Grays Harbor paper mill closes down for good

2014-01-15 Ashley Bach

The Aberdeen Daily World this month made it official: Harbor Paper is not going to reopen.

The story of the Hoquiam, Wash., paper mill is long and its ending especially sad, given the importance of the mill to Grays Harbor County, where the mill had been one of the largest employers. Grays Harbor County has the third-highest unemployment rate in the state (13.2 percent) and Harbor Paper's demise in the timber community will be felt for years to come. 

The paper mill in Hoquiam was used to ups and down. It first opened in 1929 and then shut down in 1992 after a massive decline in local logging. A year later, it reopened as Grays Harbor Paper. Its team of 250 employees was less than half of what the mill employed before the first closure, but at least it was still operating as a critical economic engine for the coastal community. The new company switched to manufacturing recycled paper, which allowed the mill to operate for another 18 years. 

In 2011, the mill closed again, and 16 months later, a new owner - now with 175 employees and the stripped-down name Harbor Paper - started the mill back up. The re-opening ceremony in fall 2012 was attended by Gov. Chris Gregoire and other dignataries. Company employees even gave the new owner, Cesar Scolari, a standing ovation

But the mill's most recent resurrection lasted only a few months. The mill was shut down once more in February 2013. As last year wore on, word came out several times from the new owners that they planned to reopen, but the longer the closure, the more locals started to realize the shutdown may be permanent. 

Two stories this month (here and here) from the Aberdeen Daily World were the first official confirmation that the mill - which had been operating off and on for more than 80 years - was finished. Reporter Amelia Dickson saw what other locals saw: the mill's new owners put all of the mill's assets - everything from the paper machines and the mill's buildings to generators and three Ford pickups - up for auction on BidItUp.com. (The actual auction is Feb. 19.)

The auction listing confirmed "what many in the community had feared: Harbor Paper would not reopen. PUD officials are operating under the assumption that the mill will be torn down," Dickson wrote on Jan. 11.

So what happened? Why did the mill close down so soon after reopening and why couldn't the mill get back on track?

According to the Daily World, the mill's owners have a different version of events than the owner's primary lender and the State Department of Commerce. But the basic narrative is the same: the mill was losing money hand over fist, "incurring more than $11 million in operating losses and $21 million in debt,” according to a letter last month from Harbor Paper to its creditors. The company made several attempts to reopen, first by renegotiating prices with its suppliers and then by trying to sell to yet another ownership group.

At one point, according to the Department of Commerce, Harbor Paper's primary lender agreed to let the company stop making payments on a $5 million loan to allow the company to get the mill back on its feet. But Harbor Paper eventually decided against this arrangement.

Whatever the details, the mill is done, leaving behind millions of dollars of debt, subsidies and other deals, brokered by the Department of Commerce, Grays Harbor PUD, Grays Harbor County and the city of Hoquiam. Harbor Paper owes money to most of these government agencies, though it's unclear how much, if any, they will get back. Grays Harbor PUD is even on the hook to clean up the mill site.

The reason so many of these government agencies were willing to step up is because of the critical role the Harbor Paper mill played in Grays Harbor County. The mill's permanent closure is another sign that our region's timber communities need help. Fortunately there are concrete proposals on the table - from U.S. Rep. Doc Hastings' national timber reform plan to Rep. Peter DeFazio's plan to increase the federal timber harvest in Oregon.

None of these plans are going to be the silver bullet for Grays Harbor County, but they help. Our model for federal forest management is broken, and our timber communities need a reasonable timber harvest and reasonable timber revenue to help get back on their feet.