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Economic impact could be huge as paper mill closes its doors

Report by employment department estimates $223 million negative impact to economy

Friday was the final workday for a majority of workers at the Newberg WestRock paper mill, which has now entered into its “idled” state for an indefinite period of time.

In the morning and throughout the day supporters from the community gathered outside the facility to show support and say goodbye as workers came and went on their last day of employment.

“We sent them off and it was just really strange not hearing that mill going,” said Sharon Moore, organizer of the Friends of Newberg Mill (FNM) group. “It was quiet and eerie.”

The FNM group has been involved in helping the workers as the mill shuts down, organizing almost immediately after the closure was announced, attending union meetings and planning Christmas events for children and families affected by the shutdown.SETH GORDON - Closure -- Following the last workday for a majority of employees last Friday, a crew of 25 to 30 workers will remain at the Newberg WestRock mill until its hog fuel supply has been burned up, at which time a crew of four maintenance workers will be the only employees onsite during the indefinite idle.

“I had a couple cousins that worked there and I grew up here in town,” Moore said of her connection to the mill. “Whether you do or not, you kind of do because that mill has been here forever.”

The connection many in the community feel to the mill is visible in the widespread support from individuals and community organizations.

“A giant thank you to the Newberg community as a whole, they really rallied around this mill and the employees here,” said Robb Renne, who has worked at the mill for nearly 40 years and is president of the Association of Western Pulp and Paper Workers, Local 60. “My hat’s off to them for being willing to do that.”

A few workers will continue laboring at the mill for the rest of this week before also being laid off. Then a group of 25 to 30 employees will keep working for the remainder of the time that the boilers are operating, until the hog fuel pile is eliminated. That could take a few weeks to a couple months, Renne estimated.

Once the hog fuel pile is gone, that group of workers will be reduced again to a group of four that are maintenance workers. They will remain working indefinitely, monitoring the facility while the mill is idled.

WestRock spokesman Tucker McNeil said he did not have a timeline or any new information about the idled facility and whether it would resume operations in the future. The company purchased the mill over the summer and announced its plans last month to idle the facility due to market conditions.

For now, the FNM group is working to get affected families through the holidays, putting together Thanksgiving baskets and working on a toy drive and another food basket drive for Christmas.

“Right here at the holidays, it’s a tough time to get laid off,” Renne said. “Obviously there’s no good time, but this is just an exceptionally poor time.”

Economic impact

As the mill workers feel the brunt of the closure with an immediate loss of employment, more information has also been compiled on how the idling will affect the community on a wider level.

The Oregon Employment Department (OED) prepared an economic impact analysis using the Impact Analysis for Planning (IMPLAN) system.

The system, which OED workforce analyst Will Summers estimates has a 95 percent accuracy rate statistically, looks at how business changes can have ripple effects into the surrounding economy.

“It’s a tool to say, ‘When something like this happens, what can a community expect?’” he explained.

In the case of the Newberg mill, the IMPLAN system estimates a $223 million negative impact to the economy, broken down into several categories.

On the base level there’s the immediate job loss that stems directly from the layoffs when the mill shuts down, which is estimated to affect around 220 workers. The IMPLAN model estimates this will have a labor income impact of about $23 million in the wages that would have been paid to the workers annually, which translates into a $185 million total economic impact of those workers’ lost jobs. That larger figure includes taxes as well as where the workers’ wages would have ended up.

“(It’s) spending on housing, on cars, on gasoline, on groceries, on all the things that millworkers will spend their money on, and that money then gets spent by the people who they bought the service or product from,” Summers said.

Then comes the wages of people who were suppliers of the mill but are no longer needed given the closure. The IMPLAN model estimates 175 jobs impacted in this category, translating into about $8 million in wage impact and $24.5 million in wider impacts.

Finally there are the jobs that are not directly connected to the mill, but would experience a ripple effect from the economic hole created by the closure.

“Somebody at a hair salon who got laid off because the folks at the grocery store who used to get their hair cut, they are no longer working at the grocery store full time because they don’t have the need for that,” Summers said. “So it’s trying to capture those impacts.”

The algorithm estimates 122 of these jobs lost, representing about $4 million in wage impact and $13.5 million total economic impact.

The wage and spending impacts are a sizable and fairly immediate part of the economic blow, but there are other considerations as well. Property taxes for the mill property could be affected, for instance, but it’s too early to tell how.

The Oregon Department of Revenue (ODR) property tax division performs valuations that are tied into property tax assessment. Whether a facility is or isn’t operating is considered in that assessment, ODR spokesperson Joy Krawczyk said in an email.

“It isn’t the only factor, but it is a contributing factor,” she said. “After we complete our valuation of the property, we provide that information to the county assessor, who will assess the property tax.”

Yamhill County deputy assessor Jeff Ivie said the property taxes would change if there was a change in assessed value, although what that impact looks like is not something the county can forecast.

The mill is among the top 10 taxpayers in Yamhill County, the Newberg School District, city of Newberg tax district and Portland Community College district.

It was by far the largest taxpayer in the Newberg School District for the 2014-2015 tax year, as it was levied about $275,000, or about $50,000 higher than the next closest taxpayer.

Overall in the 2014-2015 tax year the mill was levied about $430,000 on about $37 million in assessed property value.

The mill’s property taxes have fluctuated widely over the years. For example, last year the mill paid $179,467 in property taxes on one of its parcels, with slightly less levied for the current tax year.

That same parcel was levied a high of $2.25 million in taxes in 2004, which fell markedly each year until 2012 at a low of $154,015 in levied taxes.

Environmental impact

The wood disposal services provided by the mill, which formerly accepted and burned all types of wood including treated and painted products, were also suspended with the closure.

Because there are no other facilities in the area that accept those types of engineered wood, and because the vast majority of wood waste from demolition and construction activities in the Portland area were taken to the Newberg facility for burning, Metro found itself in a quandary.

The regional governing body had regulations that required sorting and recycling of materials that were recyclable, to prevent waste of wood that had some value — such as burning for energy at the mill. With no way to dispose of the demolition wood that would have gone to the mill, which last year totaled more than 127,000 tons, on Nov. 12 Metro councilors voted to suspend regulations that directed recycling of wood waste, instead allowing that wood to go into landfills in the area.

“It’s not clear when or whether the mill will reopen,” Metro director of property and environmental services Paul Slyman said, noting that the mill is being closed in a way that it could reopen in the future.

Even if operations began again, though, new regulations would then apply.

“If it is restarted, it will have to comply with federal boiler emission regulations, requiring cleaner emissions and a much tighter, clean wood fuel specification,” Slyman said. “This means there is little chance that SP or similar facilities will ever again be a market for painted and treated urban wood waste.”

Councilors noted the unfortunate situation all around, from the families who would experience job loss to the negative impact on the environment in a region that prides itself on recycling, to the strange situation of having just one facility to take the vast amount of wood waste in the area.

As the Newberg facility closes, Metro is looking at other ways to recycle wood waste, including increased salvage and reuse, and use as a raw materials for manufacturing operations. For the near future, though, that wood will head to the landfill.


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