To address the growing demand for its industry-leading liquefied natural gas (LNG) technology and equipment, Air Products and Chemicals Inc. (APD) recently revealed its plans to build a new manufacturing facility in Manatee County, Florida. The industrial gas company said that the new facility, which will expand its LNG manufacturing capacity, will meet the demand for its large LNG heat exchangers.
The facility will be constructed at a deepwater port location with the flexibility to manufacture large LNG equipment without any shipping constraints. The 300,000 square foot manufacturing facility is expected to come on line late 2013 and will employ roughly 250 people over a four-year period.
Air Products’ proprietary LNG technology, which is available across 15 nations globally, processes and cryogenically liquefies natural gas for consumer and industrial application. This innovative technology has been designed to address the growing energy needs across the globe.
Air Products provides process technology and key equipment to the LNG industry for natural gas liquefaction process as well as small and middle-level LNG facilities. The LNG technology is gaining importance as it meets the increasing global need for cleaner energy.
Most of the LNG manufactured globally leverages Air Products’ technology. The company has shipped its LNG heat exchangers to remote places, including locations in Indonesia, Algeria, Nigeria, Peru, Malaysia, Egypt, Oman, Yemen and Qatar.
Air Products recently shipped the 100th LNG heat exchanger made at its Wilkes-Barre facility in Pennsylvania. Some of the heat exchangers manufactured at this plant are as large as 16.5 feet in diameter, 180 feet long and weigh as much as 500 tons.
Air Products benefits from a long-term take-or-pay contract, a consolidated industry structure, diverse customer base and sustained pricing power. The company’s healthy project backlog and solid bidding activity strongly position it to achieve its long-term growth target. However, soaring energy and raw material costs pose a threat to margin expansion.
We currently have a long-term Neutral recommendation on Air Products. The company, which competes with Praxair Inc. (PX), holds a short-term Zacks #3 Rank (Hold).
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