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|
18 Closures 4 | 5 Production & Citing Losses 10 |
manufacturers from 50% to 200% |
Energy Casualty Report Press Release | Send an Impact Story
Previous Reports: August 1 ECR | August 16 ECR
Stories 3.1 through 3.11 reflect companies that already closed facilities, laid off workers, canceled some production or stopped plans to expand 3.1 Casualty: Layoffs (50+) Rate Increase: 400%
Based on a detail and comprehensive assessment of factors, my company made the decision to remain in California Key factors contributing to this decision included incentives offered by the State of California, local jurisdiction and utilities. In regard to the utilities, a major part of our decision to stay in business and/or remain in California was based on securing the benefit of electricity discount rate provided by Southern California Edison through its Economic Development Rates, (EDR). Now with the out of control electricity rates forced by the artificially created shortages and wrong doings of certain elected officials our electricity rates have more than quadrupled. We need to congratulate every one involved for accomplishing this great task on behalf of every one in California specially those suffering the most like Parter Medical Products Inc. These electricity rate increases along with the drastic increase in Workers Compensation Insurance, higher property or lease rates, combined with the current business climate in addition to the fierce competition from companies located in other states or other countries .are forcing us for immediate cease in our manufacturing operation and/or eventually plant closure. At current electricity rates, the electricity cost now is more than 12% of our total manufacturing expenses compared to only less than 3% prior to the rate changes. We have laid off more than 40% of our work force, cut back more than 50% of our manufacturing operation as a result of these impacts to our cost structures. We are experiencing that the environment for manufacturing our products in California extremely difficult or almost impossible. We could easily manufacture and distribute our products in any other state or country at much lower cost without any difficulties. As a minimum in the other states besides lower electricity rates, we do not have to tolerate the steep workers compensation insurance rates that they are presented to us in California only. I like to share with you my letter of plead for help to the officials representing Southern California Edison, City of Carson, California Manufacturers Trade Association, California Trade and Commerce Agency, South Bay Economic Development Partnership and other officials back in June of 1998. Parter Medicals’ business consist of primarily use of plastic injection molding machines for the manufacture of its products for sales and distribution. This particular type of operation unfortunately is not designed for interruptible format. The consequences of financial losses due to waste in material, product, and energy are greater than the incremental savings offered by the electricity rates. I like to emphasize that Parter Medical has implemented all recommendations provided by Southern California Edison for energy savings and specially use of available newer energy efficient equipment in our manufacturing operation. At this time under these environments we are left with no other alternative except to curtail or probably shut down our entire manufacturing operation and lay off our employees while investigating alternatives.of moving to other states or countries. 3.2 Casualty: Layoffs (21) Rate Increase: 79% We have seven restaurants serving Breakfast, Lunch and Dinner in the central San Joaquin valley. We have been in business over fifteen years. The "High Energy Cost", most definitely has had a negative impact on our business. Not only has it increased our operating cost, but it has increased all our suppliers operating cost, so they have increased their cost on to us. It most definitely has had a negative effect on our daily customer count, on average we are down 12-15%. Obviously, this has forced us into layoffs. To date, we have had to layoff three full-time employees in each restaurant, totaling 21 people in the last 60 days. I am very nervous about increasing our menu prices, to cover our increased costs, due to the large drop in our customer count. Then also, coming January 1, 2002, we are facing ANOTHER +.50 per hour wage increase. This will have a $2200,00 - $2,400.00 monthly increase to our Labor Cost. This increased labor cost, mainly goes to our largest group of minimum wage employees, which are our Servers, "Tipped Employees." They currently are all making $20.00 - $35.00 per hour income. Here is what we have done, and the impact the High Energy has done to us.
3.3 Casualty: Layoffs (5) We have been forced to increase our pricing at a time when our customers are unable to incur the increase resulting ain a 12 percent decrease in revenuesand an increase in operating costs. A number of our customers are no longer in business as a result of their increases energy cost and a marginal business. 3.4 Casualty: Layoffs (4) Rate Increase: 110% Banks & Co. can not pass on extra cost. 3.5 Casualty:Layoffs (4) Rate Increase: 50% Crown Printing is a 100 year old company and this is the worst impact we have ever seen. We have lost 25% total profit for the year. 3.6 Casualty: Layoffs (3) Scrimco's profits are way down, fewer employed. 3.7 Casualty: Layoffs (2) Rate Increase: 53% My company has seen a 53% increase in electricity costs. This, happening during a severe slow down in the semiconductor industry. If both the slow down in the industry and the increase in electricity costs continues I will be forced to close my business. I currently employ 23 people. They will be out of jobs and on unemployment. 3.8 Casualty: Layoffs (1) With increased energy costs, I can no longer compete with other states and countries that do the same work and manufacturing. This also makes it hard to pay employees. 3.9 Casualty: Production & Cite Loss Rate Increase: 216% A plan has been implemented to move 30% of our production to Washington and Mexico in the next three years. Net effect will be a loss of 67 jobs. Total wages lost to other plants will be over $3,000,000 per year. 3.10 Casualty:Production & Cite Loss San Francisco Bay Brand Inc. is simply just going to move manufacturing offshore as cost of business in California has become staggering. 3.11 Casualty: Hiring Freeze Rate Increase: 65-75% The company I work for has seen energy costs rise 60-75%. Our company can't raise our prices or rates to cover this additional expense, since most revenue is paid to us through set contract terms. Therefore, we have had to implement other cost cutting measures in 2001 such as not filling vacant positions, implementing cost containment measures in employee benefits packages, and decreasing the company 401(K) matching contribution. |  | Stories 3.12 through 3.21 reflect companies that are in danger of laying off employees, moving facilities or canceling expansion plans in California 3.12 Wetsel-Oviatt Lumber Company founded in 1939 is a small, family owned lumber manufacturer. The Company is located in El Dorado Hills, California. The Company employs approximately 120 personnel in the sawmill facility and in our timberlands division. The Company owns timberlands in El Dorado County that is managed for balanced growth and harvest. Over the years, the Company has fought a general decline in overall timber availability from both public and private lands and the strengthening of our dollar that has allowed a rush of lumber imports in substitution of domestic production. Taken together with a complex set of mandated regulations by both the State of California and the federal government, managing a forest products operation in California is a challenge. The Company produces, in large part, a commodity product that is traded on the open market on an offer and bid basis. Generally, the prices for our product have not kept pace with the brisk demand for lumber and forest products due to the expanding volume imported from Canada and other off-shore producers. We have been fighting a two pronged war, on one side the diminishing timber that is available for harvest and the open floodgate of imports. Now we have the energy crunch of 2001. A few years back, the Company signed a contract with Pacific Gas and Electric (PG&E) to allow the utility to interrupt the Company either thirty times per year or cumulatively for one-hundred hours according to the utilities decision. This was a reasonable approach to allocating electricity that might, at times, be in short supply. Last fall, the utility exercised the interruptible option but made a diligent attempt not to completely disrupt our production schedules. In January, the State operated ISO took control of the interruptible scheduling. Between January 1st and January 20th, the ISO used the entire year’s allocation of 100 hours in a short time span. Their methods were frustrating, arbitrary and completely incomprehensible. The ISO would interrupt our production schedule for six hours, allow us to go back on-line for 5 minutes and then interrupt our schedule for six more hours. This went on for days at a time. Then, when their methods ceased making any sense, they would interrupt our usage on a Sunday afternoon when we did not have any scheduled production using up their allocation foolishly. By the end of January when our production results were posted, we estimate that we lost $500,000 for the month in real money that was never realized nor made up in later months. The Company utilizes natural gas for our dry-kilns; most of our lumber production is sold in a dry condition. While electricity production was reaching new lows, the price of natural gas was reaching new highs and the squeeze became even tighter. Anticipating enormous increases in our electricity rates that did occur, the Company approached our production crew (members of Lumber and Sawmill Worker’s Local 2729) and discussed our options. We could pay the double digit percentage increases for electricity or try to hold the line. To their great credit, the crew opted to move their shift to a period that would incur the lowest possible energy cost to the Company. The crew starts their shift at 3:00 a.m. and finishes at 11:45 a.m. with most of our production hours considered off peak. This is a tremendous hardship for our crew and their families, many of whom have been with the Company for more than twenty years. They have had to completely re-order their lifestyle and their internal clocks to remain competitive and employed. The Company, along with many in our industry, has for years installed energy saving devices throughout our plant from capacitors and soft starts to ballasts in our light fixtures. We stagger the start of our electric motors to hold down demand loads. Conservation has been a part of our management style for a number of reasons: it saves money and many times enhances production. Therefore, the Company had already put into place most of the programs suggested by our utility and the ISO. The only program left was to reschedule our production crew. We constantly attempt to analyze the effects of this change and have arrived at some generalizations. Our incidence of injury has increased since moving the shift and that is a cause of grave concern, our level of production and the quality of our product has deteriorated and the crew and their families are tired. We can’t move out of state and we don’t want to close the doors but the energy crunch of 2001 is close to the final straw for this small family owned Company. 3.13 Rate Increase: 150% I have a small business located in Bakersfield California - that I started in 1968. Presently we have 35 employees that depend on our company for their primary source of income. Cost of doing business continues to rise without us being able to increase our selling price. Our PG&E bill in June was $700. July the same bill with less power consumed was $1800. 3.14 Rate Increase: 60% Our May bill for electricitywas $13,000 and our June bill was $22,000. We estimate we will suffer the hit of over $70,000 in excessive charges through the holiday season. This will be a direct hit to our bottom line and will weaken our ability to retain good employees and continue to expand due to an erosion of the profits of our company. We have been in business here for over 17 years and in that time have grown to where we employ 60 people in a top notch candy manufacturing company. We have paid millions in wages and taxes and for that we are privileged to bail out a sorely mismanaged entity. 3.15 Rate Increase: 76% Our facility has shifted 40% of its peak load to the partial and off peak periods. To do this has impacted our employees and operations. One operations begins its shift at 5:00 a.m. and works until 12:00 noon. Another operation has changed to a two shift operation in which one shift begins at 3:00 a.m. and works till 12:00 noon. Another shift begins at 6:00 p.m. and works until 3:00 a.m. In spite of these efforts to reduce peak load and energy consumption during the peak period, the facility's electrical bill has risen by 76%. Without taking these measures, the bill would have risen 100%. 3.16 Rate Increase: 200% Significant impact on product costs and profitability. It hads made us less competitive and opens the door to competition from outside California. 3.17 Rate Increase: 70% Our customers in Mexico would accept Price Increase 3.18 Rate Increase: 169% Causing us financial hardship because we can't increase our prices due to foreign competition. If this "ATM" policy continues , we will be forced to reduce our workforce and their wages which will bring financial hardship to our communities. We need help! 3.19 Rate Increase: 98% When BUSSCO Inc. annualizes this increase, we will be forced to make this up by working a reduced hour week and will look for other ways to save thousands of dollars. We are unable to pass operating costs on to our customers 3.20 Other suppliers are are passing their electicity rate increase to us. We are considering moving our manufacturing out of California. 3.21 Nikkel Iron Works decreased electricity usage by 40% compared to one year ago. Cost remains the same. These increase have contributed to higher product costs and we have passed on a portion to our customers. The balance of the increase we have absorbed. |
