PORT TOWNSEND — Port Townsend Paper Corp. executives, who announced the company’s closure of two Canadian box production plants in Kelowna, British Columbia, and Calgary, Alberta, are mum about the potential impact the move might have on the Port Townsend mill that produces bleached kraft paper for boxes made at the plants.
Port Townsend Paper, which employs 290 at its local mill, shared the news Wednesday in a prepared statement that made no mention if the closures would have any economic impact in Jefferson County.
Asked for additional information on what could happened to the Port Townsend mill, Chuck Madison said in an e-mail message that the statement “covers what we would like to see in the media.”
Mill executives have been reluctant to talk to the media in the aftermath of coming out of Chapter 11 bankruptcy proceedings in 2007.
The company confirmed that the Canadian corrugated box production plants will shut down in early December.
The Port Townsend Paper Family of Companies employs about 660 people and annually produces more than 320,000 tons of unbleached kraft pulp, paper and linerboard at its mill in Port Townsend.
The company manufactures about 1.3 billion square feet of corrugated products annually at its Crown Packaging plant and BoxMaster plant. The plants operate under the Crown Packaging line.
Port Townsend Paper reported that the closure of a major Okanagan-area customer last year sealed the fate of the Kelowna operation.
Fifty workers in British Columbia will be laid off Dec. 4.
The closures announcement comes after Port Townsend Paper Corp. learned last week that Gov. Chris Gregoire and the state Department of Commerce awarded the company a $2 million grant — federal stimulus money to upgrade its biomass cogeneration boiler and plant, which will create temporary jobs and ultimately provide green power to the mill and Puget Sound Energy customer grid. Waste wood would fuel such a plant.
The mill was one of 18 others that state Commerce selected of 120 applicants for grants and loans.
Port Townsend Paper officials said they were grateful for the grant that will require them to go through negotiations with the state and a National Environmental Policy Act process before the plant can be built, creating 108 temporary jobs.
Equipment from the shuttered Okanagan plant will be moved to Port Townsend Group facilities in Richmond and Burnaby, British Columbia.
The Port Townsend Paper Family of Companies and its Crown Packaging division stated that the company intends “to wind down production at the Kelowna corrugated box manufacturing facility, located on Enterprise Way, by year’s end.”
The change will result in the layoffs of about 50 employees.
The facility’s largest customer, Owens-Illinois in Lavington, closed its doors in October 2008.
Having lost 35 percent of the facility’s sales, the company cut costs in every way it could, including staffing reductions, in an attempt to keep the facility financially viable and see what 2009 would bring for the Western Canadian box market, Port Townsend Paper’s statement said.
“Unfortunately, the market continued its four-year-long contraction in 2009 as box customers struggled with rising costs for energy and raw materials, the strength of the Canadian dollar affecting exports, expensive labour and an economic downturn.”
“The Western Canadian box market is as tough as we’ve ever seen it,” said Joe Beers, the firm’s packaging divisions president.
The company has invested several million dollars in improvements at Richmond over the past few years “which will provide the ability to effectively service our customers with quality products in all our markets,” Beers said.
Crown Packaging will retain a sales and customer service office, along with a distribution warehouse, in Kelowna.
In addition, the company is investing more than $2 million more in projects to ensure timely deliveries of products from its machines to all of its markets.
Charles Hodges, Port Townsend Paper chief executive officer and president, said in March 2008 that he expected the Port Townsend mill to continue to improve profits after emerging from Chapter 11 bankruptcy protection in August 2007 as a private company under the control of its bondholders.
“The mill has a future, it will be here for a while, but we have to get to a point where we get our cost structure under control and be able to put money back into the mill, ” Hodges said then, shortly before he took the reins of the Port Townsend Paper Corp. mill and the company’s box-making facilities in Canada, from John Begley on April 30, 2008.
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Port Townsend-Jefferson County Editor Jeff Chew can be reached at 360-385-2335 or at jeff.chew@peninsuladailynews.com.