Dyers, Textile Firms Frustrated Over Energy Pricing
Despite the recent plunge of natural gas prices, most of the apparel industry’s beleaguered textile and dye-house owners will still be paying exorbitant prices while much of the region will be enjoying cuts of as much as 48 percent.
These recent cuts, mainly for consumers and small businesses, won’t be much help to those dyers and textile companies that rely on natural gas for their boilers. Most of these firms are locked into long-term contracts, which ironically are aimed at cutting costs in the long run.
The situation has many local dyers and textile outfits frustrated as they look for relief on the legal front as well as from federal agencies, among other solutions. In the meantime, they will pay prices of at least $2 per unit above current rates.
“We were told that the prices would go up, so we signed on [to a long-term contract] at $8 per decatherm; now the prices are down to $5.10,” said Vijay Shaw of Los Angeles-based Washington Garment Dyeing & Finishing.
Shaw was paying prices of as much as $21 per decatherm in recent months, which drove gas bills from about $5,000 to as much as $45,000 per month. The crisis has forced Shaw to lay off 65 of his 80 workers and operate at a loss for the past year. Other companies such as Anaheim Mills and L.A. Dye & Print have been forced to shut down as a result.
“This whole situation has been like a very dirty game,” said Shaw. “It’s becoming like the stock market.” Like others, Shaw said he is hoping some relief will come through litigation against several energy suppliers that are being accused of collusion and artificially driving up prices for their own benefit.
Washington Garment Dyeing & Finishing is among a dwindling list of dyers and finishers looking to survive in already tepid business conditions. Saeed Sassooni, principal, Saba Textiles in Buena Park, Calif., said he would like to see some type of assistance from state, local or federal agencies but doesn’t see it happening soon.
“For the first time in 14 years, I really don’t know what to do,” he said.
At Almore Dye House in North Hollywood, Calif., operators just last month locked in a multi-year deal at about $8.60 per decatherm, only to see prices drop $2. The company has been passing some of the charges on to clients—a strategy company principal Don Teichner said has been received with some resistance. But he said the long-term contract is beneficial as it saved the 83-year-old company from the grief others have faced recently.
“We have a pretty good contract that covered us over this latest cycle,” said Teich-ner. “We’ve looked at cutting expenses in certain areas, and the fact that we’ve been in business for so long has helped.”
Still, many operators, including Jack Achvan of F&J Dye House based in Commerce, Calif., said that gas prices are just a piece of the whole puzzle.
“We should all be in better shape, but we’re not,” Achvan said. “We’re all under tremendous pressure.”
Recent cuts in consumer prices have been linked to increased production, milder weather and conservation. Several energy analysts have said the pressure in court along with public sentiment has put the pressure on energy companies to keep prices in check, hence the recent cuts. Southern California Gas Co., which is a division of Sempra Energy, one of the companies involved in current litigation, this week slashed prices for residential and small-business owners by 48 percent, the biggest cut in four years. This follows a move by the Federal Energy Regulatory Commission to approve cuts on electricity prices.
Scott Edwards, president of the Association of Textile Dyers, Printers and Finishers, is advocating caps on wholesale prices, which would help business customers like garment dyers.
“Stability is going to come with caps on these wholesale prices set to a national average at the well head,” he said. “Even at this stage, windfall profits are still being made [by suppliers]. We’re still not out of the woods yet.”
