LAKE LILLIAN (AP) -- Vehicle engines that burn fuels other than gasoline have incinerated fortunes over the years.
Twenty years ago, when gas prices were soaring, 120,000 "alternative fuel" vehicles rolled off assembly lines every year. Today, the number has dwindled to about 3,000.
But Bi-Phase Technologies, a tiny company in this southwest Minnesota farm town, has a deal with Ford Motor Co. that will offer some truck buyers a cheaper, cleaner alternative to gasoline -- an engine fueled by propane.
The improbable arrangement involves applying new technology from Minnesota in Mexico, where Ford installs Canadian-made engines in trucks assembled in Cuautitlan, near Mexico City.
Bi-Phase Technologies, a start-up company with only 40 employees, has patents on a propane fuel-injection system designed to be compatible with engines made to burn gasoline.
Bi-Phase created its factory in a former school, tearing down the walls between what used to be classrooms for seventh- and eighth-graders. There, workers piece together the fuel injector parts by hand.
David Bennett, the company's chief executive, who invented the propane fuel injector the company sells, spent years working for an alternative-fuels company based in Los Angeles before moving to Lake Lillian to start his own company a few years ago. His wife, Valerie, grew up in Lake Lillian.
Much of the money backing Bi-Phase came from Schwan's Sales Enterprises Inc., the food company based in Marshall. Schwan's is one of the largest users of propane trucks in the United States.
Meeting Ford quality standards sometimes has been difficult for Bi-Phase, a company with shallow pockets. The automaker is being especially careful in an effort to avoid the kind of warranty problems that potentially can cost millions of dollars.
Bi-Phase fuel injectors go through rigorous testing, a process that's turned up problems that have had to be resolved with the oversight of Ford engineers.
Bennett said that he and his engineers have been working long hours to assure that the company has found a way to eliminate minute variations in the propane flowing through its fuel injectors -- variations Ford would not tolerate.
"They took fantastic risks," Bennett said of Ford/Mexico. "It's a gamble I think ultimately we'll win."
Ford has 1,200 orders for propane-fueled trucks in Mexico now and expects that number to rise to 4,000 next year, said Marcos Perez, director of product development at Ford/Mexico. The trucks will be sold only in Mexico.
The propane fuel injectors made by Bi-Phase have proven to be superior to those made by rival companies, he said. The parts made by others generally are designed for the "aftermarket," allowing truck owners to retrofit gas engines to run with propane.
"We tested a number of systems which did not work that well," Perez said. "They're being used in the aftermarket and failing."
He said Ford hit upon Bi-Phase while "trying to find an alternative that will be more robust and reliable."
Forces involved in the deal include international economics, corporate cost-cutting by companies, a unique investor and changing technology.
Oil-rich Mexico is a developing country with a greater appetite for foreign goods than the hard currency to pay for them. To hold down domestic demand for oil, while boosting petroleum exports that bring in cash, Mexico imposes high taxes at the pump. Gasoline costs about $2.50 per gallon, about a buck more than the same amount of liquid propane gas.
That fact means rising demand in Mexico for commercial trucks that can burn propane. But Ford has a problem.
The computers in its truck engines aren't designed to work with the kind of conventional, carburetor-linked propane devices that can be added to GM and Chrysler trucks, Bennett said.
Result: Ford has watched thousands of customers eager for propane-fueled trucks turn to rival Big Three companies.
To win some of the sales now being lost, Ford/Mexico got together with Bi-Phase, a company whose fuel injectors work with the fuel-controlling computer chips in Ford engines, Bennett said.
Ford will get the propane fuel injectors for about a third less than the $4,000 to $4,500 the devices will cost in the aftermarket. Bennett believes the endorsement of a Big Three automaker should boost sales.
Bi-Phase is testing its propane fuel injector on a truck on loan from General Motors.
Brainerd Dispatch ©2013. All Rights Reserved.