Photos by STEPHANIE KLEIN-DAVIS The Roanoke Times

Gabriela Rodriguez, (from left) Leticia Garcia, Maria Rodriguez, and Herminia Pichardo work in the sorting area of Erath Veneer's facility in Rocky Mount. The company shut down its manufacturing of veneers in September and now is only a distributor.

When production ended at Erath Veneer's Rocky Mount facility, the company's consumption of electricity plummeted. But its monthly bill from Appalachian Power Co. still includes a $12,000 minimum fixed rate, which Appalachian plans to continue to charge until October.

Photo by Duncan Adams The Roanoke Times

Michael Erath, president and CEO of Erath Veneer.

Gloomy rain drummed the roof. Just a few months back, the manufacturing din at Erath Veneer's plant in Rocky Mount would have drowned out the sound.

Production at the 41-year-old, family-owned company shut down Sept. 18. Eighty employees lost their jobs. Erath Veneer holds on now as a distributor of the hardwood veneers it once manufactured.

With machines silenced, the company's consumption of electricity has plummeted. But its monthly bill from Appalachian Power Co. still includes a $12,000 minimum fixed rate calculated when Erath Veneer was in full manufacturing mode. The small company also pays for its monthly kilowatt hour consumption.

Appalachian plans to charge the fixed rate until October.

Michael Erath, president, CEO and son of the founder, shakes his head.

"Consumption is a fraction of what it once was," he said.

Appalachian Power has been unwilling to modify the contract. Erath said the utility's inflexibility demonstrates it does not care about business customers who hire, pay taxes and support the regional economy.

"We're in a desperate situation and they will not help us," he said. "It's like a damn 800-pound gorilla sitting on you. We're at a point in this economy where we are trying to stay in business and trying to employ people in this area. Strong-arm tactics like these make it much harder to survive."

Appalachian readily acknowledges its refusal to alter the contract, a process that requires 12 months notice. Todd Burns, an Appalachian spokesman, said the utility's industrial customers "consume massive amounts of electricity," a demand for which Appalachian must tailor generation and ensure reliable service.

"Electric power supply requires the investment of large amounts of capital, and the bringing on of facilities into service requires significant lead times, particularly for generation and transmission facilities," Burns said in an e-mail.

He said Appalachian did not receive word of Erath Veneer's transition from manufacturer to distributor until October -- hence the 2010 contract termination date.

Burns said contract terms ensure Appalachian can plan for and meet the demand of more than 200 other industrial customers in its service territory and allow the company to recover related costs.

Appalachian's position does not move Michael Erath.

"But this assumes all customers would, at the same time, close their manufacturing operations and transition to a totally different business model, as we did -- which I think is quite different than maintaining high usage levels and just asking for relief," he said.

Bob Moore is Erath Veneer's chief financial officer. When the Virginia State Corporation Commission held a public hearing Nov. 19 in Rocky Mount, Moore described the company's plight to commissioners. He and other businesspeople described witnessing a pattern of disregard by Appalachian for customers' financial circumstances.

Erath Veneer sought assistance from both U.S. Rep. Bob Goodlatte, R-Roanoke County, and U.S. Rep. Tom Perriello, D-Albemarle County. Goodlatte's district does not include Rocky Mount but Erath said he knows the congressman. Perriello's district includes Rocky Mount.

Contact with Goodlatte was direct. He wrote a related inquiry to Appalachian.

Contact with Perriello was limited and indirect. Still, Moore said the congressman's failure to respond was disappointing.

Jessica Barba, Perriello's spokeswoman, said the office was "made aware of the situation" but no one from Erath Veneer had been directly in touch.

She added that "Congressman Perriello did not see a role for our office to play" in what was viewed as a contract dispute between two companies.

"As far as we know, it's just one company," she said. "Not to say they're not important. It's just hard to see what the federal role would be."

George Erath founded Erath Veneer in 1968. Until September, it manufactured veneers from American hardwoods after sawing logs were delivered to the plant.

Today, it contracts out manufacturing.

Customers have included Lane Furniture, Hooker Furniture and Stanley Furniture, among others.

A year and a half ago, Erath Veneer had about 175 workers. Today, it employs 21.

At peak production, Erath Veneer's monthly electric bill could run as high as $35,000, Moore said. The first post-production bill totaled $14,249, including the $12,000.

Michael Erath said the company has invested more than $6 million in the facility during the past seven years. During the fiscal year that ended March 2008, he said Erath Veneer celebrated its most profitable year. But then came the nation's near financial collapse and contraction of the furniture and building industries.

"We were on a trajectory to really grow and be successful," he said. "Now, we've lost employees that I've known since I was a child. The last day was incredibly emotional. I watched the last log being cut and that was like seeing someone pass away."

News researcher Belinda Harris contributed to this report.