MUSKEGON — A lakeshore fabrication shop hopes to capitalize on explosive growth in the U.S. craft distilling industry by offering custom Michigan-made stills and other equipment.
NexGen Mechanical Solutions LLC founder Scott Whitaker, a pipefitter by trade, over the last 13 years developed a niche in serving the region’s distilleries, including New Holland Artisan Spirits in Holland and Muskegon-based 18th Amendment Spirits Co.
After working for other mechanical contractors, he decided to go out on his own in late 2014, mostly to help local distilleries and breweries with mechanical services, process piping and new equipment installations. Now, Whitaker, 32, sees an opportunity to go deeper in serving distilleries by manufacturing custom equipment under the NexGen Craft Stills brand at his shop in Muskegon.
“There’s an open market. Craft distilling is on the rise and will be for a while,” Whitaker said. “I see an opportunity to grow. It’s not just in Michigan, it’s everywhere.”
However, NexGen’s location in Muskegon — near a concentration of West Michigan’s brewing industry — has already led to new business for distilling equipment. The company plans to fabricate three stills for the yet-to-launch Wonderland Distilling Co., which expects to submit its licensing applications in the coming weeks for a production facility in Muskegon Heights.
Wonderland’s ownership team includes three principals from Muskegon’s Unruly Brewing Co. LLC, who had worked with Whitaker and NexGen in the past.
“Scott is very well respected from a welder and manufacturer standpoint in the Michigan craft scene. He’s done work for a bunch of breweries and distilleries,” said Allen Serio, the chief marketing and sales officer at Wonderland Distilling.
Upon seeing the craftsmanship in the pilot 100-gallon still Whitaker made, the partners in Wonderland decided to buy it and tap NexGen to make a 225-gallon and 700-gallon still, all of which will be installed at the company’s production facility at 2217 Lemuel Street.
“When we looked at still manufacturers, to be able to source one that was in Michigan was really cool. We’re definitely excited about that,” Serio said.
NexGen looks to offer an alternative to legacy companies like Kentucky-based Vendome Copper & Brass Works Inc. as well as cheaper Chinese importers.
All of NexGen’s stills are laser-cut, rolled, and hand-fabricated in Muskegon.
“The selling point is our quality, customer service and design customization,” Whitaker said, noting he plans to offer a range of stills, from small pilot models and skid-mounted systems to batch distillation equipment, each custom designed to fit customers’ needs and heat sources. “Every still has a different design, every still is completely different.”
NexGen looks to scale up its offerings as the craft distilling industry continues on a period of strong growth in Michigan and nationally.
Michigan ranks ninth nationally with 62 active craft distilleries as of August 2018, an increase of nine companies from the previous year, according to data from the Louisville, Ky.-based American Craft Spirits Association.
Nationally, the ranks of craft distilleries grew 15.5 percent to 1,835 last year. The industry accounted for 7.2 million cases of retail sales volume and $3.7 billion in value, increases of 23.7 percent and 29.9 percent, respectively.
According to the ACSA, craft distilleries invested $593 million in expansions for 2017, up 48.9 percent from the prior year, signalling growth potential for equipment suppliers like NexGen.
“Nationally, our industry has been experiencing exponential growth, mirroring the growth of the craft beer industry only 15-20 years behind,” Jon O’Connor, co-founder of Grand Rapids-based Long Road Distillers LLC and president of the Michigan Craft Distillers Association, said in an email to MiBiz. “While our total number of operators will probably never equal beer, our trend lines are similar. Some challenges with the growth of our industry are startup and capital costs, the regulatory environment both federally and at the state level and the access to talent.”
Despite well publicized talent woes in the manufacturing sector, Whitaker believes he has a secret weapon that will allow him to scale his company to meet the demands of the business as it grows.
As a signatory contractor to Local 174 of the West Michigan Plumbers, Fitters and Service Trades Union, if NexGen gets inundated with orders, Whitaker can call the union hall to staff up accordingly with certified welders or other workers.
“Being a union contractor works for me; it would be impossible otherwise,” Whitaker said, noting industry titan Vendome also is a union shop. “I can get certified and highly skilled workers with a phone call. … These guys are professionals. I know what skills they come with.”
Whitaker worked as a journeyman prior to deciding to go into business for himself as a contractor and start NexGen. He credits the union with helping him access the resources he needed to establish and launch the business.
“They made it super easy and helped me with how to set up and get my business license,” Whitaker said.
Now, he’s learning to try to balance all the aspects of running a business, while still actually building stills and working on jobs at the same time. The process of bootstrapping NexGen has been “overwhelming” at times, but he’s been able to start and operate the company without going into debt.
“The stress of a business loan was something I did not want to do at this point,” he said, noting he’s begun focusing more on running the business, including working with a vendor to build a new website and develop a marketing plan, particularly for distilleries. He’s also planning to hire someone to handle sales and marketing for the company.
“This gives me the ability to grow the way I want,” he said.