Power crunch hits smaller businesses doubly hard

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Posted at 9:48 p.m. PST Wednesday, Jan. 17, 2001

Power crunch hits smaller businesses doubly hard Tech suppliers squeezed between high bills, lost productivity BY JON FORTT Mercury News

Richard Wills figures he lost about $100,000 when the rolling blackout hit his Fremont manufacturing plant at noon Wednesday.

The owner of D&H Manufacturing Co. said his precision parts company, whose customer list includes tech heavyweights Applied Materials and Novellus Systems, had been warned all week that there might be outages anytime, but no one knew when.

Then, just like that, everything shut down for 90 minutes.

Wills lost money like thousands of business owners across Northern and Central California as the state felt the practical effects of a concept that has until now been little more than mumbo-jumbo: the rolling blackout. The California Independent System Operator ordered power cut to thousands of homes and businesses throughout the day, operating on the premise that planned inconveniences for thousands are better than rendering the whole power grid unreliable.

Waiting for help

It's a strategy of biding time until legislators settle on a longer-term plan to bail out California's electric utilities, which have been leveled by a cocktail of high wholesale energy prices, uncooperative weather and utility deregulation.

The blackouts darkened enterprises from the corner deli and dry cleaner to major corporations. Many of the area's biggest tech plants have backup systems for emergency power. But smaller businesses are forced to rely on the power grid for their lifeblood of electricity.

``We cleaned machines, wiped things down, we had a shop meeting, did basically nothing, killing time,'' Wills said. ``Probably 30 or 40 percent of my crew went home.''

Wills employs 120 people making a variety of parts for high-tech machinery. The monthly power bill at his energy-dependent business is about $20,000. Wednesday's outage cost him nearly $100,000 in lost productivity, he said.

Small manufacturers are squeezed in a financial vice: On one side, the inevitability of higher power bills. On the other, rolling blackouts cost them not only from lost productivity but from damaged goods.

Lingering effects

David Goodreau, chairman of the 1,000-member Small Manufacturers Association of California, said if the power crisis is not resolved soon, small businesses could feel the effects long after the lights come back on.

``I think the biggest impact is going to be on how the business community views California. The question is, will California companies lose business because of a perception that this may not be a good place to manufacture components?'' Goodreau said.

``When you're talking about short lead times to make products, when you have to worry about being down for a day, it can be a big deal. And like with anything else, I can guarantee you that the small companies take it a little bit harder than some of the larger companies do.''

The corporate titans of Silicon Valley -- companies like Intel Corp. and Cisco Systems Inc. -- operate like cities unto themselves; they have generators to supply power when disaster strikes. For small manufacturing operations though, businesses employing fewer than 500 people, blackouts can stop everything.

That's a big deal, since often these smaller shops make equipment the titans need. While they are not name-brand companies, they are a significant part of the reason California has a manufacturing economy bigger than any other state's. Several California manufacturers said if the power crisis renders them unable to supply the parts their customers demand, they expect to lose contracts to competitors in other states.

For many small manufacturers, the electricity plan is simple. If the power goes off, the day is over. That means California employees start feeling the power crunch in their bank accounts, too.

``Ninety people go home without pay'' if the power goes out, said Thomas Coss, owner of Santa Clara Plating Co. ``Our business is electroplating and it's absolutely dependent on having electricity.''

Meanwhile business owners like Michael Brugge of T-M Manufacturing Co. in Sunnyvale are left wondering when and if the lights will go out, and grind their businesses to a halt. He said it wouldn't be so bad if he had some warning so he could plan -- for both financial and safety reasons.

Safety concerns

Brugge said he is concerned that if his factory's power shuts off without warning, equipment could fall. T-M, a machine and welding shop, uses powerful electromagnets to lift equipment that weighs between 100 and 1,000 pounds.

``It'll shut us down and mess up our deliveries,'' he said. ``We'll send everybody home, that's the only choice. We can't have everybody sweeping the floor for two hours.''

http://www0.mercurycenter.com/cgi-bin/edtools/printpage/printpage.pl

-- Martin Thompson (mthom1927@aol.com), January 18, 2001

Answers

The safety issues concerning these blackouts have not been brought out yet. People are going to get hurt in a big way.

-- Martin Thompson (mthom1927@aol.com), January 18, 2001.

Isn't it strange that the world and our stock market had a major reaction to Russia defaulting on debt a couple years back and when California which has a much bigger GDP than Russia has rolling blackouts its no big deal. The stock market has been celebrating the last few days while California which if it was a nation would have the fifth or sixth biggest GDP in the world and Wall Street doesn't think much of it. Unbelievable!

If I was a business owner in California I would be steaming! Generating my own electricity, so to speak.

-- Guy Daley (guydaley@altavista.com), January 18, 2001.


Moderation questions? read the FAQ