethanol Company in Benson, a farmer-owned cooperative that has gained a national reputation for innovation. “Bill is looked upon as a go-to guy, a real visionary,” says AURI project director Michael Sparby, who has worked with Lee for a decade. “He’s highly respected in the ethanol industry.”

Lee, 56, grew up in eastern Tennessee. He has spent more than three decades in the grain- processing industry, including stints at Ralston Purina and A. E. Staley, where he managed a corn wet mill in Loudon, Tenn. In 1994, Lee joined Delta-T Corporation, a Virginia-based ethanol plant developer. He was the start-up manager at Corn Plus, a Winnebago, Minn., ethanol plant and oversaw construction of the Benson ethanol plant for Delta-T. In 1996 he became the plant general manager.

Under Lee’s guidance, CVEC has expanded from 15 million gallons per year to 46 million gallons. The company posted revenues of $32 million in 2006. At the same time, CVEC diversified into an unusual array of products — including vodka. “We’ve become known for doing a few things a little differently,” Lee says.

CVEC’s E-85 distribution program is one example. The company supplies 115 Minnesota gas stations, serving one-third of the state’s E-85 retail outlets. “In the past five years, we have sold more E-85 than anybody in the country,” Lee says. In 2006, E-85 sales contributed nearly $9.5

million to plant revenues, according to the company’s most recent annual report.

CVEC also makes industrial-grade, organic and kosher alcohol for use in cosmetics, food and other products. “We’re the largest producer of certified organic alcohol in the U.S.,” Lee says. These high-margin niche markets are growing rapidly, he says. The plant doubled its sales of industrial alcohol in 2006 to 4.3 million gallons.

The best-known CVEC product is Shakers Vodka, introduced four years ago by Infinite Spirits, a California marketing company. Shakers, available in several flavors, is distilled from wheat and packaged in a distinctive Art Deco-style bottle.

CVEC launched its industrial alcohol and spirits division, Glacial Grain Spirits, as a hedge against times “when fuel-alcohol prices were low,” says Brandon, Minn., farmer Gene Fynboh, a CVEC founder. “It’s another market.” Glacial Grain Spirits added $400,000 to the co-op’s bottom line in 2005, but lost money in 2006, when fuel-alcohol prices went sky-high.

CVEC’s newest venture is a partnership with Frontline BioEnergy LLC to install a biomass gasification system at the Benson plant (see related story page 6). CVEC has taken an ownership stake in the Ames, Iowa start-up company, which is building biomass gasification systems for ethanol plants. Frontline is also developing methods to make ethanol from syngas. “This is where we see our industry heading,” Lee says.

Fostering innovation

The CVEC Board of Directors has encouraged innovation, Lee says. The directors have “a sophisticated view of the business and an appreciation for the strength in diversification. They’ve been very supportive as we’ve reached out to new areas.” Fynboh, who has served on the board from the beginning, recalls a board retreat where “we all took one of those personality tests, and everybody on the board was a ‘pioneer.’ ”

Lee and his board are active in state and national policy work, too. “The time we invest is part of our long-term commitment to build the industry,” says Lee, past president of the Renewable Fuels Association, an ethanol trade group. “We don’t often differentiate between what’s good for our company and what’s good for our industry.”

Lee also credits his staff. “It takes exceptional ability and dedication to develop and integrate new technologies while maintaining the base operation at a very high level of performance.”

CVEC has “taken risks to move the company forward and position itself to take advantage of opportunities,” Sparby says. That kind of innovation takes “a lot of leadership and courage,” Fynboh says. “Bill is always thinking of things that could benefit the plant or the industry in the future.”

Bill Lee, general manager of Chippewa Valley Ethanol Company, has built a national reputation for innovation. Besides ethanol, CVEC produces Shakers Vodka, organic and kosher alcohol for cosmetics, food and other markets and leads the nation in E-85 production.