Video: KiOR Stopping Production, Working on Improvements

[bitsontherun QtBa7f7N]

COLUMBUS, Miss. (WCBI) — To preserve cash flow and reduce expenses, KiOR will stop production at its Columbus plant for the next three months while it makes changes it hopes will improve production and efficiency.

But company officials say the production shutdown won’t mean layoffs of current employees. Instead, KiOR CEO Fred Cannon, speaking during a conference call Thursday morning, says they’ll be busy with the strategic changes.

“They will continue to be there. There will be a lot of work for them on the efficiencies we’ve discussed,” Cannon told WCBI.

Until the new equipment and processes are installed and working, the company will delay any planning for a second Columbus facility.

The company is trying to raise $10 million for investments in the Columbus plant this year and another $22 million for research and development.

Cannon says both are critical to the company reaching its production goals and maintaining cash flow by next year.

The Columbus plant has been down for much of November and December in a cost-cutting move while the company analyzed operations and devised needed changes.

Even with the shutdowns, the plant, the first of its kind to turn wood products into gasoline, diesel and fuel oil, operated for 65 days in the last three months of the year and produced 385,000 gallons of fuel; for the year it produced 894,000 gallons.

In the last quarter, it shipped 115,000 gallons of gasoline, 111,000 gallons of diesel and 26,000 gallons of fuel oil.

Cannon says the debate in Washington in changing alternative fuel standards drove down prices so low that the company couldn’t afford to continue production for now until it can get efficiencies to the point where it is producing at least 80 gallons of fuel for every ton of wood.

Cannon says he hopes once changes — new equipment, modifications and revised processes — are made during the first quarter, the Columbus plant can begin production again in the second quarter.

But to make any of it happen, Cannon admitted the company must get financing in place.

Thursday’s announcement comes as the “Greenfuels” industry is coming under fire, including a 60 Minutes report Sunday on CBS that looked at KiOr and similar alternative fuel industries and the billions of dollars that have been spent on them. In addition, former Secretary of State Condoleezza Rice, one of the highest profile names on the KiOR board, stepped down last month.