The news that biodiesel maker Imperium Renewables will be cutting 24 employees (or more than half of the staff) from its Grays Harbor plant, announced Thursday night, won’t be a big shocker to anyone who has followed the company’s yearlong downward spiral. The Seattle-based biofuel firm, which has raised more than $200 million over its lifetime, withdrew an IPO that could have raised an additional $345 million, back in January 2008, and soon after reduced staff from a high of 107 employees. In the past year, Imperium has also lost a contract to supply Royal Caribbean with 18 million gallons of biodiesel annually and closed its Hawaii office.
So the signs were all there — and the economy only made things worse. The biodiesel market has been hit especially hard by the downturn. Demand for both diesel and biodiesel has dropped with the economic slump and dropping fuel prices have really hurt the margins of biodiesel makers. David Woodburn, an analyst with investment bank ThinkEquity Partners, told us last week that “The pressure is really to a point that biodiesel processing using canola oil or soy oil is unprofitable these days.”
Imperium said last night that this latest reduction would “reduce costs and preserve capital in the face of dramatically reduced global demand for biodiesel, high feedstock prices and extreme volatility in the petroleum fuel markets.” Imperium CEO John Plaza said the decision would enable the company to “survive and grow when the market turns around for the biofuels industry.”
We’re still waiting to hear back on how many employees are left at the company. But the cuts will come at a plant that sits on 12 acres at Port of Grays Harbor in Washington. When it opened in August 2007, the facility was supposed to be the largest biodiesel production facility in the U.S., with an annual capacity of 100 million gallons per year. Plaza said, “We understand this is a difficult blow to the Grays Harbor community. We remain committed to Grays Harbor and are doing everything we can to reverse the course our industry has taken.”
On top of the recession crippling the global biodiesel industry, U.S. biodiesel firms have recently faced a serious blow from across the pond: the European Union plans to slap a punitive tariff on imports of U.S. biodiesel for six months, making it less attractive in the European market. According to Reuters Imperium will face a 29 euros ($37.46) per 100 kg duty. Ouch. Now Plaza and Imperium are just hoping President Barack Obama, and his administration’s strong support of the biofuel industry, will help them survive the hard times.