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Enertech bounces back in Mitchell

From left, U.S. Sen. John Thune, R-S.D., Enertech CEO and President Steve Smith, and Brandon Darnell, president of Carthage-based Energy Dynamics take a tour of Enertech's Mitchell manufacturing plant. Energy Dynamics is the Enertech's largest distributor. Marcus Traxler / Forum News Service

MITCHELL, S.D. — The business is back at Enertech.

The Mitchell geothermal heat pump manufacturer has been on the rebound in 2018 after having to lay off 27 employees during 2017. They now have about 40 employees and are looking for more, company President and CEO Steve Smith said on Thursday at the company's Airport Road facility on the north end of the city.

In conjunction with a plant visit from U.S. Sen. John Thune, R-S.D., on Thursday, Aug. 9, the company also announced a three-year purchase from a military contractor, which should provide for consistent work for employees through the future.

Over the next three years, Enertech employees will build about 5,100 fluid coolers for military base homes, along with another roughly 1,800 geothermal units. Smith said his company had been working for four years to land a contract of the sort and said he was happy to provide the news to his employees.

"This is awesome news for us and we have to cut lunch short because we need to get you guys back to work," Smith joked in a noon meeting with workers to deliver the news.

The work will begin in October, officials said. The fluid cooler equipment is stationed outdoors and looks like an air conditioning unit, Smith said. The project is used with closed loop geothermal systems to cool in hot climates.

"It will look like an outdoor air conditioner, even though we don't have an outdoor unit, because we're all inside because we're all geothermal," Smith said. "It will have a remote outdoor unit and we will transfer heat and take them out of these military houses in these warm climates and then load it to the fluid coolers, and a fan will come on and it will get rid of the heat."

Geothermal systems, in general, consist of an indoor handling unit and a buried set of pipes outdoors called a loop system. In the winter, the system absorbs heat and moves it into the house through a heat exchanger. In the summer, the opposite occurs and heat is absorbed in the home, which is cooled as heat is transferred back out through the buried pipes.

Smith called attention to the roughly 15 employees who are either new or have been hired back since the layoffs. Many of the layoffs were attributed to the loss of a production tax credit in 2017, but Smith said the company and the industry as a whole will need to do a better job of "learning to fly without the tax credits." He noted some of the company's best years were before the tax credit was in place.

"But geothermal is still the best source of heating and cooling still to this day. When other equipment gets more efficient or better, that technology is going into our equipment," he said. "You can't find any better way to heat or cool than with the ground, because it's constant temperature and you want to take advantage of that.

That tax credit is now back in place, in part because of the efforts of Thune and the South Dakota congressional delegation. The bill created a 30 percent federal tax credit for residential geothermal systems installed in new and existing homes, and a 10 percent federal tax credit for commercial applications. The commercial credit will expire in 2022. The residential tax credit falls to 26 percent in 2020, 22 percent in 2021, and expires in 2022.

"I think the main thing that you want to do with public policies like that, that people depend upon, is to at least give them certainty," Thune said, noting that geothermal had become a "orphan" when other renewable credits were renewed.

"We were able to give this some of the same tax treatment as the other renewable sources and provide the certainty that the industry needs," he said. "More than anything, people need to know what they're dealing with and then they can work with it."

For his part, Thune said he was impressed by the production and employees at the business in Mitchell.

"I always hear about and read about geothermal, so learning about how they're made and how they're installed and what's being done is really interesting," he said. "It's a really neat story generally and a really cool story to have here in Mitchell, South Dakota."

Enertech was formed in 1996 as a geothermal heat pump distributor in Illinois and purchased the Hydron Module business in South Dakota in 2007, expanding the Mitchell plant and the company expanded again in Mitchell in 2009 to the current 80,000 square-foot building size.

Hoping to hire some more of South Dakota's hard workers, Smith said he'd like to return to a staffing level 50-plus employees by the start of 2019. From there, he doesn't know how much quicker things would grow, but he'd love to have it.

"I'd love to have the first shift filled and have to bring on a second shift," he said. "That's where I'd love to be."

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