McKinley Paper Mill layoffs to have widespread impact

Economic loss, worker retraining discussed

PORT ANGELES — McKinley Paper Mill workers, union representatives, politicians, social service workers and other community leaders addressed reasons for layoffs announced last week, the economic impacts it will have and how to meet the needs of affected workers.

Kevin Scott, the general manager at McKinley, told Clallam County commissioners on Monday the company’s decision to lay off employees was entirely based on economic concerns.

Scott, who has been with McKinley for about seven months, said costs have been skyrocketing in recent months. McKinley’s main input material, old corrugated container, has become especially expensive on the west coast.

The energy costs for running the mill also have been increasing, he said.

Another factor is the inefficiencies of the mill. Scott said the machines they use are old and not designed for the grades they are running. That means the products they make don’t fit the machines very well. Replacing the machines would cost money that the mill doesn’t have, he said.

The mill workers have been addressing these concerns recently, and Scott said the mill has seen improvements in efficiency and reliability.

“But the overriding economics show that the gains we’ve made just aren’t good enough, yet,” he said.

While battling increasing costs, Scott said prices for the mill’s products have dropped.

“We’ve got increasing energy costs, increasing raw material costs, and the market — while it’s begun to improve — has not been to the extent that has brought us to being profitable,” Scott said.

“The company, looking at that, not seeing an end in sight, made a choice to idle the mill,” he said.

Although McKinley plans to lay off 193 workers on Aug. 25, Scott said it plans to keep a skeleton crew around so the mill can be restarted “when the market conditions warrant it.”

Scott, who has been signing workers’ layoff notices — including his own — over the past week, said the mill’s situation is “a very tough thing.”

“[But] economically, our market is not providing the revenue to overcome the energy and the raw material costs,” he said.

“That puts us in a bind.”

John Fox, president of the Association of Western Pulp and Paper Workers Union 155 Local and one of McKinley’s workers, wasn’t convinced that economic concerns were the overriding reason for the mill’s shutdown.

Fox said the union had just begun negotiations with the mill for a contract that would “bring the employees up to industrial standard.”

That, Fox said, was when the company decided “that they were no longer interested in running the mill.”

“This doesn’t sound coincidental,” Fox said.

“This mill is, and always has been, an integral part of Port Angeles, and we’re heartbroken at the idea of walking away from it,” Fox said.

Impacts of the closure

Economist Dan Underwood found a potential for millions of lost dollars in tax revenue and income as he gave a preliminary analysis of how the layoffs will impact Clallam County.

Underwood analyzed three economic dimensions: The direct effects of the McKinley layoffs; the indirect effects, or effects that will occur in the supply chains; and the induced effects, or the effects that come when direct and indirect workers spend the money they’re making in the local economy.

In the realm of employment, Underwood’s analysis estimated a total of 418 jobs will be affected. He also estimated there will be a loss of about $31.275 million in income.

Beyond just the 193 workers McKinley plans to lay off, the discussion acknowledged businesses that work with the mill also will be negatively impacted.

One of those is Hermann Brothers Logging and Construction, which was represented at the meeting by Bill Hermann.

Hermann said when the mill shuts its doors, the Hermann Brothers’ revenue is going to drop dramatically, resulting in ripple effects to his employees. Hermann said between 30-35 workers could lose their jobs, and about $3 million will likely be lost in payroll.

“This is not a pretty situation,” Hermann said.

Underwood also analyzed the mill layoffs’ impacts on tax revenue. He found that, not including electricity taxes that are paid to the city of Port Angeles, the total loss in tax revenue will be $13.5 million combined for state and local government.

Two caveats Underwood noted is that the impacts will not be instantaneous, and the report represents the bottom line without any other changes happening in the world.

Workers’ needs

Many members were present to discuss how to address the workers’ needs created by the layoffs.

One of the institutions poised to help is the Olympic Workforce Development Council (OWDC), which is planning a rapid response.

Alissa Durkin, OWDC’s program supervisor, said rapid response will provide an onsite or hybrid meeting that will bring in representatives from the community to discuss the resources that are available.

Services they will offer include details about unemployment insurance, health benefits, job search assistance, career counseling services, financial planning, workforce development services and more.

Bill Dowling, executive director of the OWDC, said they also have funding they can draw upon to help pay for training and support services for the affected employees.

“There are different funding streams that we can bring together to help these individuals,” Durkin said.

Marc Abshire, executive director of the Port Angeles Regional Chamber of Commerce, said the chamber is hoping to pull together a summer job fair in late July or early August to present employment opportunities to affected workers.

“There’s just so many open positions in the county that need to be filled. The opportunities are out there,” Abshire said.

Another resource available to workers was presented by Rick Dickison, the director of the Center for Inclusive Entrepreneurship (CIE).

Dickison said CIE will provide no-cost training and one-on-one technical assistance for people who are looking to start a business.

“[We’re] not gonna be the answer for 193 jobs, but as part of the portfolio of responses, we would love to offer our services,” Dickison said.

Chelsea Mason-Placek of the Washington State Labor Council said the council is “here to help in any way we can for the folks who are impacted.”

The worker retraining program at Peninsula College also stands ready to help these workers. Brian Kneidi, who oversees the program, said they will help individuals get unemployment, pay their tuition and get them into the college as quickly as possible.

Port Angeles Mayor Kate Dexter said the city of Port Angeles is “committed to doing as much as we can for the folks that live within the city.”

She said the city is working on a utility assistance program for laid-off individuals, and the human resources department is working to help fill open jobs.

“If other people have ideas of ways the city could help, please bring that to our attention,” Dexter said.

Ezekiel Hill, community service office administrator for the local Department of Social and Health Services offices, said DSHS will offer wraparound services including food, medical and cash benefits and employee training.

Paul Jarkiewicz, the executive director for the Port of Port Angeles, gave an inventory of open positions across the Olympic Peninsula, urging leaders to figure out ways to keep the workers employed locally.

“We can’t afford to lose 193 skilled or professional folks out of this community,” Jarkiewicz said. “If they leave, they’re not coming back.”

Other individuals who expressed their support for workers and offered to help in any way included state Rep. Mike Chapman, D-Port Angeles, Julie Anders from the state Department of Commerce and Haley Schanne representing U.S. Rep. Derek Kilmer’s office.

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Reporter Emma Maple can be reached by email at emma.maple@peninsuladailynews.com.

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