Mill closure impacts Montana forest products industry

Smurfit-Stone Container Corp. announced this week that it will close its mill near Frenchtown at the end of the year, a move that is expected to have sweeping impacts on Montana’s forest products industry and other economic sectors.

The closure will take effect Dec. 31, eliminating 417 jobs. Another mill in Ontonagon, Mich., ceased operations in September, ending 182 jobs.

Steve Klinger, Smurfit-Stone president and chief operating officer, said the two mills are high-cost facilities that do not provide adequate long-term returns. The company filed for bankruptcy protection last January and expects to have a bankruptcy reorganization in the coming spring.

The loss of $45 million in payroll and benefits (Frenchtown Smurfit-Stone employees had average pay of $70,000 a year) will have significant long-term and short-term impacts from Missoula to Libby, according to the University of Montana’s Bureau of Business and Economic Research.

With the mill’s ties to forest products, trucking and rail, the bureau estimates the closure will lead to additional job losses in those areas as well as in the construction, retail and health-care sectors. Tax revenue reductions also are expected for local and state governments.

“The jobs at Smurfit-Stone have a very large footprint across the local economy,” said Patrick Barkey, the bureau’s director. “We think that the total job impact from the closure could be as high as 1,500 jobs when all the linkages are taken into account.”

Todd Morgan, the bureau’s director of forest products research, said the impacts of the closure will ripple throughout the industry.

“The Frenchtown mill has played a unique role as both a user of mill residuals from other wood-products facilities in the state and a buyer of smaller-diameter, lower-value timber from land management activities,” he said.

Montana’s forest products industry has had significant losses in the last few years. About 1,000 mill jobs have been lost since 2005 and overall employee incomes are down by about $12 million.

Chuck Roady, vice president at F.H. Stoltze Land and Lumber Co. near Columbia Falls, said he was notified of Smurfit-Stone’s pending closure Monday morning.

“That’s a pretty tough blow,” Roady said. “The whole forest products industry is connected at the hip. They are a huge user of byproducts.”

The Smurfit-Stone mill has long purchased wood chips from Montana sawmills to make linerboard containers. The mill also bought round-wood pulp that was ground into chips, and it purchased hog fuel that was burned to provide power at the mill.

“Now people aren’t going to have any place to take that stuff,” Roady said.

“It’s a huge impact not only to the forest products industry but to all of Montana. It’s a tough deal,” he said. “It’s a blow to forest management. Being able to take pulp (from logging sites) and turn it into an asset was a big deal … What are these logging contractors going to do now to get rid of that stuff?”

Roady said the closure will result in a revenue loss for Stoltze.

“It will hurt us,” he said. “We took a lot of round-wood pulp there and a lot of our chips.”

Chip trucks heading to and from Frenchtown have long been a common sight on western Montana highways, but that will come to an end.

Roady said the Frenchtown mill at one point was averaging about 150 truckloads of pulp per day plus about 30 loads of hog fuel and about 750 loads of chips per week.

“That’s a lot of trucks,” he said.

He noted that Montana Rail Link also will be impacted because the railroad for years has hauled chips to the mill from eastern Montana and hauled the mill’s container products out of state.

(Jim Mann is a reporter for the Daily Inter Lake in Kalispell).