September 10. 2016 8:07PM

Business Perspective: Energy prices zap business 
growth in NH

By DON WELCH



 

If you’ve been paying attention to news on the business pages or scrutinizing your utility bill, you undoubtedly know about the region’s current electrical energy challenges. 
 
Electric prices in New Hampshire are 55.6 percent higher than the national average, according to the most recent data from the U.S. Energy Information Administration, Even in times of low demand when rates drop, they’re still nearly 60 percent higher in New Hampshire than in the rest of the country. For you, that means your family is paying approximately $400 to 500 a year more for electricity than families in other states.

Now imagine what that increased cost means for businesses, especially for companies like ours. At Globe Manufacturing, we use a lot of power to run our machinery, maintain our inventory of products, and simply keep the lights on. For you as an individual or family, the extra cost for electricity in New Hampshire is money that could otherwise be used for improvements to your residence, a vacation, new clothes for the kids, etc.

Likewise, higher electricity costs not only add hundreds of thousands of dollars to the cost of making our products — firefighting suits and equipment — but it’s money we could otherwise re-invest in the business, including creating new jobs here in New Hampshire.

New Hampshire’s high electricity prices are a drag on our economy. It puts New Hampshire companies like mine at a competitive disadvantage compared to companies in other parts of the country. Further, it’s a disincentive when businesses are considering whether or not to set up shop or expand in the Granite State.

Since the 1880s, Globe Manufacturing has been the leading producer of firefighter turnout gear. Most of the first responders you see across the country are wearing coats and pants that were cut and sewn here in New Hampshire. In addition to our corporate office and production facility in Pittsfield, we have facilities in Maine and Oklahoma. From all of these locations, we create the industry’s best personal protective equipment for firefighters.

For the sake of discussion, suppose my company had an opportunity to develop a new product line, something to provide even greater protection for first-responders here in New Hampshire and around the nation. Such an endeavor would require capital investment in new production equipment, expansion of the physical plant to accommodate a new assembly line, additional employees to make, market and transport this new product. In launching this new product, I have a practical decision to make. I have plants in three different states. At which factory should we make this new product? Where does it make the most business sense to invest these resources?

Many factors would go into making this decision. The availability of a trained, skilled workforce. Distance to key customers. Even greater than factors like these however, is the simple cost of doing business. How much will it cost to create the product in this state versus that one? And one of the most important considerations that will drive this decision is the cost of electrical energy. I already know that the electric bill I’m paying at my facility in Oklahoma is half of what I pay in New Hampshire.

There are many New Hampshire employers that, like Globe, have operations in other parts of the country where electricity is equally reliable, and their electricity bills are much lower. High electricity bills are a strong disincentive to create new jobs associated with a new or expanded product line here. It’s a barrier to bringing new manufacturing companies into the area. Worst of all, over time, it will likely force companies to move jobs elsewhere to save money — or pick up the whole business and relocate out-of-state.

The tide can be turned if New Hampshire state policy makers — regulators, legislators and our next governor — take a sober, clear-eyed look at the consequences of inaction. We need an “all in” approach to electrical energy, one that embraces natural gas, solar, hydro, nuclear, wind and other sources of electric generation, as well as energy efficiency, to address the state’s energy challenges.

The forces marshalled against new energy projects are vocal and well organized. But they represent the minority point of view. Most thoughtful people recognize we cannot sustain our economy, let alone grow it, without lowering the cost of electrical energy. 
 
I urge state policy makers to show courage and leadership when being challenged by new energy project opponents and avoid dragging out what has devolved into an interminable approval process. The sooner New Hampshire can augment its energy infrastructure to meet the demands of the 21st century, the sooner rates will drop to near or below the national average.

When electrical rates are no longer a drag on New Hampshire businesses, it will create more opportunities for job creators and homeowners alike.

Don Welch is is president of Globe Manufacturing Co. LLC. The Business & Industry Association, New Hampshire’s statewide chamber of commerce, produces this column monthly exclusively for the New Hampshire Sunday News.