The announced shutdown of the communications paper arm of Georgia-Pacific’s Camas paper mill may be the harbinger of what’s to come. Consumers are buying less paper, production costs are increasing, and competition is fiercer.
G-P will lay off as many as 280 workers next year when it shifts production of paper used for printers and copiers elsewhere. The Southeastern states will benefit from future pulping centers at its Louisiana facility.
People working at paper mills are well-paid and have good benefits. Many live in rural communities which suffer from chronic high unemployment. The mills are a big part of the local tax base. For example, G-P’s mill is Clark County’s largest property taxpayer, recently paying almost $1.8 million.
The Camas mill has been a big part of Southwest Washington’s economy since it opened in 1885. It grew into one of the world’s largest papermaking complexes. At its peak it employed nearly 2,700 workers.
In the 1970s, Crown Zellerbach, the longtime mill owner, launched a $425 million mill modernization. That investment would be equivalent to roughly $1 billion today. The mill reached the point that it need to be updated or closed.
Zellerbach had another option. Close Camas and expand the newer Wauna, Ore., complex 70 miles down the Columbia River. The company decided to rebuild Camas mainly because it had a strong workforce, existing pollution control and energy equipment, and good support from local and state leaders.
While the timing was right in the late 1970s to modernize, the economic climate was not. Between the time the plans were finalized and construction contracts were signed, the economy tanked. In 1980 inflation, interest rates and unemployment soared into double digits. While some companies curtailed construction, Zellerbach didn’t.
In 1981, lawmakers, attempting to balance the budget, withdrew the sales tax exemption for pollution control expenditures and eliminated the sales tax deferral and B&O tax credit on the rest of the project. That added $10 million to the cost. (The Legislature eventually restored the incentives.)
The extended costs and borrowing made Zellerbach financially vulnerable and the company succumbed to junk bond dealers in 1986. It was taken over and torn apart. Camas and Wauna were sold to James River Corp.
Washington paper operations, along with semiconductor, aerospace, carbon-fiber, food processing and small manufacturing, use lots of electricity. In our state, over 70 percent of our electricity is from hydropower.
Low-cost and reliable energy has offset other high operating costs, but over recent years added threats of a new state carbon tax, and stiffer environmental regulations have mill owners squeamish.
Unfortunately, when manufacturing goes overseas or to other U.S. location, electricity is often supplied by coal or natural gas-fired power plants so there are more, not fewer, carbon emissions.
To protect jobs and rural communities, Washington elected officials must help mitigate competitive costs. Costs matter more than ever today.
They also need to focus on keeping rural traditional industries competitive and avoid targeting industries for new taxes, compliance costs and fees. We all need strong regulations which are reasonable, affordable, workable and achievable.
Papermakers still have strong markets for many products, but consumers’ buying and reading habits will continue to change. Foreign producers will continue undercutting prices for American-made paper.
It is the real world and it isn’t likely to change soon.
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