Indiana: New Energy to idle ethanol plant through the winter; 40 workers laid off

Source: By JIM MEENAN South Bend Tribune • Posted: Tuesday, November 6, 2012

New Energy ethanol plant in South Bend.

New Energy ethanol plant in South Bend. (November 5, 2012)

SOUTH BEND — New Energy Corp. tried to hold on as long as it could, Russ Abarr, its president, said today.

But late last week, the South Bend ethanol plant joined several other prominent ethanol industry companies by idling its plant, resulting in the lay off 40 workers.

“Due to the challenging economic conditions facing the ethanol industry, the New Energy Co. has decided to cease production and temporarily idle the facility,” Abarr read from a prepared statement.

“We’ve been looking at what we can do and trying to avoid it,” he said. “The decision to lay off long-standing, dedicated employees of New Energy was extremely difficult.”

The employees helped provide the foundation of the company over the past 28 years, Abarr said, adding that the plant is currently for sale.

The plant is being prepared to be idled into the winter months, he said. He would not reveal how many employees would remain, but did say the company is focusing on controlling costs during the shutdown.

“We have a staff sufficient for the maintenance of the facility to keep it in a stable idled state,” he said.

But, he added that he is hopeful of calling back employees sometime, though no guarantees were made.

“I believe definitely it will (re-open),” Abarr said, citing the plant’s excellent location in regards to corn supply, the ethanol market, transportation and local labor.

Thirty years ago, the decision to build a plant in South Bend was due to those reasons, he said. “I strongly believe it continues to be one of the best locations in the country.”

The company’s only other layoff in its history took place in June 2011 when 30 workers were laid off. It, however, had a slowdown in June.

Abarr cited three realities that impacted the industry forcing New Energy’s hand. They were:

Continued high corn prices, which resulted from the recent drought conditions.

Ethanol inventories remaining at high levels despite reduction in overall ethanol production. The inventories are higher now than a year ago.

Gasoline prices and lower gasoline demand. “Ethanol demand is related to gasoline demand,” he said. “The average price of gasoline is 26 cents a gallon less than it was a month ago.”