High electric bills dragging down California businesses

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High electric bills dragging down California businesses Thursday August 16, 2001, 03:35:02 PM


Associated Press Writer

SAN FRANCISCO (AP) -- The electric bills of many Silicon Valley businesses have doubled, putting area jobs and the future of many companies at risk, business groups said Thursday.

A rate hike which went into effect in June raised average electric rates by 38 percent for commercial customers and by 49 percent for industrial customers around the state.

"The Legislature throughout this crisis has just looked at buisness as the ATM machine for this problem, without the forethought or the foresight of what this is going to do to the state's economy," said Jack Stewart, president and CEO of the California Manufacturers & Technology Association in Sacramento.

California energy regulators also changed how utilities charge businesses for their energy use. After years of receiving a bulk discount for using large amounts of electricity, the state took the business discount away earlier this year.

The CMTA, the Silicon Valley Manufacturing Group and the San Jose Silicon Valley Chamber of Commerce said the state should not help two financially ailing utilities climb out of debt using money that would come partially from the electric rates businesses pay.

Lawmakers are trying to decide whether to pin the majority of around $3 billion in bonds to help Southern California Edison on businesses, or spread it among all utility customers.

The CMTA Web site's "Energy Casualty Report" claims 10 companies have laid off workers as a result of higher bills, four have shut down and four have stopped hiring new workers. Names were not listed by request of the companies, the site said.

Stewart said his group had not estimated how much higher power costs have cost California businesses, but said they are worried after just one round of higher bills.

Since January, the state has spent more than $9.5 billion buying power for the customers of Pacific Gas and Electric Co., Southern California Edison Co. and San Diego Gas and Electric Co.

"Everybody's going to have to be a part of the solution and its our hope that no one segment is disproportionally affected more than any other," said Roger Salazar, a spokesman for Gov. Gray Davis.


-- Martin Thompson (mthom1927@aol.com), August 16, 2001


Energy Crisis Hurting Factories Where Fabric, Clothing is Dyed (KFWB/AP) 8.16.01, 2:45p --

The state's energy crisis has caused natural gas and electric bills to skyrocket at Southern California factories where clothing and fabric are dyed, forcing many of those firms to raise prices or go out of business.

Factories are staying with basic colors --black, gray and camel -- to save money.

The fashion and apparel industry contributes $47.2 billion a year to California's economy, while the state accounts for about 12 percent of the clothing manufactured in this country, the Los Angeles Economic Development Corp. said.

There are 763,000 apparel and textile workers in this country and more than 147,000 work in Los Angeles, the U.S. Bureau of Labor Statistics shows.

"About half of the dyed clothing that California produces is sent to other states," said Jack Kyser, chief economist for the LAEDC.

Specific numbers are elusive because it depends on what designers and stores order, Kyser said, "but people in small stores all around (this country) will see a change."

At LA Dye, manager Henry Licon said it used to cost customers $75 to color two or three yards. Now, such small orders are out of the question.

"It just costs too much to keep the vats going," said Licon, whose company colors fabric for a variety of small clothing manufacturers.

The situation is most dire in areas served by Southern California Edison, which has raised rates an average of 30 percent for industrial users in recent months. Garment makers report that dye houses in places like Vernon, Avalon and Orange County have been forced to shut down by high energy costs.

Gary Schifter, a salesman for Peyk International, a Los Angeles-based clothing supplier, said he used to send his fabric to a dye house near his Vernon warehouse but it went out of business.

"I am really feeling the crunch," Schifter said. "There have been so many layoffs, and it's a very depressed industry right now. Business is down about 50 percent."

Before the energy crunch, a dye house might produce a minimum of 300 yards of red or blue fabric during a single run. Now, it costs so much to keep the machines running that the minimum order has jumped to about 2,800 yards.

Most small manufacturers can't afford to place such large orders for colors that might languish on store shelves.

At ABC Dye House in Los Angeles, owner Menashe Gamliel said he has seen his combined electric and gas bills grow from $11,000 to $26,000 a month. His bills from the Los Angeles Department of Water and Power didn't change drastically because the utility owns its own power plants and has sidestepped wholesale price increases. But his natural gas bill was another story.

"We are surviving, but it's a struggle," he said, adding that his 32 employees serve about 50 makers. "We are still working with the same prices (to dye garments) that we have for years. But we are now charging customers a 5 percent surcharge to (compensate) for the increase in our bills."

Since April, natural gas rates in California have climbed as high as $18.80 per thousand cubic feet, compared to $4 to $7 elsewhere in the country. Last month, The Gas Co. cut its rates for homes and small businesses by 48 percent.

Gamliel said his business is down nearly 50 percent because manufacturers cannot afford the increased prices he has had to charge for dyeing garments.

Ilse Metchek, executive director of the California Fashion Association, an organization that represents manufacturers, retailers and dye houses, said the energy crisis is not the only problem. Garment makers also are facing increased competition from foreign manufacturers.

Apparel makers are turning to dye houses in Mexico, China and Cambodia because labor is cheaper and faster. In Mexico, many work around the clock for less than the $4 a day minimum wage, according to Labor Statistics. And in Cambodia, workers claimed they received $30 a month, $15 less than their minimum wage.

At Maternity Blues, a small retail store in downtown Los Angeles, owner Jerry Ojeah said her more "impressive" colors will come from overseas.

"With the minimum (domestic prices) being so high, we can only afford to dye a few basic colors," said Ojeah, who also oversees MBB Marketing, a manufacturer of maternity garments in this country. "The cost of dyeing has been passed on to the retailers. So smaller stores are just going to have black, stone and maybe camel colors."

Fabric importer Marvin Jacobs of Los Angeles-based LMJ and Associates said he doesn't expect this to be the end of the color palate for clothing.

"You will still have your high-tone fashion colors this fall like the plums and rusts but the smaller retailers are going to have to import them, which means that locals are losing their jobs and consumers will pay more there," Jacobs said. "But bigger places like the Gap will not be affected because they can afford the minimum (dye orders)."

Luckily for consumers, fashion experts in New York are predicting that this fall's hottest color will be black.

"Black and white are the biggest sellers anyway, and in New York, they say it's going to be a season of black, camel and navy," Metchek said.

-- PHO (owennos@bigfoot.com), August 17, 2001.

Now I've heard everything. "Black, white, and camel" ...the Official Colors of the energy crisis.

Now all we need is a flag -- and a motto. How about "Semper Obscuris" written on a darkened lightbulb, over stripes of those three colors?

-- Andre Weltman (aweltman@state.pa.us), August 17, 2001.

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