Boise to eliminate 300 jobs, close 2 paper machines in International Falls
One-third of the jobs at Boise Inc.'s paper mill in International Falls will be permanently eliminated by October, the company announced Thursday. The job cuts by the city's largest employer -- and the latest blow to the northern Minnesota wood p...
One-third of the jobs at Boise Inc.'s paper mill in International Falls will be permanently eliminated by October, the company announced Thursday.
The job cuts by the city's largest employer -- and the latest blow to the northern Minnesota wood products industry -- will come with the company's plans to close two of the mill's four paper machines.
A total of 265 union and salaried jobs will be lost at the mill by the company's fourth quarter, with another 35 jobs eliminated throughout the corporation, said Lori Lyman, the public affairs manager at the International Falls plant.
"These decisions are not made lightly," she said. "We have explored several options over the last few months. And in each case, we came to the same conclusion."
With the decreased demand for paper, the company had to take steps to ensure the viability of the mill, Lyman said. She said Boise remains committed to maintaining its International Falls plant with its remaining 580 employees. To that end, it will immediately invest $8 million into the downsized plant, she said.
But the news of 265 impending job losses in a city of about 6,500 people is "devastating," said International Falls Mayor Bob Anderson.
"Certainly, the loss of an industry's jobs brings with it the loss of several hundred other support positions in the community," he said. "Likely every family, every business, every organization in Koochiching County will be affected some ways."
Jim Skurla, director for the University of Minnesota Duluth Bureau of Business and Economic Research, calculated the economic impact: The loss of about 300 Boise jobs will result in a total loss of 635 jobs in Koochiching County and $280 million to the local economy over a year. And in the seven-county Arrowhead region, the result will be 910 jobs lost and $318 million lost to the regional economy, he found.
Anderson, who became mayor in January, was seeing the layoffs from a new perspective. He had worked for Boise for 51 years, retiring 18 months ago after holding Lyman's job for 25 years.
"It's not any easier being on either side of this," Anderson said. "I was there when we had to make announcement of layoffs. Those things are gut-wrenching and my guts are wrenching today."
The announcement of the elimination of 300 jobs came in the company's first quarter financial report, in which the paper company announced it lost $1.2 million from January through March. That compares to the company's net income of $21.3 million for the same period in 2012.
In the report, President and CEO Alexander Toeldte said two paper machines and an off-machine coater at the International Falls mill would be closed by the fourth quarter to improve the company's cost competitiveness in light of the declining demand for their paper products.
The closures will reduce the company's production of white business paper by about 115,000 tons, or 9 percent, and allow the company to "focus our efforts on key products and machines that drive our profitability, improve our cash flow and enhance the overall competitiveness of our International Falls mill and our paper business," Toeldte said.
Union leaders at the mill were informed of the job cuts Thursday morning, before it was publicly announced.
"It was quite a shock to us," said Bob Misner, president of USW Local 159 in International Falls, which represents the mill's paper making production workers. "I didn't see it coming."
As mill workers received the news, they were left confused more than anything, Misner said.
"Most people are simply asking questions," he said. "We just heard the news. We're in the process of setting up meetings to discuss what's going on. As far as who is going to be affected the most, we don't know yet."
Laid off salaried workers will receive severance packages and placement services, Lyman said.
She declined to talk about possible severance for the unionized hourly workers who will lose their jobs, noting that contracts with eight different unions are involved.
"We will meet with union representatives to discuss the effect on employees," she said.
More secure future
Boise Inc. is based in Boise, Idaho, with four large mills making white paper and another mill producing newsprint. The company also owns paper distributing facilities.
The company will retain about 580 employees at the International Falls mill running two paper machines producing uncoated white office paper and producing the pulp that's made into paper, said Virginia Aulin, Boise vice president of human resources and corporate affairs.
"We will no longer have to buy pulp to make our paper in International Falls," Aulin said.
Aulin said the job elimination is permanent but the downsizing should make the remaining mill jobs more secure.
"All of us use less paper. There's a declining demand for paper and we have to be sustainable if we want to survive as a company," she said.
Mayor Anderson saw an upside.
"We've been more fortunate than other communities that had their economy based on the paper industry," he said. "Some have lost their entire mill. The silver lining of this announcement is we will still have a paper mill better positioned to face the challenge of the global marketplace.
"And so the challenge for our community is, first of all, to support the many families who will be losing their employment. And second, to do everything possible to keep those nearly 600 positions and the mill viable into the future."
The downsizing is expected to have a ripple effect through the Koochiching County economy and hit already hurting loggers across the region who supply the mill with its wood fiber.
Earlier this year Wisconsin-based Wausau Paper said it is closing its Brainerd mill and eliminating 134 jobs because of stiff global competition in overseas markets where the company was trying to expand.
Last August, Georgia-Pacific announced it would permanently close its Duluth hardboard plant, putting 141 employees out of work.
Since 2008, three oriented strandboard manufacturing mills closed in Grand Rapids, Bemidji and Cook with a loss of hundreds of jobs. In Deerwood, 158 jobs were lost when Weyerhaeuser closed its strand lumber plant. And last year the Verso Paper Mill in Sartell closed for good after a deadly Memorial Day explosion and fire. It had already shed 175 jobs in late 2011 and the closure meant 260 more layoffs.
Wayne Brandt, executive vice president of the Timber Producers Association, said more than the decreased demand for paper is to blame. He said Minnesota's competitive advantage has eroded because of increased energy costs and the use of lower quality wood that comes from harvesting older trees first.
"In a shrinking market, they make it where it's more cost-effective to make," Brandt said. "We need to make sure it happens in Minnesota. Our mills need to be competitive. That's what we have to work towards. We would like to see that production here. We want jobs here in Minnesota."