Smurfit-Stone Container Corp. announced on Monday the permanent closure of its linerboard plant in Frenchtown, effective Dec. 31.
The news came as a shock to the mill’s 417 workers – all of whom will lose their jobs – and to Missoula community leaders who have been working to keep the mill going despite a tumultuous wood products market and the worldwide recession.
“With all the effort our union and our workers put out to keep this mill going, it’s a crying shame that we were unsuccessful,” said Bob Johnson, a millwright at the Frenchtown plant for the past 30 years and the steelworker’s president-elect union leader. “It’s a sad state of affairs that over 50 years has come to an end out there.”
“It’s a lot to think about on Monday morning,” said Missoula Mayor John Engen. “We have a community responsibility to try to figure out a way to support these folks who have worked there.
“The folks at Smurfit have given and provided to the United Way over and over again and to other safety net organizations ... and we need to figure out a way to help them.”
The company, which is emerging from bankruptcy, also announced the closure of its mill in Ontonagon, Mich., where another 182 workers will lose their jobs immediately.
In a brief written statement issued by the company, Smurfit president Steve Klinger said both the Frenchtown and Michigan mills are high-cost facilities that do not provide adequate returns over the long term for the company.
“These decisions were made to ensure the company’s long-term growth and profitability and do not reflect on the hard work and commitment of the employees at the Ontonagon and Missoula mills,” Klinger said.
While polite and responsive to media calls, the company’s spokesperson, Mike Mullin, was equally short on comment. Mullin did say the company hasn’t yet decided what will become of the Frenchtown facility; its sale has not yet been discussed.
For regional economists, Monday’s announcement was unwelcome, but expected.
“In large measure, we knew this was coming,” said Larry Swanson, director of the O’Connor Center for the Rocky Mountain West at the University of Montana.
As the wood products industry cratered and demand for paper products declined nationally and internationally, he said, the Frenchtown plant began to rely more and more on recycled cardboard to make linerboard.
At times, those materials were hauled in from the Midwest, and then hauled out again to distribution centers.
“The locational advantage of this particular plant has been diminished over time,” Swanson said.
“The price of paper reflects what the company is saying about the decreased demand for paper products,” said Pat Barkey, director of the Missoula-based Bureau of Business and Economic Research. “The demand for their linerboard is tied up with how much product is being shipped – and retail-wholesale trade and international shipment has been very weak.”
As the company takes drastic measures to climb out of bankruptcy and plan its next moves, Missoula community leaders grappled on Monday with the colossal ripple effect the Frenchtown plant’s closure will have on western Montana and beyond.
“Shock waves” was the best way to explain the impact of the news in the Missoula County Courthouse, said commissioner Michele Landquist. “My first reaction after my jaw hit the floor was, ‘Where do we go from here?’ ”
The mill was the second-largest taxpayer in Missoula County, behind only NorthWestern Energy. In 2009, it owed 1.7 percent of the 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.
According to county tax figures, Smurfit-Stone is currently more than $2 million in tax arrears, with roughly $1.1 million of that incurred from penalties and interest from fiscal year 2008 and another $960,000 for the first half of FY 2009, which was due Dec. 7.
“I don’t think any of us really has any particulars on how it’s going to play out, but I’d be darned surprised if it didn’t have a pretty major impact on this county,” commission Chairman Bill Carey said.
In fact, the outlook is grim, say regional economists.
“This is a pretty significant blow to our economy,” Barkey said. “It means up until now, the recession in Missoula has been faring better than in other parts of the country and other parts of Montana.
“Unfortunately, this is really going to be felt. We’ve been looking north at the Flathead and dodging some of the bullets they’ve taken up there, and I think this one is really going to hit us.
“Those are very high-powered jobs when it comes to economic impact, and unfortunately it’s moving in the wrong direction.”
In specific terms, the plant closure means the loss of 417 high-paying jobs, with an average annual salary of $70,000.
“Those jobs represent about 4 percent of the Missoula’s economy,” Barkey said. “In terms of what it represents for the economy – that’s about a $45 million loss annually.
“And the impact goes well beyond that.”
Given the mill’s connections to other sectors of the economy, such as the vendors that supply tools and service equipment, the timber mills that supply the boilers, and the truck drivers who haul raw materials to the mill, Barkey predicted many more jobs could go dark.
“This could be as big as a 1,500-job decline when it is all said and done,” he said.
All day Monday, city and state leaders scrambled to hammer out a plan to help the 417 employees of Smurfit-Stone and to give the Frenchtown plant new life.
Missoula Job Service spent the day pulling together a rapid-response team to help help people with questions about unemployment and retraining options.
Mayor Engen was on the phone discussing the plant closure with representatives for Montana Sens. Max Baucus and Jon Tester.
Dick King, director of the Missoula Area Economic Development Corp., was talking with the governor’s office about what’s next for the Frenchtown facility.
While the plant closure and its job losses are disheartening, there’s no reason to give up on finding a new use for the Frenchtown plant, King said.
“There is great value in that property. There is a tremendous resource out there,” King said. “We have a great industry site out there, we have a great workforce, the place has passed muster with environmental regulations, and we need to start talking with the company about the property.
“If not linerboard, what else from the natural resource sector? How can we keep those basic jobs?
“What you do when the roof falls in on someone, you reach out and help,” King said. “Smurfit-Stone owns the property and we can reach out to help.”
Montana Gov. Brian Schweitzer issued a statement, assuring his office will do its part in providing assistance to the plant’s dislocated workers.
The state will also work closely with labor leaders, employers, community activists, local government officials, educators and workforce-development professionals to explore and identify alternative uses for the Smurfit site that could involve new green technologies and biomass electricity production.
“It’s pretty clear that everybody understands the significant impact the Frenchtown plant has on the
life and viability of Montana and its wood products industry,” King said. “The ripple effect
of this closure is going to be huge.”
At the mill, workers couldn’t look that far ahead.
“We are all still absorbing the announcement,” said Roy Houseman, the union’s leader. “We are in shock and people are just trying to understand what this means.”
Although the plant will close on Dec. 31, employees will be paid full wages until Feb. 11 in keeping with a federal regulation called the WARN (Worker Adjustment And Retraining Notification) Act, Houseman said.
Some work will continue through the first part of the year to shut down and store machinery.
The only bright spot in the dark day was the fact that employees will receive benefits under the Trade Assistance Act – but only because those federal benefits were approved within the past year during the plant’s last round of layoffs.
As the day wore on, as Houseman went from one management meeting to the next, taking short breaks to explain the news and its repercussions to his fellow union members and coworkers, his exhaustion and heavy heart could be heard in his voice.
Weary, he talked about upcoming meetings with Smurfit representatives to discuss severance packages and about the many union meetings to come.
His voiced cracked, and Houseman paused for a moment to say quietly: “This is not a very good day.”
Reporter Betsy Cohen can be reached at (406) 523-5253 or at email@example.com.