Future leaner for urban processors. As cities face rising water costs, industry feels their pain

Capital Press Staff Writer


SALEM, Ore. – Rising labor costs, an unpredictable and highly competitive international marketplace and ballooning utility and wastewater treatment costs are all converging to make for challenging times in the Willamette Valley food processing industry.

In Salem in particular, where vegetable and berry processing have long provided an economic anchor for the community, the outlook is worrisome to those in the industry.

“Food processing has been the mainstay and the backbone of our manufacturing economy in Salem for 100 years,” said Larry Glassock, president of the Salem Economic Development Corp. “Now it is being significantly eroded.”

Large local private employers like Del Monte, Norbest, AgriPac, and more recently, AgriFrozen Foods and Chiquita have exited the scene, leaving in their absence a gap that no other industries have filled.

The situation has Glassock wondering how attractive the mid-Willamette Valley will be to the food processing business in the 21st Century.

“I don’t think that there’s any magic bullet out there that can solve this thing,” said Glassock. “You can’t just say the problem is sewer and water costs, or it’s electricity. The problem is that there are a combination of things happening all at once.”

Glassock and many food processor operators believe the City of Salem could make the environment a little more business-friendly if it wanted to.

“They’re chasing all of the food processors out of town for one reason or another,” said George Crispin, president of vegetable and berry processor Rainsweet, Inc., which has two plants in the area. “They need to take a balanced view of this thing, and look at the (water and utility) rates they’re charging food processors here in Salem versus the competitive market rates by other municipalities in other cities.”

In 1997, the City of Salem took up efforts to make water and wastewater rates more equitable for ratepayers. In 2001, city staffers completed a cost-of-service and rate design study, which focused on determined how costs should be shared among different customers of the city’s service systems.

As a result, industrial wastewater rates have risen by about 8.9 percent a year, and are expected to continue along that trajectory.

The cost of service analysis identified all expenditures the city is planning to make for water infrastructure over the next 20 years, and determines how those costs should be allocated among customers.

Food processors want to the city to take another look at its analysis and reassess the positive economic impact of food processors make to the community. By doing so, the companies hope to convince the city council to agree to some wastewater rate relief in the coming year. A wastewater rate task force, which includes industry representatives, has been formed to explore the possibilities.

Tim Gerling, Salem Public Works Department director, says there are many issues at play with regard to the wastewater issue – which he acknowledges is an increasingly difficult one for industrial wastewater producers like the food processing industry.

He said he’s hopeful compromises can be reached so that producers are happier about their situation in the coming months.

But the city’s financial picture isn’t exactly rosy at the moment either, Gerling said. In addition to a $6 million to $8 million budget hole the city is currently trying to fill, federal regulations related to the Clean Water Act are forcing the city to spend in the neighborhood of $660 million in water and sewer improvements.

“That’s driving about $350 million to $400 million for capital improvements — and it is not optional,” said Gerling.

Gerling said that, despite perceptions to the contrary, the city is “not unsympathetic” to the plight of food processors and large industrial users in general.

Industrial water users make up about 16 percent of the city’s total rate revenue. Food processors account for around 60 percent of that 16 percent, he said. Current wastewater revenue projections for this fiscal year, which starts in July, indicate the city will collect $28.3 million in total revenue, and of that food processors will make up $3.2 million.

All other industrial users are at $2.3 million, and everybody else — commercial and residential users — pay $22.8 million, he said.

“As a category, industrial users make up a significant subset of the rate base,” Gerling said. “But we have probably something like 57,000 customer accounts in total. So you’ve got 10 food processors that are going to be very anxious to get some kind of rate relief, and 56,980 that are going to be mad as hell if they have to pick up a significant portion of it in order for that to happen.

“That’s a pretty tough call for a city council member to make: Yeah, you want to keep employment, and yeah, you want to keep your big customers happy, but are you willing to alienate the entire voting constituency in order to do that?”

Whether relief is politically possible, processors are changing the way they do business. Water is “no longer free and unlimited,” and virtually everyone agrees that henceforth great emphasis will have to be placed on conservation efforts if remaining food processors want to survive.

“I’m constantly looking for ways to save money in water usage,” said Mike Harcourt, vice president of operations for Rainsweet. “I’ve tried to put in all the equipment I can to try to reuse water as much as I can. Reusing water, rather than allowing it to just run down the drain, has the real potential for saving me some bucks.”

On Thursday, March 20, SEDCOR will host a wastewater management seminar on the Chemeketa Community College Campus in Building 3, Room 118, from 9 a.m to 2 p.m. Topics to be discussed will include targeting opportunities for conserving water and reducing waste, pretreatment technologies, developing a sustainable program for minimizing water use and wastewater generation, conducting use assessments and understanding food processing wastewater costs and issues.

Guest presenter Claudia H. Gaeddert, president of the Corporation for Land Planning and Engineering, and a consultant for the Idaho Department of Environmental Quality, will recommend strategies. Call (503) 399-5181 to make reservations.


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