California Dvd Replicators Face Challenge Of Rolling Blackouts

As California audio and video replicators head into their peak production periods, threats of rolling blackouts and rising energy costs have sent many plants scrambling to devise conservation plans to avoid shutdowns and missed deadlines.

During the summer, replication plants typically work overtime to duplicate an avalanche of titles scheduled to hit stores during the fourth quarter. But meeting deadlines will be difficult for companies operating in California because of the state's ongoing energy crisis.

The Independent System Operator (ISO) is the state agency that controls California's electricity grid. During periods of reduced resources and increased demand, energy reserve levels drop; if they drop too far, utility companies begin rotating random, hourlong power outages to points on the grid.

"We will bring them back in an hour and, if necessary, go to the next group. That would go on until the emergency was over," says a Southern California Edison power plant spokesman. "It could be days or weeks before a plant is affected. If they do get interrupted, then they'll go to the back of the line before they are interrupted again."

If a shutdown does occur, replicators say, the key is a quick restart after the power is turned back on. Molds need to be cleaned out before the equipment can be started up again. "If the shutdown is orderly, it will likely only take about a half an hour to restart after a two-hour shutdown," says Anthony Angelini, president/COO of Zomax, which operates plants in Concord and Fremont, Calif.

To prepare for the expected rolling blackouts, JVC Disc America, which operates one California plant, is setting up a pager notification system with the ISO that is expected to be in place by June.

"We could be down one or two hours every 12-14 days," says JVC VP/plant manager Reid Montgomery. "So, every morning the ISO will be providing us with an overview of what the day will look like and which plants will likely go down."

SuperDVD, a new replicator in Hayward, Calif., has experienced two rolling blackouts since the energy crisis began late last year and has begun finding other replicators to handle its workload.

"SuperDVD is lucky because we have very good working relationships with other replicators in the Bay Area," says SuperDVD production VP Ichiro Kodaka, "and we can farm out work without missing our deadlines."

But start-up companies looking for financing haven't been so lucky. One newcomer, who chose not to be directly quoted, says the company has had to prove to potential investors that it has the energy situation under control. As a solution, the company's new plant will be putting in diesel power generators as well as co-generation units that can run on reconverted heat. The replicator is also using smaller utility companies for energy rather than relying on the troublesome Southern California Edison or Pacific Gas & Electric. However, using smaller suppliers may only be a short-term solution, since the ISO will order cutbacks from them as well.

Other larger replicators with plants outside California are beginning to redirect their workloads out of the state. Panasonic Disc Services, JVC Disc America, Crest National, and Zomax, for instance, are prepared to send business elsewhere.

"We have four other factories around the world and are prepared to do business there if we have to," says Bob Pfannkuch, president of Panasonic, which operates one plant in Torrance, Calif. He says replicating materials for all major titles have been and will continue to be sent to all of Panasonic's other locations. "Although we don't plan to make the titles elsewhere, we are prepared to do so if we lose power."

Most important, replicators need on-site contingency plans if power is cut, but backup power sources can create added problems.

JVC, for example, has an on-site generator as part of its disaster-recovery program. However, because of California's stringent environmental laws, JVC cannot run the unit more than one hour without violating state emission laws, according to senior VP of marketing Sean Smith. The result is a frustrating tug of war.

"That's typical for California: They tell you you must cut back usage and suffer destructive business practices, but you cannot supplement the required demand without violating other laws and incurring other penalties," Smith says.

But cutting back overall energy usage appears essential because of cost increases that are expected to run between 40%-60% this year. As a result, some replicators are looking for ways to cut down their energy needs.

SuperDVD, for example, is considering installing electric injection molding machines, which consume 50% less energy than the commonly used hydraulic injection molding machines. Installing the new machines could save the plant between $8,000 and $9,000 per machine per year, says SuperDVD's Kodaka. "This is huge for even a medium-size replicator with 10 to 20 lines."

In addition, the company is taking other conservation steps. "I have also installed heat exhaust systems on all the DVD production equipment to draw as much heat as possible away from the machines," Kodaka says. "My theory is you have to blow the hot air out first before you try to cool the facility with air conditioning."

Zomax has also been implementing conservation efforts for quite some time and, in fact, its Fremont plant has won several energy-saving awards. Angelini says an enthusiastic staff and increased attention to the little things—such as turning off lights—help.

"We have timers on all of our lights, and if someone leaves without shutting off the lights, they will automatically go off at 7 p.m.," Angelini says. "Also, the facility is controlled by a computer system that is tied to pagers. Our manager gets paged when equipment goes down or when it gets too hot or cold in one room. He can monitor these things while he's here or can dial in from home."