Just last week, FuelCell Energy (NASDAQ:FCEL) announced a $67 million plan to expand its manufacturing facilities over the next couple of years. In the world of big business, $67 million doesn't really sound like much. But for a company that has barely plowed any significant capital expenditures into the business for the past five years this is a lot of money, which will give the company the ability to more than double its facilities in hopes of increasing production. Let's take a quick look at what the company has planned, how it stacks up against the company's recent spending, and what this could mean for the business long term.

Getting ready to ramp up
FuelCell Energy has a small problem that is starting to show its face. Its current manufacturing facilities can handle an annual production rate of about 100 megawatts worth of fuel cells. Today, the company has an annual run rate of about 70 megawatts, and so if the company has any hopes of maintaining its momentum on sales growth it will need to start looking toward the future.

This is where this $67 million investment comes into play. The company plans to use this investment to double its current manufacturing capacity to close to 200 megawatts annually, and management believes that it will also be able to reduce production and logistics costs because it will move the entire production process under one roof. All told, the company estimates that this expansion program will take come in multiple phases, with the first phase being complete in the beginning of 2016. 

How this plan stacks up against its recent spending habits

Source: S&P Capital IQ, authors calculations

From these figures, the two things that jump out is that the company hasn't been spending near as much money has it plans to in the next few years. To be fair, though, prior to 2009 the company had made some much more significant capital investments, and since then those numbers scaled back a little. That $67 million investment really changes things, though. 

Of course, this doesn't tell the entire story, because for FuelCell Energy and other emerging technologies like hydrogen fuel cells, research and development costs are going to be a major component of the company's spending plans. It helps, of course, that the company has historically generated revenue from research and development contracts to offset some of the spending, but its R&D spending over the past five years have well outpaced its capital expenditures.

Source: S&P Capital IQ

What a Fool believes
2014 has been the year of the hydrogen-powered fuel cell, with FuelCell Energy sharing the limelight with other players in the space such as Plug Power (NASDAQ:PLUG) and Ballard Power Systems (NASDAQ:BLDP). All three are starting to see some commercial success in certain niche markets, and the years of R&D spending are starting to pay off as the costs for these systems are becoming more cost competitive with other options out there. The big challenges for these companies now, though, is to maintain the momentum of growing sales in hopes of finally becoming profitable companies. 

Between the several millions of dollars that FuelCell has spent in the past several years, and its growing demand internationally, the opportunity to grow seems to be there. With this capital investment to increase production capacity, it seems to be spending that money at the right time. If management can turn greater production capacity into better economies of scale, then it should be on the right track toward those elusive profits.