Sonoco Crellin Inc. will stay in Chatham, N.Y., thanks to a $1.03 million package of electricity-rate and tax breaks. The company had looked at new sites in Indiana and Texas, but decided to stay in New York, headquarters for the 13-plant operation.
For 50 years, the injection molding firm has been one of Chatham's highest-paying em-ployers. But the company recently looked elsewhere because, in part, it complained that the region's power costs were too high. The headquarters are near a picturesque stretch of the Hudson River, a few miles south of the capital at Albany.
In a deal announced May 25, Sonoco Crellin agreed to remain in its 67,000-square-foot plant because a local industrial development board and New York State Electric & Gas offered $1.03 million in electricity-rate and tax breaks. The county development authority, the Columbia Hudson Partnership, said the deal keeps 200 jobs from leaving the area.
Another factor that helped Sonoco Crellin remain was the $200,000 state-funded injection molding technician training program at Columbia Green Community College, said Jayme B. Lahut, Columbia Hudson Partnership executive director.
Leslie H. Lak, executive vice president of Sonoco Crellin, said the company has grown from a single facility in Chatham to a major molder with machines ranging in size from 30-500 tons of clamping force and annual, division-wide sales of more than $100 million. The firm - a subsidiary of Sonoco Products Co., of Hartsville, S.C. - plans soon to add a 1,000-ton press.
``It is our intention to stay here another 50 years,'' Lak said.
Neither Lahut, who put the incentives package together; nor Lak; nor spokesmen for NYSE&G would reveal what power rate breaks had been agreed upon.
Sonoco Crellin's complaint of high energy rates in New York state is similar to that of processor groups in neighboring Massachusetts, Rhode Island and Connecticut.
Rate-reduction deals have become increasingly popular as Northeastern states scramble to retain plastics processors and other large employers.
John Anderson, executive director of the Electricity Consumers Resource Council in Washington, noted, ``There are tremendous numbers of deals being cut'' like that of Sonoco Crellin and NYSE&G. ``A lot of times, deals like this are costing other customers, including smaller businesses, a lot of money. Some customers can be convinced to stay in one place through such `cost-class subsidies,' but the people who are having to pay for such subsidies don't realize the charge until much later.
``Will that be good or bad for the companies receiving the benefits? I don't know,'' said Anderson. ``Even deals that look really good today will not be good in the future.''
And according to NYSE&G's manager of retail pricing, Henry Host-Stieen in Binghamton, N.Y., some of the utilities' customers will face power rate hikes of 9 percent over the next three years. The lesser rate increases will go to industrial customers, Host-Stieen said.
Brian Backstrom is a local critic of the Sonoco Crellin/NYSE&G deal. Backstrom, vice president of CHANGE-NY, an Albany-based tax reform and privatization lobbying group, called for tax and utility reform, rather than continued deal making with individual companies.
``Creating the best tax and regulatory climate in the Northeast will have people knocking at our door instead of clamoring to get out,'' he said. New York's attempts to ``create a regulatory climate that encourages economic growth'' is stalled in the legislature, he said.
Similarly stalled is Rhode Island Gov. Lincoln Almond's pro-business legislative package. In support of a program that would deregulate electric power at the state government level, Almond took to the highway in a bus on May 29. Among his stops on the publicity-gathering tour were processor Polytop Corp. in Slaterville and compounder Teknor Apex Co. in Pawtucket.
Anderson argues the greatest benefit from utility company deregulation will be lower rates.
Anderson pointed to a survey released May 30 by Washington-based free-trade lobbying group Citizens for a Sound Economy which noted, ``Across the U.S. economy, competition in the electric industry would result in benefits valued at almost $110 billion a year.''
``Without competition in the electric industry, we will be a trillion dollars poorer in the next five years - a trillion dollars that won't be available for job expansion or higher wages,'' a CSE statement said.
The study concludes, ``If utilities had to compete for customers, the typical American household would immediately save about $216 a year.''
Backstrom said, ``You can do away with a lot of supposed energy incentives [to keep firms from moving]. It amounts to the politicians picking the winners and losers in a capitalist market. Every company that has threatened to move, or gotten a glimmer in their eye to move'' from New York state ``has been approached by politicians from both sides of the aisle'' to stay, he said.