Mills' energy costs rising

Mills' energy costs rising
By Scott Stafford,
Berkshire Eagle StaffBerkshire Eagle

Local paper manufacturers say increasing power prices result in benefit cuts and lower wages.

Tuesday, April 10NORTH ADAMS — Executives from several local paper-manufacturing firms in the Berkshires yesterday told a member of Gov. Deval L. Patrick's cabinet that a stiff increase in energy costs in January further hampered paper mills already facing stiff competition.
Secretary-designate of Labor and Workforce Development Suzanne M. Bump met at Massachusetts College of Liberal Arts yesterday with members of the Berkshire legislative delegation, economic development officials and other business leaders to discuss challenges faced by the local paper industry. The meeting was called in the wake of — and partly as a result of — news that the former Fox River Paper Co.'s Rising Mill in Housatonic is closing next month, leaving 137 workers jobless.
"Energy is one of the most alarming and concerning cost increases we've had to deal with, and it results in diluted benefits and more difficulty in recruiting workers," said Mike Standel, mill manager for Schweitzer-Mauduit International Inc., which operates a paper mill in Lee. "It also makes it difficult to stay viable in a very competitive marketplace."
Energy costs at the Lee mill have risen 171 percent since 1994, according to Roger G. Scheurer, environmental and manufacturing projects manager at Schweitzer-Mauduit.
This year alone, Standel said, the energy bill will rise roughly $770,000.
"When you add that much to the cost of doing business, it is a significant bump to overcome," he said. "It's quite staggering."
Scheurer said the mill — even though it is trimming costs, laying off workers and using every opportunity to conserve power — would lose "a couple of million dollars" this year.
Energy costs at the Lee plant were easily the highest in the company, he said.
The harrowing experience at Schweitzer-Mauduit was echoed by paper executives around the room.
One official said it also affects their ability to hire and retain workers.
"It is harder for us to keep skilled people at diminishing wages when they also have to pay higher energy costs at home, driving a need for higher wages," said John Schulte, a vice president at Crane & Co.
Contacted later by The Eagle, Edgar Alejandro, manager of economic and community development at Western Massachusetts Electric Co., said the January increase was the first in several years.
"It was a significant increase, but one that has been deferred for a long time," he said. "And as all of these companies have struggled, so has WMECO. With deregulation (of the electric utilities) came cost-cutting and layoffs."
Alejandro also noted that much of the increase is due to the cost of upgrading the electrical grid system throughout southern New England — upgrades that will eventually result in a more efficient infrastructure, more reliability and less dramatic cost increases. So for the short term, the cost of the upgrades will continue to be a factor in determining the price of electricity.
"Energy costs more in New England than in any other region of the country," Alejandro said. "Part of it is the insurmountable amount of environmental regulations."
At the same time, said state Rep. Daniel E. Bosley, D-North Adams, initiatives to encourage more renewable and regional sources of energy are gaining ground. In the long run, these will have the effect of providing cleaner energy from more local sources that would hopefully result in fewer and smaller price increases.
But for the short-term, several at the meeting yesterday agreed, the increasing price of energy will continue to be a factor for manufacturing facilities in New England and may necessitate more aggressive power conservation efforts or investment in technology that allows plants to generate their own power.
The cost of energy is also an important consideration for companies looking at relocating or expanding in the Berkshires, said Tyler Fairbank, president of the Berkshire Economic Development Corporation.
Bump explained that labor and energy issues were not factors that contributed to the closing of the Rising Mill. Officials from Neenah, the company that bought Fox River Paper, told her that the main concern was the antiquated equipment and the significant capital investment needed to upgrade the machinery. She noted that a number of different parties have expressed an interest in the Rising Mill for a variety of different uses, but nothing is likely to happen there soon.
After the meeting, Bosley told members of the press that while there may not be much that can be done to alleviate the short-term increases in energy, other opportunities to reduce the cost of doing business here will be explored.