Smurfit Stone Bankruptcy Fallout
Smurfit-Stone to Close Frenchtown Mill
The local shut-down affects more than 400 workers, with serious consequences for the region, experts say.By Amy Linn, 12-14-09
Year after year, the employees said, they worried the rumors would come true: the Smurfit-Stone mill in Frenchtown—home to some of the best-paying manufacturing jobs in the region—would close down for good. But when it comes to losing a livelihood, not even years of preparation can make the shock go away.
“I thought it was only a matter of a time, but it hit us a little unexpectedly,” said soft-spoken mill worker Howard Cotten, describing how he felt when he heard the news this morning.
“My two bosses were both in tears,” said Connie Thompson, a lab worker who started at Smurfit-Stone in 1982. People spent the day in a daze, Thompson said at the end of her shift this afternoon. “It’s a family out here,” she added. “It was like, you just walked around and realized you won’t be working out here any more—a place you’ve worked for 27 years.”
The reactions outside the containerboard plant were echoed by general dismay throughout Missoula today as word spread that Smurfit-Stone Container Corp. will stop operating its Frenchtown mill on Dec. 31, leaving 417 people jobless. The company is also shuttering a plant in Ontonagon, Mich., affecting 182 people.
“I did not expect a closure, so it is kind of shocking news,” said Missoula Mayor John Engen this morning. Engen said he’d been in touch with Montana’s senators in Washington and with state and local officials to discuss the shut-down and potential ways to assist laid-off employees. “We have some responsibility to step up and help these folks out and offer retraining programs or whatever we can do,” he said.
Ron Houseman, president of the United Steelworkers Local 885, which represents mill workers, was similarly disheartened. “These jobs are good, middle-class, high-earning jobs, and they’re an important part of the community,” Houseman said. “How many jobs can you think of where you can earn more than $50,000 a year on a high school degree?”
The average wage at the mill is $25.44 an hour, or nearly $53,000 a year; the 77 managers at the plant made that much money or more, said Houseman, a newly-elected Missoula city councilman. All told, the 340 hourly employees together made about $18 million a year—salaries that trickled down in money spent throughout the region.
Erasing those jobs will affect untold numbers of other people, “including all the providers and vendors who supply the mill, the guys who run logging trucks, and all kinds of businesses,” Houseman said. “The mill was a very large factor in the economy, not just for the wood products industry, but for Missoula and all of Montana.”
The plant was second only to NorthWestern Energy in the amount of taxes it paid to Missoula County, according to Missoulian reporter Betsy Cohen. It’s also a financial mainstay in Frenchtown. “In 2009, it owed 1.7 percent of the [Missoula] county’s total property taxes, nearly 20 percent ($134,281) of the Frenchtown Fire District’s budget, and 21.7 percent ($825,976) of the Frenchtown School District’s budget,” Cohen reports.
The backdrop to this story involves cost-cutting, the recession—and bankruptcy. Smurfit-Stone—a leading paper container and box manufacturer with nearly 150 facilities and 22,000 employees worldwide— filed for Chapter 11 protection in January 2009, plagued by $5.6 billion in debt and stricken by weakening demand for its corrugated cardboard and other products.
Rumors about a plant closure in Frenchtown spiked after the bankruptcy filing. Anger did, too, particularly after the company won permission from a bankruptcy judge in April to pay as much as $47 million to 3,700 executives and other workers, according to Bloomberg news.
“I think maybe management hasn’t been as good as it could have been,” as Cotten put it. “The bonuses maybe didn’t need to be made—but that seems to be the way corporations work these days. It’s just ‘take the money and run,’” he said.
The Creve Coeur, Mo. and Chicago-based Smurfit submitted a reorganization plan to the U.S. Bankruptcy Court in Delaware this month. The plan preserves pensions for employees, but also outlines huge restructuring costs. The Michigan mill and the Montana plant, which makes linerboard, were simply not profitable enough, Smurfit-Stone announced this morning.
According to the company statement, “The Missoula mill, which produces 620,000 tons of liner annually, and the Ontonagon mill, which produces 280,000 tons of medium annually, are high-cost facilities that do not provide adequate returns over the long term.” The decisions “do not reflect on the hard work and commitment of the employees at the Ontonagon and Missoula mills,” said Steve Klinger, president and COO of Smurfit-Stone, in the statement.
Dick King, president of the Missoula Area Economic Development Corporation, said in an interview today with KPAX reporter Allyson Weller that the fallout for the region could be “very serious.”
“Obviously a lot of our small businesses rely on supplying services and goods to Smurfit, so the impact is very significant,” he told Weller. “Hopefully there will be ways to mitigate that impact.”
The shut-down comes amid a 10 percent unemployment rate nationwide and the shedding of more than 7 million jobs since the beginning of the recession. In Montana, the unemployment rate stands at about 6 percent—better than the national picture, but far higher than the 2 percent rate the state enjoyed in pre-recession 2007.
One bit of better news is that, although the plant closes Dec. 31, employees will be paid through Feb. 11, Houseman said. They will also be eligible for federal programs that help workers advance their education and learn new trades. “Ideally, people will be able to access these benefits and move into fields that there’s a higher demand for,” he said.
Even more ideally, the closure never would have happened in the first place, said the employees filing out of the plant, as light snow merged with billowing smoke from the stacks. “There’s a very angry feeling in our group,” said Connie Thompson. “This company has not been honest with us.”
This story has been updated.
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I sure hope Hoerner Waldorf is not dismantled, but is rather left in place and a buyer found. A consortium?
Otherwise, any hope of Montana avoiding the tinderbox/wasteland fate of Colorado, New Mexico, Arizona and Idaho is gone. Wow, this HAS been a lousy year. Is it over YET?
If the mill isn't going to be used to produce liner board any longer, perhaps it can be transformed into a biomass-electric generating facility. It already has some generating capacity in place, not to mention sawdust handling facilities and smoke stack scrubbers.
Not sure who handles timing and public relations for Smurfit-Scrooge, but their timing really sucks. Merry Christmas!
The issue is not driven by production costs. The issue is not a good work force and a good mill. The issue is that the United States does not now produce the goods to package that at one time consumed all these mills' production. We have diminished as a manufacturing country to the point where wholesale closures of packaging plants is under way. If you don't make anything, you don't need a box to ship it in. We don't and we don't.
So the dog that is wagging the tail of Smurfit and others is the globalization of trade. The apparent intent to reduce world wide labor to an hourly wage common denominator is starting to show up in the New West. The industrialized world of the near future will be a low cost producer using low cost labor. Who they intend to sell the shit to I have no idea. How they intend on paying the R&D;costs of improvements to technology and methods I have no idea. In a country where Homeland Security has contracted for 200 million rounds of .40 caliber ammo, it is probably time to get nervous about who is scheduled to die for whatever reasons in our rapidly changing country. Do they foresee a need to enforce payments of fines for not buying mandatory health insurance?
Smurfit was the part of the equation that turned the growth of forests (air, sun and water on a soil base creating fiber) to a useable product once needed more than now. So there is a loss of jobs past Smurfit (transportation, warehousing, billing, advertising), and a loss of jobs from the nurturing of the tree to the mill which would be land management, logging and stand management, transportation, and all the ancillary support services like tire shops, hydraulic suppliers, parts stores, fuel dealers, that fed on the Smurfit dollar. Hey, those are gone!! Those Smurfit dollars are gone. And if Montana has property taxes, a huge hole in the local property tax base instantly forms when the mill no longer has vitality because it is permanently shut down. It is a pile of yet to be recovered scrap. Probably some sort of EPA Super Site before it is all over.
When this all shakes out, the real value of the place, to Missoula, and the value of the four other pulp mills to their communities, will be felt for a long time, and there is not one thing out there to replace pulp and paper wages for blue collar workers. Not one thing. Not one legal thing. All those little mill towns now grown up with knapweed and boarded up windows---there will be more as the US continues its economic decline. The Rust Belt has never recovered. Now it is the turn of the Dry Rot Belt to go to dust. And it has been for two decades. First you stop logging and then lose 75% of the sawmills. Then the plywood and veneer plants fell by the wayside. Now it is the pulp mills. Distance and markets now preclude much private timberland from having any value at all that can be recovered profitably. And this Smurfit closure kills the fuel reduction programs of many private landowners. The Feds want to burn all that they have so it is not even an issue to them.
So my question has to be----how come Plum Creek Timber is getting so much money for their timberlands AFTER logging them when unlogged land now has less value? Answer: Because Philander Baucus, US Sen-a-tor, and Chair of the Senate Fi-nan-shul Co-mittee is large and in charge. Oink Oink...and how much does Missoula County have in their kitty to buy some of that "cheap" land? Or the State? It was just a sham deal to get PCT a sweetheart sale through the Feds??? Oh, my!!! Is he ever good at "sweetheart" deals!!! Why, after he gets a done talkin', ever body find their pants are down 'round their ankles...even folks that wasn't listenin'.
Time for another Constitutional Convention.
The issue is not the failure of the Constitution, but the failure of the individual voter to take the time to make sense of what has happened, and is happening to him or her. Those Smurfit Pulp and Paper Union workers all vote for the party that took away the wood supply from a bunch of small mills using public land logs. Unions and the Green Lobby are locked hand in hand, and they are because the former path to socialism was not making any headway in conquering the US economy and the freedom to work hard and smart and live the American dream. The Smurfit workers shot themselves in the raw material cost foot, so to speak.
So we got the watermelon approach, all green on the outside and red as hell on the inside. And now that the green got control, the red inside has leaked out and now runs the country. Go figure.
This whole deal is about the redistribution of wealth. Cap and trade money to go to subsidize the energy needs of the poor? Sure. I have a bridge to sell. In time, as the wages drop and income taxes no longer can support government in its ever ongoing growth, all due to energy costs, cap and trade will NOT send energy taxes to the poor, but will send energy taxes to the highest bidder and all the money will go to support the Government Class. Samuelson died yesterday but his math still works. The higher energy costs will raise the common boat and everything will cost more, even government. And that in turn will give us the post WWI German inflation rates, Argentine inflation rates, Zimbabwean inflation rates, and we will all suck hind teat so the Government Class can live well. You did note that at the end of the AP stories on the Trillion dollar plus Congressional budget, the little notation of a 2% raise for all Federal workers. That is the red flag to set State workers out to demand a like raise in wages, and that ripple will work its way down to small town government and teachers, and the end result will be little Johnnie and Mary will be one of 50 in their classroom because there is only so much money for education, and the full wally bennies and six figure incomes go to a few super teachers in each school, and the work is done by a passel of minimum wage aides just happy to have health care. The knights and vassals are about here. Government fiefdoms and merchant princes, and the majority are serfs looking for a crust of bread.
Or, you can just vote for someone different in the next election, and take your chances that he or she will not be a worse selection. You do know they all come from the same source. College to internships to staff jobs to staff leadership to NGOs and back to government, and when there is an opening, they run for the job of their old boss. Succession. Farm teams. Stamped out by the dies of insider information and the number of hits you had last season. Your error rate and your looks. Yep. Ugly don't cut it. Except for maybe Shorty Waxman, who has to be a character out of Mad Magazine. But, maybe we could get lucky and elect some leadership at long last. And quit losing our jobs, our ability to clothe, shelter and feed ourselves.
2,200,000 people in Houston. 4th largest city in America. Houston elected a new mayor. She got over 87,000 votes and a good majority. She got votes from 3% of the population. Her opponent got the votes from less than 3% of the population. A little better than 3 out of every 100 residents of all ages in Houston elected their new mayor. And a little under 3 out of every 100 residents voted for the other candidate. 6 out of every 100 participated in the process. And don't tell me about people under 18 being the missing voters. 17 and under are 27% of the population. My math says less than 10% of the adult population voted, total. 5.4% of the voting age population elected the new mayor. This country gets the leadership a very few elect.
So who would show up for the next Constitutional Convention? probably mostly lawyers, the Government Class, and those outfits looking for a greater share of a someone else's efforts. Would it change things? Probably not. We would end up in the same place but from a different path with different people. When you cannot starve, there is a place to stay, and you don't have to do anything to survive, apathy is going to run deep in those who don't really give a shit. And does.
we all need to work together on this. bearbait and skinner have some good thoughts too. here's hoping we can do better than we did when stimson's closed. that was a pathetic attempt at best by all parties involved. no more politician platitudes and feel-good press releases. time for all the big players to get sweaty in a small room until we come out with something people can cash a paycheck with. something green, clean and sustainable would be nice.
But, that site will NEVER be a pulp and paper operation site again. That is the reason the owners shut it down was to take out supply in an over supplied market place. With the biomass deal, there might be some way you can shut down a coal plant if you can use the wood wastes to make energy and a bi-product like biochar or some other product besides fly ash and clinkers after you extract the heat.
http://www.oregonlive.com/business/index.ssf/2009/10/post_10.html
What needs to be done is to make a better product- as in one that doesn't take years to grow back to a point it can be used. I don't think bamboo would do well in Montana but there is a plant that would and could keep mills up and running as well as keeping farmers in business. I recently read someone in Montana got the first permit in Montana to grow hemp. I know the Montana legislature passed a bill to allow hemp if the feds would give the state permission- and that was back in 2001. Look it up folks. Not only could the product be used to fuel the production of the plant (clean fuel) it can be used to make building products, paper, cardboard, medicines, rope, beauty supplies and so much more. I think the list was something like 25,000 products. Hemp IS NOT POT. It grows quickly, will grow in wet or drought conditions and can even clean brown fields- contaminated- grounds. It will grow in Montana and all the other states too. I have often wondered if it could be grown on a mountainside after a forest fire. It has a long root system, chokes out the bad weeds that grow in an area after a burn and could potentially help to stabilze the soil until trees were able to grow enough to hold the soil so it doesn't run off or slide. California could use the help after fires. I would think we could find a lot of uses. After all, hemp was grown in this country up until the 1930's. My father always said the best lariats ever were made from hemp. Couldn't get them anymore unless they were imported, as so many other hemp products are.
Not only do I think you’re about the mouthiest and out of touch person I've read in a long time. You fail big time in humanity and understanding of the working man. Number one I doubt you ever got off your sorry ass and went to work at midnight in subfreezing temperatures to keep a large part of the economic stability of that area healthy. You also are the one driving jobs out of the US by not supporting the one person that kept America strong, the working man. You have probably never spent a winter in a town with your friends as their families were torn from each other in order to find work other places or from worry and depression from not making payments on the home they built with their own hands. Your short sighted lack of understanding the benefits these men and women provide to the community and lack of concern for your fellow man disgusts me. This is a major reason America is becoming weak. A liberal socialist like you would rather live off a free handout than spend time doing hard work. You don’t even have the ability to gain an understanding of what makes your bike run. You cannot even understand that the greeters you make fun of are doing that to continue to survive. I hope they know your name and spit on your worthless waste of a human body each time you darken their door. These same people that you disregard probably have more concern for the environment than you could ever gain in concept. Their jobs depend of utilization of a renewable resource while you just consume and are happy when it burns. The biggest impact we have with protecting the environment is just too many people. Do us all a big favor sacrifice yourself for the rest of us.
-CAMT-
I'll bet your guessing. I personally know many who do. Why because they also need to save money. Why because you bring you californocation ideas and money to Montana and drive the cost of living up. Along with locking renewable resources which drive impacts to other countries and makes companies like warehouser rich by driving other companies out of business which reduces competition. In my businness I see many products from Stone Smerfit used by US suppliers. Guess we won't see much more? At least we will be paying off the country that now owns the US thanks to the Obamasizeme administration.
I've never made what the average wage is out at Stone, and I've never felt the need to 'save' via sending our country and our jobs down the river to China,Etc.
I started a business here, paid guys well, sold it to a guy who now employs even more folks, and raises a family off it.
I re-use/fix/buy local/USA period. One kid, small house, 4 cylinder motor. Sounds like common sense to me. You want to call it California logic or whatever, go right ahead.. call it whatever you like.
Time to vote/attack with our dollars. It's the only language they understand. We're in it together like it or not, and there's blame for everyone.
Oh and don't worry about Californians. The real ones saw their state (The First Best Place) go down the tubes 50 years ago. Long before you or anyone else in Mt found it convenient/fashionable to bash them.
-CAMT-
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Main concern is for the communities, the college, the businesses in the Missoula (Frenchtown) areas, the soon to be unemployed, the families, etc. And is there going to be any support for them until they can start over....somewhere....sometime. Just what is the final total of those being displaced? What about the back taxes the Company owes the community? Poor management on the Main Office end, give the employees 2 weeks notice right before the end of the year. Shameful.