BUSINESS OPPORTUNITY
GBS is convinced that the biodiesel industry presents an unprecedented business opportunity with a number of similar or parallel historical examples to the petroleum industry. Our view is illuminated by the perspective of team members who have spent years in the petroleum industry. The successful oil companies evolved into vertically integrated entities, usually from drilling or crude production companies. They operated refineries to create a marketable or value-added products, but not because it was the most profitable part of the business. The primary focus, and main moneymaker, is the control and production the feedstock; refining is a necessary inconvenience. Historically, the mortality rate of poor, crude, independent refiners has been, and will continue to be high. Evidence of this first round of refiner consolidation, management dismissals and plant shuttering is found in the local newspapers and financial journals coast to coast. The most recent example of this is found in Beatrice, Nebraska. This high-tech plant never opened and one year later, is still in bankruptcy court. According to the National Biodiesel Board, fully one third of the biodiesel production capacity is idled.
In today’s market place, nearly all of the biodiesel infrastructure is in some restricted operational mode. In December of 2007, a new 50 million gallon plant in Iowa, owned by a soy bean farmer co-operative, could not, at any price, buy enough soy bean oil to conduct a proper commissioning operation. At the time, soy bean oil was selling for 49 cents per pound or $3.724 per gallon. Three weeks later, the oil had increased to 70 cents per pound or $5.39 per gallon. Just as increasing oil prices create upward pressure on alternative oil prices, the market price of algae oil will increase with petroleum and other alternative oils. In October, 2008, the plant was still moth-balled.
GBS has developed a vertically integrated business model that starts as the producer of the raw vegetable oil product and extends through wholesale and/or retail sales of the refined product. There is a significant opportunity to capitalize on the current lack of integration in the biodiesel industry and the imbalance of refiners vs. raw oil producers. Not only is the likelihood of the GBS success increased, but also the profit potential is much greater than that of the simple refiner.
In the GBS plan, we combine two distinct business segments. First, we have a purely agricultural business element that stands alone, with no dependence on traditional agricultural parameters. Our second business segment is a manufacturing organization that utilizes the skills of a variety of industry professionals. This complex set of interdependent relationships affords GBS the opportunity to enter the business in a very strong position. Using our broad perspective and diverse skill sets, we have minimized many of the risks of raw material acquisition, delivery and finance. The GBS core management team has the experience and leadership to manage the operations and marketing aspects of our business plan efficiently and effectively. We have taken the extra step of identifying additional avenues of expansion and revenue enhancement, providing alternative paths to success as the business and economic climates change.