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Dallas firm fueling change to natural gas in corporate fleets
08:15 AM CDT on Wednesday, July 29, 2009

By JOHN COLEMAN / The Dallas Morning News
jpcoleman@dallasnews.com

Corporate fleet vehicles are driven into the BAF Technologies factory on traditional diesel or gasoline but come off the car lifts as natural gas vehicles.

Dallas-based BAF is rising along with the green movement. The company converts traditionally powered vehicles to run on cleaner-burning natural gas and just landed a contract to help convert the largest corporate alternative-fuel fleet in the nation.

"Our business is growing because of things like last summer when natural gas was cheaper than gasoline. Big fleets understand that and want to use domestic clean-burning fuel. It's good for their PR," BAF president John Bacon said.

In this harsh economic environment, BAF is hiring while many other companies are firing. The company is nearly doubling its workforce over the coming months and is poised to profit from an expanding industry.

The natural gas vehicle-conversion company was founded in 1992 after passage of the Clean Air Act opened the door for alternate-fuel vehicles to compete.

BAF has obtained large contracts such as converting shuttle buses for Dallas/Fort Worth International Airport and pickups for the California Port Authority in Los Angeles.

In March, BAF secured $350 million of the overall $565 million contract with AT&T Inc. to convert 8,000 fleet vehicles to natural gas over the next five years. This accounts for more than half of the 15,000 vehicles to be converted, which will make AT&T's fleet the largest corporate alternative-fuel fleet in the nation.

The company is led by Bacon, a 20-year industry veteran, who said he "fell into the industry by accident." In 1989, he became president of TDM Inc., a struggling conversion company that worked in conjunction with General Motors, shipping natural gas vehicles to Europe.

Before joining BAF in 2000, Bacon worked for NGV Systems Inc., a producer of cylinders to hold natural gas in vehicles, until the company was sold in 1999.

For the AT&T contract, BAF was adding 18 "green jobs" to the 30-person hourly workforce over the summer, Bacon said.

New BAF worker Paul Jeannet was hired for the AT&T contract.

Laid off as a technician from Texas Instruments in January, Jeannet survived on his severance package while searching for a job for months.

"I was looking for a new job even before they laid me off," Jeannet said. "The job market is so tough right now. I went through a bunch of interviews. It's just really tough."

The growing green movement subsidized by President Barack Obama's February stimulus package has allowed BAF to rapidly expand its workforce in just a few months.

In the stimulus bill, $12.5 billion was appropriated to projects that could go to BAF customers, and as a result, Bacon anticipates adding 10 to 15 hourly workers on top of the AT&T hires as the money begins to roll in next month.

Because BAF has become a player in the growing green movement, it has drawn attention from big energy investors such as T. Boone Pickens.

Switching vehicles to burn domestically produced natural gas is key in Pickens' energy plan. Pickens and his company Clean Energy, a natural gas supplier, have targeted BAF to help achieve their goals.

Pickens sits on the board of Clean Energy, which made a loan convertible to a 49 percent stake in the vehicle conversion company.

Clean Energy president and CEO Andrew Littlefair said the company made the loan to BAF to indirectly benefit its own customers.

"We are a fuel-producing company, and if there is nothing out there to burn the fuel, it is bad for us. BAF can help get people over the hump to use alternate fuels," he said.

"If you want to see natural gas used in transportation, BAF will be very important," Littlefair said.

The U.S. has about 130,000 natural gas vehicles on the road, mostly fleet vehicles, according to lobbyist group NGV America. That compares with 8.4 million worldwide. In addition, the U.S. has about 1,500 natural gas refueling stations, half of which are not for public use – a fraction of the more than 300,000 gasoline stations in the nation.

BAF, meanwhile, is expanding its facilities.

Currently, half of its 20,000-square-foot factory capacity is devoted to the AT&T deal, and the company just leased 5,000 more square feet to accommodate orders that could come from stimulus dollars.

The additional factory space will allow the company to increase production capacity from 1,400 vehicles to 1,800 vehicles per year.

Converting vehicles requires retrofitting the engine to burn natural gas, adding natural gas storage tanks and reprogramming the vehicle's computer. BAF can most easily convert Ford vehicles because its technology is compatible with Ford's computers.

Bacon said the conversion from a normal vehicle to a natural gas vehicle requires about 32 man-hours to complete.

Mario Alvarez is putting in the hours in the unair-conditioned factory in the sweltering Texas summer.

As a new hire, the sweat-drenched Alvarez said he "could not be happier to have a job right now."

Laid off in March from his job at a sheet metal company in Grand Prairie, Alvarez filled out close to 100 applications before finding the job with BAF to help support his two children, he said.

Natural gas vehicles are poised to gain market share over the coming years due to efforts of Obama and Congress to create green jobs and reduce carbon emissions. Bacon said BAF will benefit greatly.

"We could easily double our sales next year, and we could go from a $10 million company to a $50 million company in three years," Bacon said. "Things could really take off."

BAF TECHNOLOGIES

What it does: Converts gasoline- and diesel-powered vehicles to natural gas

Based: Dallas.

Founded: 1992

President: John Bacon

Workforce: Began the year with 30 to 40 hourly workers, but plans to add 28 to 33 in response to demand.

Production: Can produce 1,800 vehicle conversions per year after expanding factory space 25 percent last month.

Largest contract: With AT&T to convert 8,000 vehicles to natural gas over the next five years, worth a total of $350 million.

SOURCES: BAF Technologies, DMN research