Date: Apr 13, 2013 Author: Robert L. Smith Source: The Plain Dealer
EUCLID, Ohio -- Energy companies are expected to lay thousands of miles of pipe in the coming years as they tap remote shale rock and mine oil sands and even drill beneath ancient ocean salt beds.
Andrew Sherman, a Cleveland serial entrepreneur with a new gleam in his eye, says he has the formula to coat those pipes so they can do their dirty work well.
Experts in the field tend to agree. That's why local economic development officials are excited as MesoCoat readies to open an $8 million manufacturing facility on a former TRW site in Euclid. Northeast Ohio will become headquarters of a startup that seems to be on a global growth track, a nanotech pioneer whose first target is the energy industry.
"I think the potential goes way beyond that," said Daniel Berry, the president of MAGNET, a Cleveland manufacturing advocate and accelerator. "It looks like his technology has wide application. Everybody needs pipe. Coated pipe. And that's where his technology looks to be the breakthrough."
That breakthrough, the company says, will create jobs and could produce revenues in the hundreds of millions if its market grows as expected.
For now, MesoCoat (pronounced "MAY-so coat") appears to solve a couple of expensive problems for drillers, whose pipes often carry a corrosive mix of water, sand and chemicals. The young company has developed a process to coat the inside of carbon-steel pipes using a high-intensity lamp so that the pipes withstand corrosive materials years longer than normal.
What's more, MesoCoat claims it can apply its protective coatings faster and cheaper than anyone else.
"This is not just an incremental evolution," agrees Joe Payer, the chief scientist at the corrosion center at the University of Akron. "It's a game changer."
Payer says MesoCoat is poised to define the state-of-the-art in protective coating, just as the energy industry is about to begin buying lots more coated pipes.
Another Sherwin Williams?
Unanswered questions temper the early enthusiasm. The MesoCoat process remains untested in large-scale production. So far, it has shown results only in demonstrations, with pipes treated at a prototyping plant in Eastlake and at NASA Glenn.
Still, Sherman was beyond optimistic as he surveyed a bright new manufacturing plant in an under-utilized industrial zone near Euclid Avenue on Monday afternoon. He walked a production line that will soon be sanding and coating 40-foot-long pieces of pipe in steady succession.
"Our plans are to be another billion-dollar-plus company for Cleveland. Another Sherwin Williams," he said. "The markets are there. Certainly we have the material engineers and the steel expertise here in Cleveland that can get us there."
He's an engineer by trade but an entrepreneur by personality. The Mentor High School graduate, Class of 1981, has helped launch about a dozen companies and holds multiple patents.
For his latest venture, he leveraged government and private support to pursue discoveries he made during a Navy project to coat ship decks. Sherman founded MesoCoat in 2008, when he spun it out of Powdermet Inc., his advanced materials company next door.
JumpStart and the state of Ohio invested seed money and UA provided third-party testing and validation of the technology.
In 2011, a Miami-based holding company, Abakan Inc., bought a controlling interest in MesoCoat, providing about half the money needed to build and equip the manufacturing plant, Sherman said. He remains MesoCoat's president and chief technology officer.
The new, 11,000-square-foot factory will formally open Friday, with tours provided to local dignitaries and industry representatives. Production won't begin for several more months, giving engineers time to perfect the computer-controlled processes that invoke high heat and nanotechnology.
MesoCoat's process makes use of an infrared arc lamp developed at the federal Oak Ridge National Laboratories in Tennessee. The company holds an exclusive licensing agreement with the lab for the lamp, which emits a super hot beam that sweeps a pipe to fuse corrosion-fighting material to its surface.
The combination of the arc lamp and Powdermet's nanocomposite materials sped up that bonding process, known as cladding, to a remarkable degree. Sherman said he can complete in two hours cladding jobs that typically span two days.
Early reviewers are impressed. In 2011, Forbes named MesoCoat one of America's 100 Most Promising Companies. Last year, MesoCoat topped the Manufacturing Technology category of the Wall Street Journal's Technology Innovation Awards.
The prospects have created high hopes in Euclid, a community more accustomed to manufacturers leaving than expanding.
"They're a fantastic company," said Jonathan Holody, the city's planning and development director. "And they have room to continue to grow."
Between Powdermet and MesoCoat, the 13-acre complex on Rockwell Drive employs 50 people, half of them engineers. The new plant will create 35 jobs initially and 85 by next year, bringing employment to 135, in line with state loan agreements.
That's only the start, Sherman says. MesoCoat has it sights set on building larger cladding plants near global oil and gas fields.
"We could easily be 800 people here," he said.
Already, MesoCaot is partnering with Petrobras, Brazil's petrochemical giant, to build a Euclid-style plant near the oil fields believe to lie beneath ancient salt beds off the coast of Brazil.
The company is in talks with the government of Alberta, Canada, for a pipe-cladding plant near its immense oil sands, where drilling and mining are under way.
MesoCoat's business plan projects revenues of $400 million to $500 million in three years. Sherman envisions continued growth as the company moves beyond pipes into coating ship decks, bridges and oil derricks.
"The simplest way to put it, we're out to paint the world in stainless steel," Sherman said. "To stop rust."
While much of that work will be done abroad, Sherman said the science and the engineering will remain in Euclid, where he enjoys access to talent and space for more chemical powder plants.
As he watched a pipe resembling a cannon bore roll down the line toward the arc lamp, he mused, "This is new to the world."
