Originally created 05/05/02

Paper cuts



(Editor's note: International Paper Co., the world's largest paper producer, has been trimming 10 percent of its U.S. work force, about 3,000 employees, to remain profitable in an increasingly competitive global industry. Job loss at the company's 900-employee Augusta coated-paperboard mill have been minimal. Cuts have been much more severe in Savannah, Ga., where the job loss has been covered by the Savannah Morning news, a sister publication of The Augusta Chronicle.)

SAVANNAH, Ga. - The paper mill on West Lathrop Avenue was such a big deal when it opened in 1935 that Savannah visitors sent family and friends picture postcards touting it as the largest facility of its kind in the world.

Town elders hailed Union Bag's new mill as Savannah's savior from The Great Depression. And over the next couple of decades it seemed as if every other child's father worked at the plant known as "The Bag." Many of those youngsters would one day follow in their parents' footsteps.

At one time, more than 5,500 people relied on the mill complex for good-paying jobs.

Even the mill's odor - caused by boiling wood into pulp used to make paper - became synonymous with prosperity. But today, unless the wind blows just right, the mill hardly comes up in casual conversation.

The city has moved on, developing a burgeoning tourism industry and a port that brings in a high tide of warehousing and distribution centers.

Yet, the large timber trucks still lumber into town toward the paper mill, and few Savannahians have ever considered a future without the facility. But lately, the unthinkable has become the plausible:

International Paper, which bought out Union Camp in 1998, has cut the work force from 2,600 to 1,200 employees.

The mill's county property taxes - based on the value of the facility - have been dipping since a high of more than $1.34 million in 1996 to about $1.2 million in 2001. During that time, the mill has scrapped or shut down five of eight paper-making and linerboard machines.

When IP started the new year by announcing another 150 layoffs at the Savannah mill, gone were the reassuring hands of Willis Potts, the civic-minded former vice president of Union Camp who headed local operations. In his place is the reclusive George O'Brien, one of IP chief executive John Dillon's chief lieutenants and the top-ranking IP official in Savannah.

As the bad news about the mill continues to filter out, Mr. O'Brien hardly casts a shadow in the community. Twice, he scheduled and then canceled interviews for this article.

All this has led to rumors that IP may close the facility.

The perilous state of the paper industry adds to the speculation.

Four years ago, the U.S. paper industry annually exported close to 5.5 million tons of linerboard used to make packaging. Since then, the development of Asian and South American mills has caused foreign demand for U.S. linerboard to plummet below 3 million tons per year.

Still, IP officials say publicly they are here to stay and acknowledge that it would be difficult to completely abandon Savannah. They want the Savannah mill to be leaner and more efficient and similar in size to other company mills.

IP's chief executive, John Dillon, told Wall Street analysts recently that company-cost cuts, such as those in Savannah, are increasing profits. The cuts are intended to help debt-heavy IP pay for its purchases of Champion International, Union Camp and Georgia Pacific's timber division.

The local mill has three major things in its favor:

  • The largest and most productive machine, called Machine No. 8, is the size of two football fields and surrounded by considerable infrastructure, making it costly to tear down and transport elsewhere.
  • The plant has a state permit to pump 28.7 million gallons of free water a day from the Floridan aquifer. Buying that water from a utility would cost thousands daily.
  • The mill's location reduces transportation costs. The Georgia Ports Authority surrounds the mill, handling imports and exports of IP products. The 400 truckloads of wood arriving at the plant each day roll off interstates 95 and 16.
  • In addition, IP has moved its 450-employee Forest Resources Division offices to Savannah, in part, to manage its vast tree and land holdings in the area.

    But the local mill's fate depends most heavily on the No. 8. The decade-old machine has allowed the mill to produce more with fewer people.

    Only 16 to 20 people per shift are needed, mostly watching for problems and easily keying in new specifications as needed.

    "We can do everything from the control room," said Wyman Simmons, the team leader on No. 8.

    The 30-ton rolls of brown paper at the dry end of No. 8 are cut and sent to other plants that turn the paper into sacks or the lining for boxes that package everything from frozen pizzas to washing machines.

    By spitting out 3,000 feet of paper per minute while running at the equivalent of just more than 34 mph, No. 8 is a speedster. No. 8's post-World War II counterparts, Nos. 5 and 7, produce 1,000 to 2,000 feet of paper per minute. They max out at a speed of about 25 mph.

    Union Camp spent more than $1 billion upgrading the Savannah mill after 1980, much of that to build No. 8.

    When IP bought out smaller Union Camp in 1998 for $7.9 billion, Mr. Dillon cited the local mill and No. 8 as keys to the company's financial future.

    Running as efficiently as possible also is a mantra heard at Georgia Pacific's massive Rincon mill and Weyerhaeuser's recently acquired Port Wentworth plant.

    Mill managers and line employees know their best job security is a bottom line that makes corporate bosses salivate.

    "In the long run, on a productivity basis, the U.S. paper business production has basically doubled since 1970," said Michael Toma, director of the Center for Regional Analysis at Armstrong Atlantic State University. "And it's continuing to grow from a production standpoint."

    The Savannah-area's wood products industry hit its employment high of 5,700 workers as the No. 8 came on line.

    Fort James became a major employer when it built a tissue-paper plant - now owned by Georgia Pacific - in Rincon in the late 1980s.

    A decade later, workers in this industry have dropped by more than 50 percent to about 2,800.

    Recent cuts include 550 lost jobs caused by the closure of Stone Container's pulp and linerboard plant in 1998. About 100 workers were laid off in 2001 when Georgia Pacific shut its drywall operations in town.

    But the bulk of the nearly 3,000 job cuts came at the West Lathrop Avenue complex in Savannah.

    The mill started shrinking in 1994 with the closing of the 59-year-old bag plant and the layoffs of nearly 400 people.

    Some of the industry's losses can be blamed on failing international economies, domestic spending drops, brisk corporate mergers and stagnant or declining stock prices.

    The national industry contracted by about 10 percent during the time Savannah lost half its wood-products-related jobs, which should have caused a significant cultural change, Mr. Toma said.

    But because the job losses occurred in the 1990s, instead of a few decades ago, they registered hardly a blip on Savannah's unemployment rate because of the city's emergence as a tourist hot spot and major growth in distribution and manufacturing sectors. Tourism and services jobs now account for about a third of the economy.

    But Savannah does seem to have a place in IP's future.

    For the mill workers who remain, they have to look no farther than No. 8 to realize what to thank.

    "When you and I are dead and gone, that machine will still be there," Mill Manager Dave Hailey said.