Dyers, Finishers to Join Natural Gas Lawsuit
Members of the Association of Textile Dyers, Printers and Finishers (ATDPF), a Los Angeles-based trade organization, unanimously decided to join a class action lawsuit filed against transporters of natural gas to Southern California in the wake of a series of crippling rate hikes that threaten to shut down several of ATDPF’s members.
The lawsuit was filed on Dec. 18 in Los Angeles Superior Court and charges the natural gas transporters with antitrust violations under the Cartright Act for collusion and price fixing on the natural gas pipeline, according to Scott Edwards, president of ATDPF.
The price of natural gas has risen four times its price three months ago, Edwards said. Natural gas prices reflect the combined wellhead price, which is the price for drilling for gas, and the pipeline price, which is the cost of transporting the gas. The wellhead price has doubled and stabilized at approximately $9 per therm, Edwards said, adding that the pipeline price has quadrupled and continues to fluctuate. But because the pipeline price varies from contract to contract, he could not identify the current price per therm.
Southern California has a “proliferation of dyeing and print shops,” according to Edwards. These dye houses, screen printers and textile finishers are particularly hard hit by this price increase because they rely heavily on natural gas and are operating on increasingly slim margins, which is making it impossible to absorb the higher energy costs, Edwards explained.
Plus, the dyers and finishers cannot pass the increases on to their customers because they are operating under contracts signed when energy prices were significantly lower, Edwards said.
Edwards said he anticipates some local dyers, printers and finishers will close, consolidate or merge in 2001. Dying and finishing in Los Angeles has already become a niche business, fulfilling small orders rapidly. But an increase in the cost of dyeing and finishing goods as a result of the higher cost of natural gas could also “speed up [the] exodus of jobs and production” overseas, Edwards said.
The ATDPF also considered negotiating directly with the natural gas marketers, according to Edwards, who said that the rationale is, “If the transportation people are willing to finance the cost of gas, that [would be] an indication to us that they believe the prices will fall.”
The organization also considered filing its own class action suit or trying to find some state relief, but agreed, after what Edwards described as “heated” discussions, to join the existing suit.
