Day: July 8, 2008

From Scott Memhard at Cape Pond Ice

Gloucester Water Rates – Impact on Manufacturing Jobs & Fishing Industry

I am deeply concerned about the high cost of water in our City, now and going forward, and the profoundly negative impact of these high rates on manufacturing jobs and the continued existence of a fishing industry in Gloucester. It is crucial Gloucester’s City Council be fully aware of the consequences of decisions about water rates, and not just on residential homeowners and voters. I speak from my perspective in the ice industry, but the same concerns impact our restaurants, fish cutters and processors, manufacturers and other businesses that regularly use water.

My family and I have operated Cape Pond Ice Company for 25 years, investing over and over again in the business to be as efficient and competitive as possible. We have diversified our markets away from the dwindling fish industry, to support our ability to reliably serve the fishing industry. Without a reliable source of ice – one of those core “hub” services for the fleet, there will no longer be a fishing industry in the port of Gloucester. Cape Pond Ice was founded 160 years ago specifically to be a reliable source of ice for the fleet.

Cape Pond Ice is in the frozen water business. Water is not only our main ingredient, but we also use water in our refrigeration and manufacturing processes. We use a great deal of water, and we pay the same rate as a homeowner filling an ice cube tray in their fridge. Because of inconsistent quality, we have to filter the water again in our plant – an added expense and use of water. There is no longer any volume discount for large industrial water users, as there used to be in Gloucester to encourage industry. There is no discount or incentive to help cover our water costs, no grants to help us to provide a key service to the fishing industry.

It is not due to shortage of supply, or that Gloucester doesn’t have enough water, that results in our City’s high water rates: Gloucester is blessed with abundant water resources – including Fernwood Lake, which was built by my ice industry predecessors as a man-made body of water to harvest ice from, and which is a legacy adding to our public reservoir system today.

I cannot fathom how Gloucester’s water rates can be so very much higher than other cities and towns – I am concerned that bad political decisions have been made in the past, and are being made today, which unfairly and disproportionately burden our water enterprise department with huge costs not directly related to water service. I am concerned our water rates have been dumped on as a politically expedient municipal fundraising alternative to legitimate real estate tax increases and unpopular but necessary Prop. 2 ½ overrides for infrastructure improvements. But at what costs to Gloucester’s manufacturing jobs and fishing industry?

Cape Pond Ice Company competes with the ice company in New Bedford to serve the commercial fishing industry. The water rate in New Bedford was increased last year for the first time in a number of years, by 20 cents per 1,000 gallons, from $1.40 up to $1.60 per 1,000 gallons. This compares to Gloucester’s current $7.52 per 1,000 gallons, which is up from $3.03 in 2000, and up from 78 cents per 1,000 gallons in 1983, when I got into the ice business, and rates were discounted to support Gloucester’s industrial water users.

Gloucester’s water rate is proposed now to increase $1.59 to $9.11 per 1,000 gallons – a 1,200% increase over 25 years. My cost for water now is 470% higher than my New Bedford ice company competitor, and about to increase to some 570 % higher. But I am still struggling right now to pay last year’s water bill! This is like a local Gloucester baker having to pay 500% more for his flour than a baker in Danvers or Beverly – how would anyone expect them to survive?

Because the fishing industry in Gloucester has gone through such a dramatic decline in the past fifteen years, Cape Pond Ice Company has had to expand into other markets in order to survive, and to subsidize our ability to continue to provide ice to the Gloucester fleet. 75% of our business today is manufacturing and delivering bags and blocks of ice to markets from Connecticut and Boston, to the entire North Shore, to Lawrence and Southern New Hampshire. But the other ice companies we directly compete against – operating from Salem (where water rates of $2.90 per 1,000 gallons are set to decrease 4% next year), Boston, Rhode Island, New Hampshire… all pay dramatically less for their water than we do here.

It has reached the point, in spite of our 25 years of investments to efficiently upgrade and compete, and 160 years of proud history serving the fishing industry, that because we operate in Gloucester, with these extremely high water rates, we will be better off to shut down our ice packaging operations, to lay off our plant production staff and eliminate the manufacturing jobs, and just buy our ice trucked in from other ice companies. Is this what you want for Gloucester?

Yes, based on Gloucester’s astronomic water rates, we will increase the prices we charge for ice to commercial fishing boats. You leave us no choice. But will boats choose to come to Gloucester when we charge $330 per ton for ice, as we fairly should based on direct costs for water here, if those fishing industry customers can buy ice for $58 a ton in New Bedford or Point Judith? Will enough boats buy enough ice for us to maintain Cape Pond’s wharf and machinery and plant? Is this the reputation Gloucester wants – the most expensive port to come to, or just the port that used to have a proud and reliable ice company, but no longer does; or that used to have a fishing industry, but no longer does?

Please consider carefully the impact of Gloucester’s high water rates on our businesses, manufacturing jobs and fishing industry. You are shaping our future, for better or worse.