Colorado: Soaring gas prices slam dye firm

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From the February 16, 2001 print edition

Soaring gas prices slam dye firm

Costs are up 169 percent in one year

Cathy Proctor Business Journal Staff Reporter Keith Spiegelman is in a race against time to install new equipment he hopes will save his business.

But it's not competitors that threaten his existence.

It's not new technology. It's not the economy. And it's not foreign competition, although that worry hangs over him.

It's the mind-boggling, skyrocketing cost of energy that may spell the end of Rocky Mountain Dyeing & Finishing Inc.

"How do you sit down for the year and anticipate a 300 percent increase in gas prices?" Spiegelman asks.

"How do you budget for that?

"You can't."

While natural gas prices have ticked to record-breaking levels for a year now, the sticker shock for residents and businesses has set in only recently. Xcel Energy Inc., formerly Public Service Company of Colorado, has had four rate hikes in the last seven months -- hikes that have roughly doubled this winter's natural gas bills compared to last year.

Spiegelman said his company's natural gas bills have gone from $3,900 for December 1999 to $10,475 in December 2000 -- a 169 percent increase in just one year. January's bills were even higher -- about $12,000, said company vice president David Flores.

"The last three months of bills have absolutely gone through the roof," Spiegelman said.

The company's total natural gas bills in 1999 were about $47,000, Flores said, adding that for 2001 he's been told to expect bills in the $83,000 range.

Residents facing high natural gas costs have flooded local and state charities with calls for help. The first bill passed by the state Legislature this year allocated $10 million to help low-income residents pay heating bills.

But when Spiegelman called the governor's office, no one returned his call. Calls to his elected representatives in the Legislature were met with sympathy, but nothing more.

Officials in state agencies, the Legislature, local chambers of commerce and business associations all said they don't know of any place a business can apply for help, but agree that the cost of energy is rapidly becoming a major issue in the business community.

"There are rumblings. As time goes on, it's going to get louder," said Tamela Lee, director of the Denver Small Business Development Center.

The Small Business Administration does offer a credit guarantee for companies that need help paying energy bills, but no one in Denver has signed up for it, a spokesman said, possibly because banks are not requiring the guarantee on such small amounts.

"Most businesses like us don't have the funds built in to handle these kind of increases," Spiegelman said. "If the costs don't come down, it will be tremendously difficult to keep our doors open."

Rocky Mountain Dyeing & Finishing, with sales last year of about $1.3 million, has been at its location near Dahlia Street and Evans Avenue, in various incarnations, since 1952, Spiegelman said. The company coats fabric used by a variety of customers including Gates Rubber Co. and also fills a niche market in the fabric-dyeing industry.

The company dyes fabric in specialty colors for the Martha Stewart home furnishings line and has worked with sneaker-famed Converse Inc., dyeing fabric in quantities that are too large for small plants but too small for the industrial dyeing operations.

"We filled a niche for a number of years," said Spiegelman, who took over the company in 1995 and has doubled Rocky Mountain's dyeing output.

Natural gas is used to heat water for dye baths and to run giant dryers. Energy bills have been fairly constant over the years, he said.

The company had a contract to buy natural gas at a cap of $2 per dekatherm from a gas marketer, but that contract ran out last June and the company was forced to buy on the spot market, Spiegelman said.

That spot market peaked in December at more than $10 per dekatherm before falling back to close at about $5.50 per dekatherm on Feb. 14.

Rocky Mountain is racing to install new equipment that uses less natural gas, dyeing fabric with cold water and drying it overnight. Spiegelman figures the equipment will reduce his natural gas usage by 20 percent or more while doubling output.

But he's worried about how long it will take to finish installation and train his 17 employees on the new equipment.

"We have a solution to our problems in place, but it's not there yet," he said.

In the meantime, the company has curbed costs where it can. Dryers that used to run every day are now used every other day. Jobs that might run into overtime hours are left until the next day.

"We're cutting where we can, we're doing what we can," he said.

Spiegelman said he's trying to keep his employees busy on other projects around the plant when the equipment is turned off, but there comes a point when there's nothing left to do and he has to send them home.

"I'm trying to keep them working. This is a good company," Spiegelman said.

Beyond the current natural gas crisis, Spiegelman worries about what it might mean for the industry.

Foreign competitors, who aren't facing high energy costs and enjoy a cheaper labor force, are not sitting on the sidelines, he said.

"Right now my customers can buy imported fabric that's already dyed cheaper than buying it and dyeing it here. I'm worried that we could lose market share and not ever regain it," Spiegelman said.

http://denver.bcentral.com/denver/stories/2001/02/19/story8.html

-- Martin Thompson (mthom1927@aol.com), February 19, 2001


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