The latest earnings report from Otter Tail (Nasdaq: OTTR ) highlights exciting opportunities in wind power. DMI Industries -- its wind-tower manufacturing subsidiary -- seems poised to step out of the otter's shadow to take on a starring role in the near future.
Otter Tail has come under heavy fire from environmentalists for a planned coal-fired power plant in South Dakota. Wind energy is a much cleaner and safer power source than coal, and when the company throws its support behind that technology in a big way, it might mollify the critics a bit. That heft is indeed being applied.
About a month ago, Otter Tail and South Florida utilities operator FPL Energy (NYSE: FPL ) announced a new wind farm in North Dakota, with a planned 160-megawatt capacity and late-2007 opening date. Last week, we saw plans for a third wind-tower manufacturing plant in Tulsa, Okla., to be completed in 2008. In addition, Otter Tail is investing in upgrades to one of its existing production lines, increasing that location's capacity by 30%.
Management says that DMI will have one of the largest wind-power production capacities on the continent, which isn't bad when you consider its much larger competition, including multinational powerhouses General Electric (NYSE: GE ) and Siemens AG (NYSE: SI ) .
Now, Otter Tail won't turn America into a tree-hugging, wind-powered paradise by itself, but it's a good start. And Otter Tail stands to benefit greatly from this very green trend for years to come. DMI is still too small of an operation to count as a reportable segment. (It's lumped in with contract machining, metal parts fabrication, and horticultural containers, among other things.) That might have to change soon, given this operation's increased scale.
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