Area firm's expansion plans appear to be back on track
Originally published in The Buffalo News, Nov 6, 2006:

Polymer Conversions' expansion plan is the sort of project local leaders love to laud: a $3.7 million project by a homegrown manufacturer, adding 15 new jobs to its 80-person work force in Orchard Park.

The New York Power Authority backed the plan with low-cost power, and the Erie County Industrial Development Agency approved an incentive package.

But Polymer's frustration with obstacles it faced with a utility to tapping into the low-cost power nearly derailed the expansion.

Jack Bertsch, who owns the business with his wife, Joan, said he was prepared to drop the project in favor of simply adding a warehouse, outsourcing additional production the expansion would have handled, and keeping Polymer's work force unchanged.

Now the picture has brightened, and the expansion appears it will happen in Orchard Park after all.

New York State Electric and Gas is showing signs of cooperation, following a visit by the utility to the plant last week, said Benjamin Harp, Polymer's chief operating officer.

"I think both parties agree," Harp said. "Now we just have to tie things up."

Until last week, the outlook was much gloomier. The Polymer executives say they were perplexed by the months-long process they endured to try to gain access to the low-cost power.

Polymer said the problem was the company wanted to conserve power through making some upgrades while it was also expanding, but that it wouldn't be eligible for low-cost electricity until it showed it was stepping up its use of power from NYSEG.

"We were willing to invest," Harp said. "We were willing to add employees. And we were willing to be a good steward of power."

Beyond the details of their own dispute, the executives saw the situation as an example of why some companies find it difficult to expand or stay in New York state.

Officials with the state Public Service Commission, which regulates utilities, say they understood Polymer's frustration. As the situation unfolded, they said they wanted a resolution suitable to both Polymer and NYSEG.

"We certainly, absolutely want the company to stay," said John Reese, the commission's director of economic development and policy coordination. "We want them to expand in New York."

Electricity costs, and how to reduce them, are a critical piece of Polymer's expansion plan, Harp said. Power is Polymer's third-largest expense, after raw materials and personnel, he said. The company makes plastic injected molded components used by medical product producers and other customers.

The Power Authority in May awarded Polymer 450 kilowatts of "expansion power," low-cost hydropower it allocates to companies that meet its criteria. The ECIDA approved its incentives the same month.

Polymer planned to expand its plant with space for up to 16 additional production machines. But Harp said the project hit a snag that he attributed to Polymer's companion plan to reduce the amount of energy it used from NYSEG.

Within its existing walls, Polymer has 22 production machines, and is replacing 16 of its old machines with new ones that will be 60 percent more energy efficient.

"When we switch to high-efficiency equipment," Harp said, "that will counterbalance the new [power] load in the addition."

Polymer asked NYSEG to lower the company's baseline, which is essentially the amount of power it uses annually, to reflect the more-efficient machines it is introducing, Harp said. That would enable Polymer to access low-cost power, which the Power Authority was still ready to provide, at about 5 cents per kilowatt hour, rather than the 13 cents Polymer pays now, he said.

"We're not asking for anything we wouldn't want any other local company to benefit from," Harp said.

In early August, Polymer hosted a meeting with representatives of the Public Service Commission, Power Authority, NYSEG, Empire State Development Corp., and Rep. Brian Higgins' office. Harp and Bertsch said they were frustrated that NYSEG didn't follow up with a proposal. Meanwhile, Polymer's expansion plan sat idle.

Public Service Commission officials said Polymer's case was complex, since it involved an expansion and an energy-saving upgrade. They said they also had to work within regulations covering utilities and power usage.

The baseline is typically based on a full year of power usage, Reese said. But because Polymer wanted to reduce its power costs more quickly, the company sought help to speed up things. That required calculating how much energy the new, improved machines would use, to come up with a new baseline.

The process takes time, since it involves determining how many hours and days per week the machines will run, as well as taking into account any seasonal variations, said John Calcagni, the PSC's chief of economic development.

Harp said a breakthrough came last week when a NYSEG representative visited the plant, checking on what was necessary to put meters on Polymer's equipment to track their energy use.

Clay Ellis, a NYSEG spokesman, also sounded optimistic in a Friday statement. "We are pleased to report that we made excellent progress this week," Ellis said. "We hope to have this matter resolved in short order."

Polymer received a recruitment pitch from Pennsylvania while its low-cost power case dragged on. But Bertsch decided against expanding its facilities in Pennsylvania or elsewhere.

At a forum on the state's power programs held downtown in September, Bertsch said that Polymer's annual sales had increased from $300,000 in its first year of business to $11 million today. He also said the company has a payroll of more than $3.5 million and that the company's electricity costs "are about 10 percent of that."

Higgins, D-Buffalo, spoke at the same forum and complained about NYSEG in a letter to Mark Hamister, a local member of the panel which hosted the forum. "The irony is that, in fact, [Polymer] could move to a geographic area outside the NYSEG delivery system allowing [Polymer] to receive low-cost power and every incentive made available to 'new' companies," Higgins wrote.

Prior to NYSEG's visit last week, Bertsch said he was tired of not getting results. He said he was committed to keeping his 27-year-old company operating in Orchard Park, but he was exploring other options to handle increased production. He flew to China last week to investigate doing some of the production there that had been planned for the expansion.

But if the agreement between Polymer and NYSEG bears fruit, it would fulfill the message of a sign, written in German, hanging in Polymer's plant. Translated, it reads: A job well done is better than a job well said.