California film extruders that must run 24 hours a day, seven days a week say June electrical-rate increases have penalized their plants. Many companies saw their monthly power bills double, according to two groups.
A letter to Gov. Gray Davis from the California Film Extruders and Converters Association said member companies are laying off workers and considering moving out of state.
``Already one company in our industry has closed a plant and moved to Texas,'' said the letter from CFECA Executive Director Norma Fox. ``Two others have purchased plants in Kentucky and North Carolina from where, because of the energy costs, they can ship product into California at a lower cost than producing here.''
Industry leaders have pressed the issue in separate Sacramento meetings with a Senate staff member and Kari Dohn, policy director in the governor's office.
An Aug. 31 meeting was scheduled with state Public Utilities Commission staffers, Robert Bateman, president of Roplast Industries Inc. in Oroville, said by telephone. The threat to their operations is ``an unintended consequence of the [PUC] rate increase,'' which became effective June 6.
``The PUC needs to make some adjustments so 24/7 people have an escape route,'' Bateman said.
Bateman and James Kelly, chairman of Emerald Packaging Inc. in Union City, are using a 15-point white paper titled ``Relief for 24/7 Manufacturers.'' Roplast and Emerald are CFECA members.
The Society of the Plastics Industry Inc.'s Western Region in Irvine, Calif., and the Printing Industries of California support the polyethylene extruders' opposition to the rate increase.
``We think [Bateman] has a valid point,'' said Paul Appelblom, president and chief executive officer of Jatco Inc. in Union City, Calif., and national SPI vice chairman. ``There is an inequity.''
Data is being gathered about the rate's impact on small and midsize around-the-clock manufacturing operations. A researcher in the governor's office is seeking information from electrical utilities, Bateman said.
``We are looking to establish information about the number of companies in the state affected and the extent to which employment may fall,'' he said.
Bateman said the rates damage energy-intensive recycling operations.
``We have shut down our recycling line. Virgin [resin] people are not paying these prices for energy,'' he said.
CFECA circulated a broadside attacking the rate structure.
``The electrical costs of our member companies have increased over 100 percent'' in comparing July bills of 2001 and 2000, Fox said in the Aug. 23 letter to Davis.
The governor's office had no immediate response.
The Los Angeles-based printing group found that one-half of survey respondents have experienced 100 percent increases, and others are in the range of 60-65 percent, said Gerry Bonetto, vice president of government affairs.
The PUC imposed the hikes to cover debt incurred by the state to buy electricity, the CFECA letter said.
``Many plastic film companies have to keep their processes operating around the clock. These companies have been hit with increases in power costs of 100 percent or more as opposed to a more typical 50-60 percent for companies who do not operate around the clock.''
Film processors ``cannot reschedule production to avoid peak usage without layoffs, and indeed, several of our 24/7 members are already laying off workers,'' CFECA said.
CFECA added, ``For many [firms], California has been a difficult environment for years. They've weathered worker compensation increases, rising wages and tighter air-quality restrictions. But our member companies have endured.''
The letter seeks immediate action.
``If California is to survive as a manufacturing center, something must be done soon. Electrical increases must be scaled back to a more manageable level.''
Processors cannot pass along rate increases because ``customers can simply turn around and buy from non-California producers who aren't taxed by excessive energy costs.''
Survival is the current mode.
``They are cutting jobs, slashing capital spending and looking to trim any fat they can find,'' the letter said. ``But no one believes this will be enough.''
CFECA addressed the 766-word letter to Davis and sent copies to state legislators, U.S. Sens. Dianne Feinstein and Barbara Boxer, and key California daily newspapers. Newport Beach, Calif.-based CFECA said California's blown film industry employs 5,000 and generates annual sales of about $750 million.
Bateman's industry contacts helped convince The Wall Street Journal to run a strongly worded editorial Aug. 24 titled ``Flower Power.''
See the Opinion section of www.plasticsnews.com for the complete text of CFECA's letter to Gov. Davis.