Former Nippon cogeneration plant down; fewer than 30 employees retained

PORT ANGELES — The former Nippon Paper Industries USA cogeneration plant has been shut down and eight of its workers laid off as the paper mill breathed its last breath — in its present form — for up to 18 months, McKinley Paper Co. spokeswoman Cathy Price said Monday.

Price, Nippon’s former human resources manager, is now filling that role with Mexican-owned McKinley, which purchased the mill March 31 from Japanese-owned Nippon for $20.6 million.

McKinley on Friday stopped staffing the cogeneration plant, which produced steam for the mill and electricity for sale while fewer than 30 former Nippon employees will stay on with the new owner in various capacities that don’t involve production, said Price, declining to specify a number.

Price said they will perform management duties, provide security and keep equipment ready to start up again in mid- to late 2018 in a retooled plant.

“They’ll be keeping the equipment turned periodically to stay warm so it’s not all rusted by startup,” she said, adding they will be “helping with the transformation.”

“A lot of us are still dealing with the aftermath of the sale,” she said.

McKinley will manufacture cardboard liner board, a heavier grade paper than the newsprint and directory paper Nippon produced at the 97-year-old Ediz Hook factory.

“All of our analysis and business planning is not yet done,” Price said.

“Right now, our intent is to transform the Port Angeles mill, turn a profit and hire employees again.”

Laid-off employees have been helped by federal Trade Adjustment Assistance funds.

It pays wage subsidies and covers job-training assistance and job-search expenses that kick in when unemployment insurance runs out.

But TAA funds could be delayed until late May or early June for about 30 employees who have been permanently laid off since mid-March, said Bill Messenger of the Washington State Labor Council-AFL-CIO, who prepares and does research for unions and companies applying for TAA assistance.

Nippon employees most recently drew benefits from the TAA program after December 2015, when Nippon shut down one of its two operating paper-making machines.

The second machine went down in January.

TAA assistance from the December 2015 cutback covered 80 percent of the 151 workers that Nippon earlier told the federal government earlier this year would be permanently laid off.

But that assistance ran out in mid-March, before the final round of layoffs, Messenger said.

The remaining 30 or so employees are salaried and consist of more senior hourly employees might be less inclined to do what it takes to find new employment, he suggested.

“They’re not likely to want to move, and that’s often what it takes,” said Messenger, himself a former power house operator at a Cosmopolis pulp mill when it was owned by Weyerhaeuser and a Weyerhaeuser employee for 33 years.

The TAA assistance application by the Association of Western Pulp and Paper Workers, which represented Nippon and now McKinley workers, “could take two or three months” from the time it was filed, which was March 9, Messenger said.

“We will suggest that people talk to their legislators in their area if it goes that long,” he said.

Price said the TAA application included an explanation by Nippon of “the effects of foreign trade” on Nippon’s decision to permanently lay off its work force.

“Directory paper and printing and writing grades have declined due to foreign competition and demand loss,” Nippon said in the application, according to Price.

“We could not develop our industrial products and customer base fast enough to keep the mill full and restore profitability.

“This loss of profit led to the decision to either sell or close.”

The application included estimated sales totals for the past two years, Price added.

Messenger said Nippon, which used recycled material to make paper, was under intense competition from China and Canada.

“There are big, brand new plants in China making the same stuff and making it a lot cheaper,” he said.

“They can afford to ship across the Pacific and still make us unable to compete.”

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Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at pgottlieb@peninsuladailynews.com.