BETTER DAYS in July 1999 when the company was still known as Midwest Grain Products of Illinois. Now-closed Protein and Starch Plant is at right and the grain elevator is directly behind it. Parts of the distillery can be seen in the background.
Since early November, employees of MGP Ingredients of Illinois’ Pekin plant have received nothing but bad news.
First, the announcement that the Protein and Starch Plant would close permanently Nov. 12, resulting in 35 layoffs. Then in mid-January came a temporary suspension of fuel grade alcohol production, and more layoffs, until market conditions improved.
Market conditions didn’t improve, and yesterday the company announced its exit from the ethanol business altogether. There will also be a suspension of food grade alcohol production at Pekin. As a result, the plant’s remaining 65 employees will be laid off.
The effects of yesterday’s announcement on Praxair, which processes carbon dioxide gas piped from MGP’s distillery, is unknown. Praxair is also a rail user.
The only good news in all of this is that MGP Ingredients apparently intends to restart some operations after 90 days.
MGP Ingredients, until recent cutbacks, had been a major user of rail transportation, receiving many carloads of wheat flour from the company’s Atchison, Kansas plant. Much of the alcohol and Distillers Dried Grains (DDGS) produced there left the plant by railcar.
The Tazewell & Peoria Railroad, which serves the plant, has now lost a large chunk of traffic. Union Pacific, which hauled MGP’s wheat flour from Atchison to the TZPR for final delivery, and receives a good portion of the outbound traffic, will also take a hit.
If food grade alcohol production resumes, there should be some rail business, but only a little at first. The news release states that 85-90% of the Pekin plant’s 90 million gallon-a-year alcohol production capacity was dedicated to fuel grade alcohol. That leaves no more than 13.5 million gallons for remaining business. And who knows if the beverage alcohol shipments to Frank-Lin Distillers in San Jose, California for the manufacture and packaging of Skyy Vodka will continue to leave the Pekin plant? (Atchison is obviously closer).
Per the news release, MGP is looking to increase its industrial and beverage alcohol markets. For the sake of all who have lost their jobs, we can all hope they’re successful.
UPDATE (Feb. 5): The Pekin Daily Times is reporting this story here. I hate to say it, but there’s no way MGP is going to maintain their Pekin plant just to make a small quantity of food grade alcohol. They should have sufficient capacity at Atchison, Kansas, so I expect MGP will announce the permanent closure of its Pekin plant well before 90 days (the company itself will probably file for Chapter 11 by then). Hopefully, a buyer will be found. Times are not good for the ethanol industry, and any “For Sale” sign will be up for a long time.
- David P. Jordan