What DIDN’T kill Smurfit-Stone

by Pete Talbot

The sad news out of Frenchtown has everyone speculating on the cause of the Smurfit-Stone closure. Here are some of the reasons given by misinformed wags:

— It was those damned environmentalists.

— It was the greedy labor unions.

— It was the potential rollback of “black liquor” tax credits.

Let’s tackle the environmental claim first. From the Missoulian’s online comments: “I hope all the tree huggers are happy … ” Tree huggers had nothing to do with the mill’s closure. There were sufficient amounts of wood chips, hog fuel and recycled cardboard to provide the raw materials to produce liner board. And with the congressional forest restoration/fuel reduction acts, it looked like there would be a continued supply. There just wasn’t an adequate market to generate the profit margin that Smurfit-Stone wanted out of the Frenchtown mill. Blame the damn invisible hand of the free market.

” … burdensome union rules and inflexible wage rates … ” (from a comment over at Missoulapolis). My understanding is the labor union did everything it could to improve efficiency, improve workplace safety and negotiate reasonable contracts. I suppose the union could have taken pay cuts to match the wages of third-world mill workers — something less than minimum wage — but is that the direction that labor in this country should go? And would management be willing to make the same sort of sacrifice?

And then there’s this gem over at Electric City Weblog: there’s a move in Congress to eliminate a tax credit for what’s considered an alternative fuel used at the Frenchtown mill. “Black liquor, a fuel produced from paper byproducts and a small amount of diesel fuel, qualified as an alternative fuel eligible for tax credits under legislation passed in 2007.” Black liquor could possibly lose its status as a blended fuel tax credit. Thing is, Smurfit-Stone had already filed for bankruptcy before it became eligible for the tax credit, so the POTENTIAL loss of this credit can’t be the reason Smurfit-Stone is closing mills.

Let’s focus on what can be done to help the displaced workers, not on scurrilous excuses as to why the mill closed. It’s time to think outside the (cardboard) box.

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  1. Matthew Koehler

    Below is some more specific information regarding the Black Liquor tax credit.

    Fact is, US Taxpayers have already forked over $10 billion in taxpayer money to the US Pulp and Paper Industry so they could burn through an extra 20 billion gallons of diesel fuel exploiting this loophole in the 2005 transportation bill. That’s the issue here.

    Specifically, Smurfit-Stone (while in bankruptcy, no less) was handed $543 million dollars from taxpayers to burn through an extra 1 billion gallons of diesel fuel so they could pump out packaging products with little demand in the market place.

    How can anyone justify this as good public policy or a good, prudent use of limited taxpayer funds? Thanks for delving into this issue Pete.

    P.S. More info on this topic is at the two posts below.

    See:
    http://cleangreensustainable.wordpress.com/2009/06/02/pulp-paper-industrys-boondoggle-could-cost-taxpayers-10-billion

    and

    http://cleangreensustainable.wordpress.com/2009/07/08/more-on-pulp-industrys-billion-dollar-taxpayer-boondoggle/

  2. ladybug

    Looking forward, the benefits to Missoula include: cleaner air, clearer skies, less dioxin in the river, improved public health and a more attractive community. The economic benefits are incalculable, and perpetual, if some new federally-subsidized retrofit can be avoided.

  3. problembear

    it would be nice to figure out a clean green way to utilize small diameter wood that could be sustainably harvested from the easily accessible (already roaded) forest lands in western montana, but even if the building boom market for wood ever comes back again in our lifetime there are much better timber producing areas of the country to grow wood than montana.

    it is time to start working together like Butte did after anaconda folded to search for new positive ways to develop a realistic new economy for missoula than raw wood production and cardboard. surely we can do better than we have in the past. it is time to adapt and grow an economy which takes advantage of our surroundings, rather than the old extraction and pollution continuum which is really just extinct as a business model anymore.

    missoula is very unique as a great crossroads in some of the largest wilderness of the lower 48 states. it is time to develop a more evolved way of thinking about our local economy. i see this as sad for many yes….but every door closing opens new possibility.

  4. I noticed the sinclair at the corner of 3rd and russell closed and for sale or lease, build to suit.

    Who’s gonna be blamed for that?

    We are in the damned near worse recession/depression since the Depression. Plenty of blame to go around, and I’ve got a couple of names in mind myself.

  5. Thomas Paine

    What I want to know is where are all the tea-baggers cheering on this outcome of capitalism? This is capitalism’s finest hour – the recognition and destruction of an unprofitable (more likely, not profitable enough) enterprise. This is the way it’s supposed to work under capitalism! This is victory!

    Don’t like the effects of the economic system known as Free-Trade American Capitalism? Then stop voting for those who support it. This means you, tea-baggers and other right-wingers who think the business of government is business. This is the “thanks-for-playing” consolation prize the few at the very top leave for the rest of us.

  6. problembear

    the bush-crash caused by unbridled greed and criminal malfeasance started this depression and only new ideas will pull us out of it.

    watching the far right try to gain some political momentum out of people suffering is about as sickening a display of hypocrisy as i can bear to watch.

    • Lizard

      c’mon, pbear, don’t revert to reflexive bush blame and rightwing scapegoating. unbridled greed didn’t just sprout with bush’s stolen election in 2000. bush couldn’t have done what he did without clinton paving the way with deregulation, and clinton couldn’t have done what he did without pappy bush and reagan before him.

      there has been a long, systemic, decades-long assault on working men and women, and we are where we are as a country thanks to bipartisan complicity in that assault.

      as mr paine succinctly observes above, this is what free-trade american capitalism does to people, and the democrats have sold their collective soul to this beast.

      that’s why the employee free choice act was allowed to die a quiet death. that’s why the health insurance bailout masquerading as reform has been stripped of nearly every provision that would actually help people.

      and look at how this pathetic administration is attacking howard dean for displaying a little chutzpah by advising his colleagues to kill this piece of shit legislation before it becomes law. i just hope they’ll listen to him.

  7. Chuck

    I would place partial blame for the closure of the Sinclair Car Wash at Russell and Third on those that have delayed the road improvements on Third and Russell for the past decade. The previous owners spent a lot of time working with the planners and the community during the years of workshops seeking some help in improving access to his site and getting Russel and Third fixed up. It is apparent that this is another small business that was unable to hang in there while the community drug it’s feet on the Russell South Third road improvement fiasco.
    I am not saying the years of delay on this project was the only reason for the closure but is an example of how the community does not support local businesses. At some point the small business folks just say “screw it” and there goes the jobs.
    Note… this is a perfect place for another frikken adult toy store, title loan paycheck loan shark outfit, pawn shop, or phony medical reefer grow.

    • Those that have delayed the road improvements

      You mean the local residents?

    • John Wolverton

      One of the main reasons that the Russell/3rd roadway environmental impact statement and project stalled is that the first set of consultants dropped the ball and had to be replaced. The second set of consultants produced a draft of dubious value that needed to be peer reviewed by a third set of consultants.
      Despite numerous past meetings and workshops over a relatively short timeframe the citizens advisory committee was not given an adequate voice and was inexplicably disbanded well before the process even came close to results.
      As you consider the demise of a business or businesses along this public right of way, consider also that people live there, with living rooms, bedrooms and yards right along it. Make it a comfortable place for people to live near, and for people to be able to safely cross via biking, walking, wheelchair or driving, and the businesses in the vicinity will thrive. In the current agency preferred alternative the Sinclair car wash/gas station gets demolished and the public gets stuck mitigating underground storage tank issues.
      The community has and is still working on ways to make this a better more friendly roadway, rather than a less friendly roadway as MDT proposes. The 3 Plus for Russell Street Citizens’ Plan does not knock down any homes or businesses. The citizens’ plan, with over 1,300 supporters, has always been open for citizen engagement and involvement. To find out more or sign the on-line petition see: http://www.russellstreet.org

  8. Freeranger

    What I didn’t know about the plant was it produces its own electricity, capable of generating 13 megawatts. Northwestern Energy, by comparison, experienced a peak load during the cold snap of nearly 1800 megawatts. I wonder if the plant’s generating capacity could be expanded, discarding the linerboard manufacturing aspect, retaining the biomass disposal part. Problems are obvious. Can Missoula Valley absorb more emissions and how much more water would be needed?

  9. bubbie

    So the rumor I heard and haven’t been able to confirm or deny is that Northwestern Energy is to blame for the closure. Has anyone heard this? What possible reasons would there be stemming from the evil (and even if they aren’t responsible I still think they are evil) Northwestern nergy creature?

  10. so the final word on stone container in frenchtown is bad news for workers in the wood products industry today…….

    the mill is being scrapped and scraped away to build mcmansions for high rollers ….. http://www.kpax.com/news/smurfit-stone-buyer-specializes-in-high-end-residential-construction/

    there will be temporary jobs for construction workers at least, but nothing to replace the hundreds of good paying jobs that were lost.




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