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Eggheads is the go-to podcast for egg industry professionals who are interested in leadership and innovation in the egg world. Host Greg Schonefeld explores the evolving world of modern egg farming, from the latest in cage-free innovations and organic certifications to navigating the economics of large-scale production. Whether you're an egg producer, supplier, or involved in poultry genetics, this show provides the insights and expert discussions you need to thrive in the industry. Crack open the science, strategies, and stories behind the egg industry’s biggest challenges and opportunities.
Craig Morley :
The legislation with the bigger cages and the density differences, every time you change that, you're also changing the ventilation.
Greg Schonefeld:
I'm Greg Schonefeld, and this is Eggheads.
Moving indoors was revolutionary for animal agriculture. It meant that egg operations could set up shop virtually anywhere, from the Midwest to the Arizona desert. But farming indoors also presented a unique set of issues that no one really needed to consider before, most notably, ventilation.
Craig Morley :
Aerotech was originally the family-owned business. We were acquired by Munters, and now we're part of this big company. And we're solely focused on ventilation systems for ag.
Greg Schonefeld:
That's Craig Morley. He's in charge of the commercial and sales side of the Aerotech division. And we're also joined today by his colleague, Ross Demerly, their applications and sales engineering manager.
Ross Demerly:
I do a lot of work with our sales reps in terms of looking at the buildings and laying out the different applications and design.
Greg Schonefeld:
Now, as part of a larger company called Grain and Protein Technologies Climate Control and Air Treatment, Aerotech works alongside some big global players in agricultural ventilation. Together, Craig and Ross have nearly 60 years of experience working on ventilation for agricultural buildings, and as the industry evolved over that time, they had to adapt to both shifts on the customer needs side and changing economic realities that would force them to adjust the way they do business. In many ways, the story of ventilation really mirrors the story of modern animal agriculture, and today, we dive into it all.
When was Aerotech first founded, more or less, and just a little bit the evolution there?
Craig Morley :
Sure, yeah. So it was founded actually in 1947 by Nolan Mitchell, so a long time ago, and he was an agricultural engineer initially focusing on crop drying, that type of thing. But they started seeing a need for confinement, controlling the environment in some of these buildings, and so he started working with an industrial fan company called Aerovent Fan and Equipment, so then became a distributor for them. And then, over time, basically wanted to break away. Aerovent was pretty rigid, very focused on the industrial side of the business. It really needed some product development, it just wasn't happening. So at that point, actually, Bob Mitchell, Nolan's son, took over the business. There was some growing pains, I think, initially. But Bob Mitchell was a genius, and his father was too, I didn't know him, but just incredibly smart people and really had a knack for what the future looked like. So he started manufacturing, and then called it Aerotech.
Greg Schonefeld:
So basically, what was being outsourced through Aerovent became in-house with Aerotech, design it, manufacture it yourself at that point?
Craig Morley :
Correct, yep, yes.
Greg Schonefeld:
Okay.
Craig Morley :
And so, when I started, it was when the hog industry in North Carolina was just exploding, so we were 97% hogs at that time. That market got pretty saturated ,and all of a sudden, on the hog side, it tanked down really fast. And so, then we went right into the broiler business, and that really helped us. And then, we've pretty much realized we've got to diversify. If we're going to do just ventilation, we need to be in more than just rely on one industry, so that's why we're in the four industries that we're in now.
Greg Schonefeld:
Yeah. I don't know if you could paint a little picture of what maybe the egg industry looked like, especially with respect to ventilation and what you've seen through that time.
Ross Demerly:
The industry had gone from three up to four or five-tier A-frame cages, and most of them were what was deemed a high-rise house. So you had a manure pit underneath, birds on top. So a lot of the ventilation concerns had to deal with the ammonia and stuff coming off the manure underneath, and how do you maintain good airflow down there to help keep that dry? So that was some of the concerns then.
It evolved then with the high-density cage houses that started becoming a thing. And so, you went from a single level house, that might have had eight or 10-foot sidewalls for the bird area, to now anywhere from 15 to 40-foot sidewalls, and instead of four levels, now you're 10, 12, 14 levels high. Then buildings started getting bigger, so we went wider and then we went longer, and how many birds can we get in a house? Your neighbor built... This house has 200,000 birds. Well, I'm going to build one with 250,000 birds, and then it went to 300,000 and so forth. And so, those brought whole additional ventilation challenges with how do you bring air in the top of this house and get the air uniform in a 30-foot tall building?
And then, more of a colony style, bigger cages for more square inches per bird, so you've got a big nest area, big cage area, and you put multiple birds in that cage, but they've got a lot more room to move around. And then, that evolved into the cage-free type of buildings that we're using today.
Greg Schonefeld:
Ross and Craig's work in ventilation gave them a great vantage point to see the whole industry evolve in the US. But early on in their careers, their company's efforts to expand into new markets also gave them the opportunity to work with producers abroad. And so, as young men who were ready for an adventure, they set off to do business in Southeast Asia.
Craig Morley :
Yeah. I spent a lot of time in Thailand, Taiwan, Philippines, and then eventually, as our volumes picked up, we started a factory in Ho Chi Minh City, Vietnam, and we're producing our vortex fans and evaporative cooling systems there, which actually turned into what Ross found, a little niche market, you can talk to that, Ross, in Vietnam, which is highly profitable.
Ross Demerly:
Yeah. And so, we were doing livestock buildings over there, and then we got approached, one of the gentlemen that owned some livestock buildings also was part-owner in a garment factory, and so he asked if we could come take a look and help figure out if there was a way we could ventilate garment factories and the workers there. They were trying to get a contract with The Gap, and US contracts had stipulations for worker comfort. And so, started going and taking a look and doing designs and calculations on body heat from people and so forth instead of animals, and came up with some ventilation concepts that we started installing into some garment and textile factories in Vietnam and Cambodia and other places as well.
Craig Morley :
So yeah, it was Samsonite, Nike, The Gap. And the cool thing was, actually, we have a list price and a discount system, but there, we sold full list price and the profits were... It was like, oh wow, this is what it's like to be a profitable company, because as we know, the ag industry, profitability is challenging at times.
Greg Schonefeld:
For sure, yeah. So I guess you were there at that time where production methods were evolving and they were ready for ventilation and you were there.
Craig Morley :
They were. Yeah. Actually, it was going incredibly well. And then, there was an Asian economic crisis that, basically, a lot of these equipment divisions went away and all that work went down the drain in some cases. But it was evolving. They were years and years behind where we were, but they were seeing the benefits of confined buildings and the ventilation systems, and so it was going quite well.
Ross Demerly:
And you heard from Mark Kleinsmith when he talked about getting the $50,000 in cash or whatever, right?
Greg Schonefeld:
Oh yeah, yeah.
Ross Demerly:
And so, one of my first trips, we were shipping containers of stuff over, and I was given a backpack with $80,000 in it to bring back from overseas back home. So you want to talk about being a nervous guy on the airplane, right?
Greg Schonefeld:
Yeah, right. Or going through customs.
Ross Demerly:
Or going through customs.
Greg Schonefeld:
I can't imagine.
Hearing about international adventures is always great. But Craig and Ross were also involved in some really big innovations that would completely change the way buildings were ventilated in the US, most notably, the electronically commutated, or EC, motor.
Maybe you could just talk real quickly what an EC motor actually does.
Ross Demerly:
There's two phases. We wanted a direct drive motor, and so the direct drive motor allows you to remove the belt and bearings and all that stuff, and you attach the propeller directly onto the motor, and so that removes all that. And so, then part of that is we also then wanted to do a DC version instead of your standard AC version, because a DC motor inherently is more efficient and can run variable speed, that's what they're designed for. And so, we wanted to incorporate all that into this.
Craig Morley :
We had our vortex fan, which we'd had a long time, and we're always trying to maximize efficiencies and make it better and better. But at some point, you reach a point where you can only do so much. So we had hired an engineer, actually, from the automotive industry, and his background was EC motors. We couldn't find an EC motor that was actually could run anything bigger than a 24-inch fan. We went all around the world looking for this bigger motor, and he was like, "I can do it, I can build it."
And so, we brought it to management, it was going to be an investment, pretty expensive investment, and they weren't too interested in it. But we kept going with it and going with it. Ross was a big part of that as well. The sales team was like, "How much more can you charge for an EC motor?" I'm like, "Maybe $250, something like that. Well, we finally got it and it came out, and it was almost double the cost of the fan. So it was expensive, there's no doubt. And Mia's pushing this thing, along with Ross.
A lot of us had a lot of potential issues that didn't go well. Norm Wettstein was our rep out in the Midwest, in Iowa, Illinois, and all those areas, where the big layer part is. And we came up with the price, and he was just like, "Don't worry about it. I'll figure out how to sell it." And he started selling them and selling them and selling them, and it just caught on. And the big part of it was we thought it's energy efficiency, the energy savings, which was about 20% over a AC motor, depending on how you run it, which is pretty substantial. But really, what it came down to, the producers are like, "Hey, no belts, no bearings." Maintenance-free, basically, and that was the big thing that really got it going. We had other companies coming like, "You guys are never going to sell this thing." And we weren't sure at first either, but it took off. And now, we go to, whether it's the IPPE show or World Dairy show, there are no belt drive fans at any of those shows anymore. It's all EC motors, direct drive.
Greg Schonefeld:
So at the time, you all really stuck your neck out for this product, what made you think that was a good idea?
Craig Morley :
We always thought of ourselves as the leader in the industry, and really, if you're going to continue to be the leader, you have to innovate, and this was our next big thing. You have to have that, at least within a... The ag industry doesn't evolve quite like the tech world and all that. But you've got to have a big thing every seven to 10 years, and so that was our big thing, and it made a huge difference in our business, for sure.
Ross Demerly:
It was a little bit of a pain point that we listened to some of the customers in regards to bearing issues, belt issues, that type of stuff. So it was one of those, where, how can we solve some of these issues? Well, let's get rid of the bearings, the belts, and so forth. And how do we do that? Well, we need a direct drive motor. And as Craig said, we decided to develop our own because there was not a version of this being made by any of the motor manufacturers that we could commercially use.
Greg Schonefeld:
So Ross, was that a fun period of time for you?
Ross Demerly:
Oh, yes. Yes, it was. I mean, it was one of those fun, nervous, scary times all wrapped in one. And so, standing before the board, asking them for money and sticking your neck out and saying, "Yes, I believe in this. Yes, we're going to do this. Yes, we can sell thousands of these." And they're like, "All right. Well, I want you to sign this. I want this in writing." And you're like, "Oh, okay."
Greg Schonefeld:
So the EC motor was a big deal on the tech side. But there are so many different variables that go into designing and choosing the right ventilation system, and as you're about to hear, the consequences of getting it wrong can be disastrous.
Craig Morley :
Well, yeah. I mean, unlike the broiler business, where every building's the same with layer, every producer has their own design in a lot of cases. But also, like we're also saying, the legislation with the bigger cages and the density differences, every time you change that, you're also changing the ventilation, and you can do it wrong. It's funny, there's a lot of companies, especially overseas, trying to get into the fan business. It seems simple on the inside, but there are so many variables to build a fan and it's not as easy as it looks. And same with ventilation design, there's so many little variables, and one little thing you do wrong, it's going to affect your return on investment, your business, basically, and the money you make.
So that's why our philosophy has always been, "Yeah, you may spend a little more money with us, but we're going to assure that it is designed exactly the way it needs to be, and if it's not, we're there to make sure it is." So we're not going to leave anybody hanging. And you know this industry, it's all about relationships, and if you burn a bridge across the country, they're going to hear about it on the other side of the country. So we take care of our customers, for sure.
Greg Schonefeld:
Yeah. Part of what they're buying is your equipment, your fans, inlets, et cetera, but part of what they're buying is your expertise.
Ross Demerly:
Yeah, pretty much. And with the cage-free, now the birds are free to lay their eggs anywhere in the barn, you want them to get into the nest and lay their eggs there. If it's more comfortable over on the floor, underneath the nest, that's where they're going to go lay their egg. And so, as the producers have to learn all this on the cage-free, cage-free takes more labor to run the barn and so forth, the last thing they need is more worry about floor eggs or not eggs being laid in the nests themselves.
Greg Schonefeld:
So I guess ventilation, at the end of the day, it impacts, I guess, productivity, animal health, maybe in a variety of ways?
Craig Morley :
Yep.
Ross Demerly:
Yes. And when it's the middle of the summer and all fans are on, everything's just running wide open. The challenge really becomes that transition area and then cold weather ventilation, that's where some of the challenges really kick in, because I happened to be out at a couple job sites here last month where it got really cold, and they were having some cold spots and hotspots in some of the areas. And the areas with cold spots, the birds were eating more feed to try to stay warm, shell quality becomes less, so you have some issues with egg breakage and that type of stuff because the chickens are not as comfortable and more of the nutrition's going to the bird's maintenance versus into the shell of the egg.
Greg Schonefeld:
Interesting. And then, when you get it wrong, or when someone gets it wrong, not you guys, but when someone gets it wrong, I would imagine it's not an easy fix, because there's the construction aspect of putting it in the first place. I mean, what do you do at that point, especially if the configuration's wrong?
Ross Demerly:
We've been getting heavy into what's called CFD, computational fluid dynamics. And so, we do a lot of modeling of the buildings and looking at predicted airflow patterns within the building. We typically try to do that on new construction, new ideas, new concepts to verify what we're doing. But in the case of trouble buildings, you can go to the building, take measurements, take all this data, then you come back and you model it and you see how the model and what it shows you from an airflow standpoint and troubled areas, and if you can predict those in the software, it makes it much easier then to overcome that, figure out what you need to do to overcome that.
Greg Schonefeld:
Craig, you mentioned before, you've got to come up with something every seven, eight years. Is this the next thing?
Craig Morley :
Yeah, we think so. I mean, there are other companies that do CFD modeling, but not to the level that we're doing it, I don't believe. And so, it's helped us. Actually, we've started using it on the dairy side, because a lot of these dairy producers, this would be their first building, there's a lot of consolidation, and they're also going from 1,000-cow buildings to 10,000-cow buildings, so there's a lot of changes there as well. So they're able to predict, just like we use a lot of cross-vent, but for the circ fans, for instance, it can tell exactly what angle it needs to be at to maximize the airflow.
Greg Schonefeld:
One thing I want to just touch on is we've talked about HPAI quite a bit on the show and there's been talk on the show, but also, you can read just the idea that maybe it's airborne. And doing something around ventilation or airflow, is that something seriously being considered in the industry, and do you guys potentially play a role in that?
Craig Morley :
Yeah. I mean, we have a background in it, just from the hog industry with the PRRS virus, so we've been doing positive pressure filtration for many years, actually. And we believe it is, if you're going to filter, positive pressure is the way to go. It's different to go from a sow building to a large layer, there's a lot more air that you're going to have to filter, but the concept's the same overall.
Ross Demerly:
Yeah. We actually have some customers now that have approached us, and we're working on some building designs actually looking at how do we positive pressure and filter some of the new cage-free houses using filtration, positive pressure, evaporative cooling concepts into it and how do we make it work? So we're actually in process of doing some of that. And as Craig mentioned, we've also started running some CFD modeling on some of these buildings to try to get an idea of how do we make this work and maintain uniform airflow in these buildings while we do that.
Greg Schonefeld:
I guess good to know that it sounds like there's preparations being made in case that is a good solution. Where do you see the business going from here? You mentioned your egg, swine, your poultry broiler as well. How do you see the future?
Craig Morley :
Yeah. We're always wondering what that's going to look like. But really, it comes down to, the fans are, efficiency-wise and performance-wise and quality-wise, we feel we're in a really good place. However, the vortex fan's been around around 25 years, so we are going to the next generation of that. And we've got some concepts that are unique that we're going to pull in, which some of the similar type analysis that our engineers use are on the components of the fans as well when they're doing the design. So it's that.
One of the things as well is it's getting more and more precise. And so, we've got it 90% dialed in, and we have another 10% to get it perfect. And so, that's where a lot of potential sensors on equipment, so cooling inlets and gathering all that data, and then allowing the controller to basically adapt to both the outside environment and inside environment and just really get that ventilation perfect. Some of that exists now, but it's in its early stages, I think, but I think that's going to be part of it. And then also, to help on the performance side, but also help on the maintenance side, give you an idea if your fans are slowing down, if it's a belt drive, for instance, you may need to tighten the belt and those type of things. And again, those things do exist, but not on the mass market at this point.
Ross Demerly:
I agree. The whole data acquisition, AI type of thing for controls, machine learning type of stuff within these buildings to make smarter decisions on ventilation.
The other thing is one of the new styles that's gaining popularity is the aviary style with the pop-out outdoors and allowing the birds to go outside. Well, now, that creates a whole nother type of ventilation issue and concern. How do you maintain a negative pressure or a positive pressure when you have all these doors open in a barn? And so, we're looking at different designs and how to do that. We're partnering with our European sister company and looking at some of their product, like chimney fans to bring air into barns to help with some of that. We're looking to Europe. In some of these cases, they tend to be a little ahead of the curve when it comes to some of the environmental things, and so what are they doing? How are they doing it? What products do they have? And so, as some of that makes its way here to the US, we're hoping to be ahead of the curve when it comes to having some of the products that we need to be able to do that.
Craig Morley :
Some of the things they're working on there as well is heat exchangers. That seems to be catching on in Canada right now because there's some good incentives, but there's some projects here in the US that are using heat exchangers as well. And then, also, intake filtration, but also exhaust filtration too. A lot of that's regulations depending on the country that they're in and the government regulations. But exhaust air filtration, ammonia levels, those type of things, controlling that, I see some of that coming maybe potentially in the future as well.
Greg Schonefeld:
Okay, good. Well, never a shortage of challenges and trying to find new solutions, right?
Craig Morley :
Yeah, that's right. Makes it fun.
Greg Schonefeld:
Ventilation may sound simple, fans and openings, but as we learned, it's another crucial variable producers have to control, because there are real consequences. When airflow is uneven, it shows up in shell quality, feed efficiency, temperature control, and ammonia management, all things that affect cost and performance. And as the industry changes, whether it's away from high-rises or to cage-free, it's another variable that farmers have to get right from a design perspective and then manage. It was interesting to hear the innovation over the years, especially the advent of the EC motor, which has higher costs, but efficiency and maintenance advantages. And with the industry in desperate need of any new ideas to help stop the spread of HPAI, it's good to know people are looking at the ventilation angle as a potential solution. And now, just one question remains.
Craig, Ross, how do you prefer your eggs?
Craig Morley :
Over medium for me.
Ross Demerly:
On my hamburger, I like it over easy.
Greg Schonefeld:
We haven't had that one yet.
If you enjoyed this episode, please share it with a colleague or friend. Word of mouth really helps us to grow the show. And to make sure you don't miss an episode, follow us on Spotify or Apple Podcasts. Until next time, I'm Greg Schonefeld, and we'll talk to you soon.