Dick King - January 27, 2010
Missoula Area Economic Development Corporation
The Frenchtown Pulp Mill and Our Economic Future
The Frenchtown Pulp Mill and Our Economic Future
Submitted by: Dick King, President and CEO, Missoula Area Economic Development Corporation, January 23, 2010
Smurfit-Stone’s decision to close the Frenchtown pulp and paper mill will have a significant economic impact. The Missoula Valley will lose 417 good paying jobs, and more than thirty small businesses that provide services to the mill will experience serious declines in their revenue, resulting in further job losses. But the impact is not limited to our valley. Small logging and trucking firms as well as the few sawmills that still manage to operate in Montana will also be affected.
The Bureau of Business and Economic Research at The University of Montana estimates that the state will lose about 1,700 jobs in 2010 as a result of the closure. The Bureau also projects that personal income in Montana will decrease by $82 million in 2010 and that almost 550 people are expected to leave the state this year, also as a result of the shutdown. These impacts will continue to affect the state in future years. Significant job losses are also expected in construction, retail trade, health care and other services.
Closure of the mill will also have a significant negative impact on private landowners, public land managers, and sawmills. Their ability to offset land management and waste wood disposal costs will be jeopardized by the loss of the state’s largest volume user of small trees, mill residuals and woody biomass. The Bureau estimates that Smurfit’s purchase of wood supply was worth about $200 per acre in net revenue to land managers and owners. This money helped pay for restoration, hazardous fuel reduction, and other activities that benefited Montana’s landscape.
Economic data helps us grasp the significance of the mill closure. We need to recognize, however, that this decision will affect our neighbors, ourselves and our communities. . Large corporations are viewed negatively by some in Montana, due in part to our history. But, we need to recognize that Smurfit-Stone was a major contributor to charities and other community needs. The company encouraged its employees to get involved in community-based organizations, such as the Chamber, Little League Baseball, and many others. Their decision to leave Montana will affect all of us.
It is important to fully understand the impact of the mill closure. When the economic and social ramifications are considered, many want to know if anything can be done to mitigate these impacts. Can the mill be re-opened? Is a sale to another company possible? If the facility is not going to be used to make paper, what other products could be made that would restore the mill’s vital role in providing a market for wood residues, small trees and woody biomass?
I am pleased to report that a serious and determined effort is underway to answer these questions and develop a response that will restore the economic benefits of basic manufacturing . MAEDC, Montana’s Governor, his Office of Economic Development, the Attorney General, the Montana Department of Commerce, the Montana Department of Natural Resources and Conservation, Missoula County, the City of Missoula, and several private businesses owners and investors are working to identify possible buyers or to create a new entity that would make an offer to purchase the facility. The leaders of this effort will need the cooperation of Smurfit-Stone to gain access to all the information needed to assess the economic feasibility of a new operation. But, if the company does not want to provide that information, the alternative of working with the bankruptcy court and the creditors’ committee will be pursued. On behalf of the state and the private business leaders, our organization has engaged an attorney for this purpose. We hope this will be the first step toward re-opening the mill and saving jobs.
As this effort goes forward, let’s recognize we have some strong assets in our favor. For the time being, we have a skilled and available work force. We have a network of small businesses that have the knowledge and expertise needed to ensure efficient operation of a complex industrial facility. We also have ample supply of raw material that can be used to make paper, linerboard, or other products such as liquid biofuel. The Frenchtown facility could be converted to other uses that require a large industrial operation. We need to understand, however, that there is no guarantee of success. It will be an uphill struggle to find a buyer or create a new entity to operate the facility. It is a daunting task.
The fact that there is no “silver bullet” that will fill the economic cavity created by Smurfit’s decision does not mean that we should accept the closure as signifying the demise of industrial activity in the Missoula Valley. Yes, the economic impact of the closure will be dire. The Bureau’s analysis paints a grim picture. But, this is all the more reason for the community, the region and the state, including elected officials, the private sector and economic development organizations, to work together to identify opportunities, understand the challenges, focus on common sense priorities and develop realistic strategies that will restore the jobs that are so critical to the quality of life we enjoy in Montana.
This effort is more difficult when commentators deride ideas that are being discussed at this early stage. We are not well served when assertions are made that are simply outdated. There is no way, for example, that any new operation at the mill would be allowed to make our valleys into sewers by dumping large quantities of air pollution. Montana’s environmental laws are among the strongest in the nation. To make claims that a new operation at the mill would violate the State’s air quality standards does not help the effort to bring the mill back to life.
Many of us in the Missoula Valley remember the day when the pulp mill was a major reason our air quality was awful. The owners of the mill, however, have worked with the State of Montana, researchers at the University, and environmental engineers to solve those problems. The company has invested millions of dollars into environmental mitigation equipment and procedures. Because of these investments, the mill has the potential of once again becoming a vital economic engine. We all need to support the efforts of our leaders to make this happen.
|
|
