Price of natural gas causing layoffs at some plants

Monday, February 5th 2001, 12:00 am
By: News On 6

NEVADA, Mo. (AP) -- Manufacturers in southwest Missouri, northeast Oklahoma and surrounding states say the soaring cost of natural gas this winter is crippling their efforts to compete with overseas companies.

The monthly bills are so high, in fact, that some of the businesses are responding by cutting back on the workweek while others are cutting back on workers.

"We're looking at basically about $170,000 additional expense each month," said Dennis Gatewood, office manager for Mission Clay near Pittsburg, Kan.

Mission Clay, which makes clay pipes used in sewers, has laid off 22 of the company's 72 employees so far this winter. It could be a month before the company knows whether gas prices recover enough to bring any of them back, Gatewood said.

John Spencer is plant manager for Crane Plumbing, a Nevada company which makes toilets and other bathroom products. The gas bill went from $20,000 for one month last winter to nearly $100,000 for the same month this winter.

Spencer recently cut back his employees to four day work weeks, in part because this is a slow time for the building industry, but also because his gas costs have risen uncontrollably.

"I really think on something that is a necessity, something the American economy depends on to remain stable, there should be government regulation as to how much these prices can escalate,"

Spencer said.

Chris Rueckerl, a plant manger with FAG Bearings Corp., said it was the same story at his plant in Joplin, where the monthly gas bill has doubled to $350,000.

Because each of these businesses is a large consumer of natural gas, they can buy their gas directly from wholesale companies.

Smaller businesses don't have the luxury of shopping around.

They are stuck with their local distributor, such as Missouri Gas Energy for southwest Missouri.

Each of the natural gas distributors serving the region has increased prices two to three times last winter's rates, passing along what they say are price increases dropped on them by the wholesale suppliers.

Dennis Ryan runs two dry cleaning businesses, one in Joplin and another in Miami, Okla. "Every dry cleaner has a boiler," he said. "That's what makes the steam to press the clothes."

At his Miami business, the bill went from $500 per month to more than $2,500 for one recent month.

These small business owners say there is no way they would survive if they jerked prices up as rapidly and as sharply as the gas companies have done to them. Some states are investigating the price hikes to guard against gouging.

"They really need to look closely at what kinds of expenses these people have to justify such a dramatic increase," said Lou Anne Daniels, owner of The Brown Bag, a deli in downtown Joplin.

Her gas bill for the restaurant went from $25 during the summer to $400 in November. She is expecting even worse news when she gets her next bill.

And she said she already is starting to see the effects of high gas prices trickling in from her suppliers, such as the bakeries.

"My bread costs will probably go up," she said. "It is going to effect every price on everything."