Coldstream plant closure 'a shock'

Paul Luke, The Province Published: Sunday, August 24

Coldstream municipal officials have reacted with dismay to news a glass- container plant will close its doors Oct. 31, throwing 300 people out of work. Ohio-based Owens-Illinois, the world's largest glass-container maker, said Friday it will shutter its factory in the Lavington area of Coldstream and transfer the production to other facilities. "It's a shock," Coldstream director of finance Catherine Lord said. "This is a big hit." The Owens-Illinois plant and a Tolko Industries sawmill are the largest employers in Coldstream, which has a population of about 10,000, Lord said. Economic fallout from the closure will reach to Vernon, where a large number of the plant's employees also live, he predicted.

Owens-Illinois said it's closing the plant to cut energy consumption and lower production costs. "This closing was driven by our ongoing global asset utilization process which identified the opportunity to shift our production to other Owens-Illinois North American facilities," said Scott Murchison, president of the company's North American Glass Containers unit. The closing is the third in Canada this year for Owens-Illinois.

------------------------------------------------

Don Quixote Note: An illustration of the ripple effects of the Owens-Illinois plant's closing can be found by examining the 2007 tax revenue received by Coldstream in the Major Industry Category. Through this rudimentary comparison using a 2004 assessment base (which may have changed )it is apparent that this plant contributes property taxes in the range of $290,000 to Coldstream. When it is remembered that a $30,000 increase is equal to a 1% raise in residential tax rates this could add a substantial burden to the residential taxes if this property is not retained as Heavy Industry.

It appears that tax revenue of around $80,000 to NORD and $120,000 to the School levy could also be affected.

----------------------

Coldstream would also have the effect of the loss of the 3% franchise fee from Terasen Gas that comes from all Natural Gas that is used at this Plant. The District of Coldstream had budgeted $154,000 for 2008 from all natural gas users in the community. How much of this comes from this plant is uncertain. At $30,000 = 1% tax rise for the Residential tax payer, this revenue loss could generate a tax hike of 1-2%

Above number are speculative only and will be confirmed only in the coming budgets of the Coldstream director of finance Catherine Lord.

The 2007 Coldstream budget had $636,071 for 2007 for General Non-residential taxes ($694,463 for 2008) and projected to grow to $781,624 in 2012 so the loss of approximately 40% of this revenue could be quite devastating.

The direct effect of the more than 300 jobs that will be lost with their reported annual payroll in excess of $15 million is the first shock wave and the resulting financial ripples of property tax and franchise fee revenue loss are secondary shock waves of a more minor but permanent nature.