WDB ‘running like gangbusters,’ implements distancing measures

By Ron Kotrba | May 26, 2020

“We had to make changes to how we load trucks, and how we deal with drivers and even our own employees,” said Tom Brooks, general manager of Western Dubuque Biodiesel in Farley, Iowa. “A lot of changes have been made because of the coronavirus, and we plan to leave them in place—even after the pandemic is over.”

Biodiesel Magazine spoke with Brooks in mid-May about how the coronavirus pandemic and the economic downturn are affecting operations at his 33 MMgy biodiesel production facility.

Brooks said before the virus outbreak, truckdrivers servicing Western Dubuque Biodiesel would enter the office to provide paperwork and had access to the employee breakroom and bathroom facilities.

“That’s not allowed anymore,” Brooks said. “We now have a window slot through which they can put the paperwork, and we provide [portable toilets] for them outside to mitigate the possibility of them spreading the virus to our employees. They pretty much stay in their trucks the entire time now.”

It’s not just truckdrivers at Western Dubuque Biodiesel following new social distancing protocols. “Our plant personnel do not go into cross-contaminated areas at all,” Brooks said. “Plant workers stay in the plant, loadout personnel stay in the loadout area, and the same with those in our lab. Lab personnel get their mail through a window slot. This way, if someone has the virus, we are reducing the chances they’ll give it to someone else.”

Brooks noted that Western Dubuque Biodiesel implemented these changes before the authorities issued procedures. “We wanted to be overly cautious,” he told Biodiesel Magazine.

With spring fuel demand nosediving due to stay-at-home orders, Brooks said he is worried about how this will affect renewable volume obligations (RVOs) under the federal Renewable Fuel Standard later this year and next. He is particularly concerned for those biodiesel producers that did not lock in forward sales.

“I sold all of my gallons for 2018 in one day in November 2017,” Brooks said. “The same happened in late December [2019] when the tax credit passed, I sold all my gallons [through most of 2020] at a profit. If you don’t have forward sales, you’re going to take a beating when RIN prices drop.”

Brooks said hedging is a necessity to be successful and profitable with forward sales contracts. “The downside of hedging is you need money to make margin calls,” he explained. “It’s not simple. It’s a complicated process.”

Western Dubuque Biodiesel learned the hard way how to navigate this process in 2010 when several market factors coalesced, ultimately resulting in a shakedown in the biodiesel industry. Today, however, Brooks seems to have mastered the risk management aspect of running his biodiesel plant. “We’re running like gangbusters,” he said.

Before the pandemic hit, Western Dubuque Biodiesel began evaluating a new technology to expand production. This has been put on hold, however, as a result of the health crisis, according to Brooks. Board members have opted to redistribute money back to shareholders rather than reinvesting in plant expansion, Brooks said.

Despite operating at high capacity right now, Brooks said the ongoing crisis is giving his employees extra anxiety. “Our employees are smart and in-tune with what’s going on,” Brooks said. “They ask me, ‘Will they change the RVOs?’ and ‘Are we able to run late into this year?’ I don’t know the answers, and that causes anxiety.”  

The long-term effects of social distancing are also anxiety-producing. “Employees can’t just go to work and come home, go to work and come home,” he said. “If they aren’t going out and enjoying themselves, this has an effect.”

The silver lining of all this, according to Brooks, is that social distancing in some respects is good—from the standpoint of the flu, for instance. “It also allows companies to look at efficiencies and make them better,” he said. “If they can become more efficient in tough times, then they can operate with better margins in great times.”

Brooks said he is “thankful and blessed” for the legislators in Iowa who have put policies forward that have done so much to create a market for biodiesel. “And we’re also thankful for the federal tax credit,” he said. “If not for that, we would be hurting a lot worse than we are. The industry would be too.”

Finally, Brooks said he is also extremely thankful for the National Biodiesel Board and key figures on the federal affairs team that have helped get the biodiesel industry in the fortuitous position it’s in right now.

“I’ve been in this industry for 25 years,” Brooks said. “I’ve seen bad times and I’ve seen great times. This too will pass. Hopefully sooner rather than later. If we keep a positive attitude and weather the storm, we’ll come out on the back end of this better as a company—as an industry. It will not be without pain, there will be growing pains, but we’ll be stronger as an industry if we can weather this together.”  

 

 
 
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