Blue Heron Paper to Shutdown Oregon Mill
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Blue Heron Paper Co., Oregon City, Ore., USA, this past week announced that it is permanently curtailing operations at its Oregon City specialty paper mill and issuing WARN notices to its employees related to permanent closure of the facility. On Dec. 31, 2009, Blue Heron filed for bankruptcy protection and has been operating for the last 14 months under the Chapter 11 protective umbrella as it has refined its reorganization plan and tried to emerge.
Immediately after filing, the company went through a downsizing in which it cut about 3,000 tons per month of newsprint production, reduced headcount, increased worker flexibility with the support of its union employees, and began a focused effort to grow a new product line of environmentally friendly commercial toweling grades.
"The initial plan was successful in restoring profitability and the company received meaningful support from its suppliers and other creditors", said President Mike Siebers, "but lately those profits began to erode due to escalating waste paper prices and limited availability of that raw material. All of the paper products we manufacture use a high percentage of recycled fiber in them. Mills like Blue Heron are where the actual recycling of the collected waste paper you set out at the curb takes place. But China and other far-East countries have developed an insatiable appetite for recycled fiber to support their own paper plants which are then subsidized by their parent countries in other ways to maintain their jobs. This allows them to drive up the price for waste paper to unsustainable high levels for periods of time, giving them an unfair advantage over companies like ours."
Concurrent with refining its reorganization plan, Blue Heron lately also actively sought an investment partner or buyer who could provide additional capital standing to secure trade credit and strategic or operating synergies with the company. So far it has been unable to identify an investor willing to proceed at an appropriate value.
"Unfortunately things have come to a quick head due to an unforeseeable and dramatic increase in waste paper cost in February," said Siebers. "In this month alone, our delivered cost for recycled paper has increased by $24 per ton, adding around $240,000 to our monthly cost of production and basically wiping out any potential for profit in the near-term future. Our waste paper suppliers have told us to either meet the market price or they will not deliver. This has left the company with no other choice other than to curtail operations and announce the closure. The Oregon City mill is expected to only operate for a few more days as it runs out its supplies. Beyond that, it is unclear if the operation will ever be re-started."
Blue Heron is a 100% employee-owned company that has been in business since 2000. Currently, it employs about 175 union and non-union workers. The mill is an integrated producer of newsprint, high brights, bag, towel, and specialty papers, all made with a high recycled content.
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