City heat pump plant to expand operations

Published: Friday, March 20, 2009 7:00 am By: Randy Ellis

The Oklahoman

While many U.S. manufacturers are cutting back, an Oklahoma company has bold plans to do the opposite.

Oklahoma City-based LSB Industries Inc. plans to expand its geothermal heat pump and heat transfer coil manufacturing plants in Oklahoma City and restart a fertilizer manufacturing plant in Pryor this year.

Jack Golsen, LSB's chairman and chief executive officer, said the company decided to expand before the economy got rough and isn't planning to change course now.

"These economic times are just temporary," Golsen said.

"We're taking a long-term view," added Tony Shelby, LSB's chief financial officer. "We're making sure we have adequate capacity now and long term."

LSB is planning to spend between $8 million and $10 million expanding the two Oklahoma City plants and about $20 million restarting the Pryor fertilizer plant. The fertilizer plant was closed 10 years ago, before LSB bought it in 2001, Golsen said.

Growth means jobs
In Oklahoma City, the company will add 78,000 square feet of floor space to its 280,000-square-foot geothermal heat pump manufacturing plant and 40,000 square feet to its 250,000-square-foot heat transfer coil manufacturing plant, Golsen said.

Golsen said he expects those two expansions to take place over approximately the next six months.

LSB currently has five plants in Oklahoma City and employs about 1,500 people locally. The company may gradually add another 100 or so after the expansion, Golsen said.

"They won't be added all at once," he said, adding company officials will wait until "the economy starts churning some."

The national economic recession and political response have impacted LSB's business operations in both positive and negative ways, Golsen said.

On the one hand, the sale of heating and air-conditioning equipment is closely tied to the construction industry, which isn't doing well, he said.

However, the government has started providing incentives to encourage people to switch to more energy saving technology. That is good for LSB because the company manufactures energy-efficient ClimateMaster geothermal units, Golsen said.

"The thing we think is going to grow the fastest is the geothermal side of it because that's the biggest energy saver you can put in a building," he said. "About 46 percent of the cost for energy is for heating and air-conditioning and this knocks out about 60 percent of that cost."

So, despite the lagging economy, LSB's residential geothermal heat pump sales have increased, Golsen said.

"It's as green as you can get," he said.

Agriculture is weathering the recession fairly well, which has encouraged LSB officials in their plans to reopen the Pryor fertilizer plant, Shelby said.

July reopening set
The plant is tentatively scheduled to reopen in July, contingent on LSB reaching a satisfactory agreement with a major urea ammonium nitrate liquid fertilizer distributor, Golsen said.

LSB is spending about $500,000 a month preparing for the reopening. There are currently 61 employees working at the plant, which will have about 100 employees when it reopens, he said.

The plant is expected to produce about 325,000 tons of urea ammonium nitrate and 35,000 tons of anhydrous ammonia a year and has the capacity to expand, Shelby said.

"We believe that there are certain initiatives that we have undertaken that are strategically important to the long-term continued growth of LSB and we will not curtail these programs in an effort to boost profits in the short term," Golsen said.

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