Friday, September 30, 2005
Two local businesses have closed rather than pay escalating natural-gas bills.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
Business owners are considering drastic steps as rising natural-gas costs eat at their profits.
Ray Mashorda, owner of County Gardens in Austintown, is looking at installing a motorized "heating blanket" in his greenhouses. The blanket would close at night, blocking the spaces between the trusses overhead and keeping the heat down where the plants are.
Officials at General Extrusions are wondering if they should go find their own gas. In the 1970s, the Boardman aluminum extruder dug a well away from its property, but a gas company provided it with free gas in exchange for gas from the well, which is no longer producing.
Natural-gas prices have been rising the past few years and have spiked even higher recently. The increases have been hard on heavy gas users, such as some manufacturers and greenhouses.
Closing
At least two local businesses couldn't survive the increases.
Campbell officials said this week that Calex Corp. is closing soon, primarily because of natural-gas costs. The aluminum extruder employs 175.
Inglis Greenhouse in Boardman is in the process of closing its 90-year-old business. Owners say they can't afford gas bills, which totaled $429,000 last winter and threaten to be higher this winter.
The average residential price for natural gas in the United States increased from $9.51 for a thousand cubic feet in 2003 to $13.03 this year and is expected to be $15.33 next year, said the federal Energy Information Administration.
"It's scary," Mashorda said.
Over the past two years, he's used expanding foam to block every little hole he could find in his greenhouses. He's added insulation to roof vents and doorways.
He's in the midst of expanding and building more greenhouses, so he won't be able to install the heating blankets for about two more years.
Despite the high cost of gas, he wants more greenhouses because he says he can grow plants cheaper than he can buy them from someone else.
Keeping heat up
He added that he's determined to keep his heat up this winter to provide proper conditions for plants. He said he doesn't want to raise prices because of energy costs for at least another year.
"We might make less profit, but we'll wait and see," he said.
He's hoping that he can gain more sales as Inglis goes out of business.
Tim Parks, owner of Parks Garden Center just south of Canfield, said he doesn't want to fool around with temperature settings or growing dates because the company has to maintain the quality of its plants. Instead, he will look for small ways to make the business more efficient.
Costs of other supplies are rising as well. The price on plastic trays that hold plants went up 20 percent last year, 62 percent this year and probably will rise next year, he said.
Area garden centers eventually will have to charge a little bit more, he said.
"I look at it as a partnership. We're going to have to work harder, and the customer is going to have to understand that we have higher costs," Parks said.
Herb Schuler Sr. sells aluminum, not plants, and his company is increasing prices Monday because of natural gas costs and expects to raise them again at the first of the year.
General Extrusions has a fixed-price contract for half of its natural-gas usage and pays market prices for the other half. The market prices are 250 percent higher than the fixed price, which expires at the end of the year. "Next year's going to be brutal," said Schuler, company president.
The company uses millions of cubic feet of gas a month in heat-treating and other processing work. Even with that volume, General Extrusions doesn't receive a discount. The price Thursday for gas to be delivered in January was $14 per thousand cubic feet.
That price has Schuler thinking about digging a gas well. He said the up-front cost would be large, but it may be worth it to receive free gas for 10 to 15 years, the normal life expectancy of a well.
Tim Roberts, a spokesman for WCI Steel in Warren, said Ohio manufacturers are pushing state officials to take actions that would bring down gas prices. WCI officials would like to see more public lands and the Great Lakes opened up for well drilling and a streamlining of the approval process for new pipelines, he said.
WCI has cited increased natural-gas costs as one of the reasons it has posted financial losses the past two months.
shilling@vindy.com