Smurfit-Stone closing Missoula mill permanently

AP News
Posted: Dec 14, 2009 7:50 PM

Smurfit-Stone Container Corp. announced Monday it will permanently shutter its paper mill near Frenchtown at the end of the year_ a move that will cut 417 manufacturing jobs in western Montana and threaten perhaps 1,000 more in related industries.

A second Smurfit mill will close in Ontonagon, Mich., as the $7 billion company attempts to drastically cut costs and emerge from federal bankruptcy protection by next spring.

The Frenchtown mill, which produced 620,000 tons of linerboard annually northwest of Missoula, will shut down Dec. 31. The Ontonagon mill ceased operations in September. It had 182 employees.

The closure comes as Montana's timber and forest products industry have struggled in the face of declining demand for lumber used in new home construction and an economic downturn that has spanned the globe.

Plum Creek Timber Co. and Stimson Lumber also have closed Montana mills in recent months, in Bonner, Pablo and Evergreen.

Gov. Brian Schweitzer and U.S. Sen. Jon Tester, both Democrats, on Monday promised job training and other assistance to help workers laid off in Montana. Republican U.S. Rep. Denny Rehberg also pledged his support.

Because of the Frenchtown mill's size _ it paid out $45 million annually in salaries and benefits _ the closure will leave a gaping hole in western Montana's economy, said Patrick Barkey, director of the University of Montana's Bureau of Business and Economic Research.

"Missoula doesn't have all of its eggs in one basket, but some of the eggs are still pretty big, and this is a big one," he said.

The average job at Smurfit-Stone paid more than $70,000 in 2008. Barkey said that's almost three times the Missoula-area average, meaning even if the laid-off workers find employment, other jobs may not prove as lucrative.

The closure could lead to as many as 1,000 spin-off job losses, primarily in the logging, rail and trucking industries, Barkey said.

For Frenchtown, Barkey said it was the broader downturn that hurt most. It cut into demand for cardboard used to ship manufactured goods to consumers.

Smurfit-Stone president and COO Steve Klinger said Monday the Frenchtown and Ontonagon facilities were not providing adequate returns to meet the company's long-term expectations.

"These decisions were made to ensure the company's long-term growth and do not reflect on the hard work and commitment of the employees," Klinger said.

Smurfit-Stone has headquarters in Chicago and Creve Coeur, Mo., and operates 12 other mills in the United States and Canada.