MAUMEE, OHIO, US — Even as the company grapples with a challenging environment in its ethanol business, The Andersons, Inc., Maumee, is well positioned to weather difficulties roiling the nation, said Patrick E. Bowe, president and chief executive officer.
Given the disruption in many industries in the United States at present, Bowe said those in agriculture should feel fortunate.
“At The Andersons, we have a strong balance sheet and good debt capacity,” he said. “We can take hits in the short term. And we feel blessed compared with many other parts of the economy. The ag sector remains strong, and we’ll do what we can to help the US ag supply chain. We’re proud to be part of it, and we’re trying to be nimble and innovative to take care of customers. There have been no disruptions in supply chains, and we don’t think there will be.”
Production facilities operated by The Andersons all fall under the “essential business” exemptions where working restrictions have been mandated. While office employees are working remotely from home, grain elevators and processing and other facilities continue to operate, Bowe said.
“The key thing is making sure we are doing it the safe way, with extra sanitation and social distancing,” he said. “The good news is that most of our facilities are in rural areas and are not very labor intensive.”
Still, numerous changes have been made to heighten sanitation, including the closing of break rooms and maintaining social distancing. These include having truckers loading and unloading at The Andersons’ facilities filling out paperwork from inside their trucks.
“Truckers do not get out of their cabins now,” Bowe said. “They used to come inside for popcorn and to talk to our operators. Our No. 1 priority is the safety and well-being of our associates.”
The ability for The Andersons to navigate rapidly changing conditions amid the pandemic has been helped by a general spirit of goodwill prevailing throughout the industry, Bowe said.
“It’s been the case for our customers in flour milling, soybean processing, feed, ethanol, everyone,” he said. “People have been great to work with and helping one another. Everyone pitches in when the going gets tough.”
Among the four major business segments of The Andersons, Ethanol is one that has been most seriously and directly affected by the coronavirus pandemic.
On March 24, The Andersons announced that normal spring maintenance and repair periods would be extended this year at four plants owned by The Andersons Marathon Holdings LLC (TAMH), a joint venture between The Andersons and Marathon Petroleum Corp.
The company’s ethanol and coproduct production in April is expected to be reduced by about 50% of normal, the company said. Production will resume to more normal levels “when demand improves,” the company said.
“This is related to fuel demand, which is estimated to be down 40% to 50% because of the pandemic,” Bowe said.
He said ethanol has been operating with thin margins for an extended period.
“And our ethanol facilities are some of the top operating plants in the industry,” he said, adding that a plunge in the price of crude oil has exacerbated conditions in the ethanol market.
Amid the pandemic, Bowe said The Andersons has been doing its part to help in the communities where it operates. In addition to financial donations to the United Way of Greater Toledo for lunches to feed children who are out of school and a similar donation in Kansas City, Missouri, US, the company has sought ways to help wherever it operates facilities.
“We want to do what we can to support our communities for people in need,” he said.
Creative ideas to help have been generated by associates at The Andersons, Bowe said. One information technology employee devised a way to use a 3D printer to produce face shields, gear meant to protect the entire face from exposure, not just the mouth and nose.
In Texas, The Andersons donated to a hospital a supply of the highly sought N95 masks that in the past had been used by employees when working around dust.
“It is not a massive quantity, but rightfully they are going to the medical community,” he said. “We are down to the minimum amount we need to keep our employees safe from dust.”
Among The Andersons’ other businesses, prospects for the Trade (agriculture) and Plant Nutrient (fertilizer) segments look positive going into spring. Following devastating flooding in 2019, Bowe said he is hopeful for better conditions this year.
“This is a big time of year for our fertilizer business,” he said. “The weather looks good going into planting season — drier and warm. We could use a good start to planting, especially in the East.”
While grain and oilseed markets fell initially with other financial markets in reaction to the coronavirus spread in the United States, Bowe said prospects for The Andersons Trade business have brightened.
Demand from feeders, flour millers and other grain processors has been strong. Demand from China has been expected for months to improve because of the phase one deal completed early this year, and signs that China will step up buying from the United States have surfaced in recent days.
Rail, The Anderson’s fourth business, has been soft for some time, and conditions have not improved much this year with low car loadings in many industries.
“Grain car demand has not been strong thus far this year, but a larger 2020 crop would help grain car demand,” Bowe said.
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