Deal may help keep Oklahoma City tire plant and its 1,800 jobs

Tuesday, March 30th 2004, 12:00 am

By: News On 6

OKLAHOMA CITY (AP) _ A tentative agreement between an electrical utility and a power producer should allow the Dayton Tire plant to stay in business and maintain its 1,800-person work force.

The plant gets low-cost steam from PowerSmith Cogeneration, which produces steam along with power, which is purchased by Oklahoma Gas and Electric Co.

A 15-year contract under which the utility agreed to buy power from PowerSmith expires in August and OG&E had said earlier that it did not want to sign a new contract.

Under the tentative agreement, the utility would enter into another 15-year contract with the plant. The two sides now will formalize a contract, which is expected within the next three weeks.

``This is total elation for the business community,'' said Dean Schirf, with the Oklahoma City Chamber of Commerce.

Dayton uses steam from PowerSmith to make tires, and the plant's energy costs could have increased $5 million to $7 million a year if a settlement hadn't been reached. Now that OG&E has agreed to buy electricity from the power plant, PowerSmith is free to negotiate a new steam sales deal with Dayton.

``Assuming we do get resolution here soon, it's a very positive benefit for our employees as well as for Dayton Tire,'' Dayton plant manager Barry Owens said. ``Timing is critical because we are in the process of budgeting for the future.''

Dayton's plant makes mostly lower-performance tires, which carry a relatively small profit margin. The plant is up for a $50 million upgrade that would allow it to make higher-performance tires, ensuring more local job security.

Without the upgrade, business and community leaders have speculated the plant could close or downsize.

Owens said the deal does not guarantee the plant will receive the upgrade. A bill in the Legislature to give a tax benefit to certain companies that upgrade plants also would help, he said.

PowerSmith and OG&E have been in a dispute over whether the utility should have to buy electricity from the power plant. OG&E has said the PowerSmith contracts are too expensive and that it wants to buy a McClain County plant.

PowerSmith has said it would sell electricity to OG&E for the same price the utility would pay for power from the McClain County plant.