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Mills to close

Wednesday, October 03

LEE — Schweitzer-Mauduit International, counting millions of dollars in continued losses, will begin closing its four local paper manufacturing mills in May 2008, eliminating at least 165 factory and management jobs by the end of next year. The Georgia-based company — the world's largest producer of cigarette paper — announced the closing of plants in Lee and Lenox Dale as part of an international restructuring strategy based on continued decline in demand for cigarette paper, the mills' key product.

This is the third major plant closure announced in South County within the past six months; higher production costs and flagging markets have been cited across each affected plant.

"Schweitzer-Mauduit evaluated options to address the impact on our operations from declining demand for traditional tobacco-related paper products in Western Europe and North America," said the company's chief executive, William H. Deitrich, in a statement.

"Though these steps are regrettable in terms of the impact on our employees and the communities in which our facilities operate, they are necessary to improve our business performance and long-term profitability," he said.

A total of 300 jobs will be eliminated in the United States, France and Brazil, reflecting 8 percent of the international company's work force. In Berkshire County, 135 jobs are unionized manufacturing jobs, and about 30 are management positions, according to a company spokesman.

The news was not unexpected for local workers, whose ranks were thinned last year for similar reasons. Since January 2006, employment at the local mills has dropped from about 255 jobs.

"We knew it was coming," said a machine worker who asked not to be identified yesterday, citing concerns about job security. "They've been talking about this for the last year."

But that still did not soften the blow. An employee who finished his shift shortly after 3 p.m. yesterday yelled to a reporter, "It's gonna get ugly," as he drove out of the Columbia complex on Greylock Street.

Mill manager Roger Scheurer, an employee with the company for 27 years, said the finality of the closure is starting to set in with workers.

"It has to hurt," he said. "These people want to work. They have pride in what they've done. And they've done it for decades. We've known about the closings for months, but it still doesn't make it easier."

A machine operator said a manufacturing job at Schweitzer, including overtime, typically pays $65,000 to $70,000.

The toll on manufacturing jobs in South County has been steep in recent months — and the likelihood of finding similar work and wages is a waning prospect.

Layoffs of some 137 employees at Fox River Paper Co. in Great Barrington began this summer after the plant was purchased by Neenah Paper Co. of Alpharetta, Ga., a Fox competitor. The historic mill is now closed and under contract for sale to a condominium developer.

In August, MeadWestvaco Paper Co. in Lee announced that it would shut down one of its two South Lee mills, eliminating some 70 jobs.

The Schweitzer mills in Lee and Lenox Dale trace their roots to the early 1800s, when Elizur Smith founded Smith Paper Co. It is believed that, in 1867, Wellington Smith Sr. became the first American commercial producer of paper made from wood pulp, vaulting Lee to No. 1 in the United States in paper production.

The mills were acquired in 1917 by British-American Tobacco Co., sold to Brown & Williamson Tobacco Co. in 1947 and again in 1950 to Peter J. Schweitzer Co., which became a division of Kimberly-Clark Corp. in 1957.

The mills are not only credited with fueling the rise of the paper industry in South County but also for supporting generations of European immigrants (mostly Italians) who moved to the area to find work.

The company's employment peaked between 1970 and 1980, maintaining levels near 700, according to Eagle archives.

Yesterday, Schweitzer spokesman William Foust said that the mills have been losing anywhere from $2 million to $8 million per year, with demand declining for tobacco products.

"Prior to 2000, we made money on the products," Foust said.

Three of the four mills in Lee primarily produce tipping paper and plug wrap, two products used in the manufacture of cigarettes. Foust noted that its biggest customer, Philip Morris, is ceasing to manufacture cigarettes at one of its two American plants.

Over the years, the Lee plant also has made a variety of other paper products, including decorative papers, furniture laminates, financial printing paper, Bible paper, business forms, drinking straw wrappers and paper used in packaging candy.

"Those were not profitable businesses for us," Foust said.

Scheurer said that rising energy costs — an increase of $770,000 on this year's Western Massachusetts Electric Co. tab alone — have hurt revenue. The Lee mills' power bill was said this year to be the highest in the Schweitzer-Mauduit company, jumping to an all-time high of 17 percent of manufacturing costs.

"Massachusetts has the highest electric rates in the country," Scheurer said. "It's a huge contributing factor."

The company's announcement this week projects annual pretax benefits of $9 million to $11 million based on restructuring and related expenses of $27 million to $30 million.

Business is good in China: A third of all cigarette products produced are consumed there, and Foust said Schweitzer is near completion on construction of a papermaking facility there.

Foust said that the Eagle Mill in Lee, where employees also operate production equipment for the Kimberly-Clark Corp., will close when a new production facility is completed in Mississippi.

Lee Selectwoman Patricia Carlino said she is saddened but not surprised by news of the closing.

"The paper industry in New England is going away," she said. "There's the possibility that those buildings will become dark by the end of next year."

State Rep. William "Smitty" Pignatelli, D-Lenox, said that the only good news is that employees — and employment retraining agencies — have strong advance notice.

"This is a business that's been married to the tobacco industry as their main product," said Pignatelli, "and we know the history on that, so no one should be surprised."

Although the cost of energy has been a factor in plant closings, it's not a standalone problem. On the other hand, such costs are lethal to manufacturing, he said.

"It's a serious issue, and we need to face it head on in state government," Pignatelli said. "The time for talk is over, and we need bold action, and the governor needs to step up. Manufacturing is in trouble."

COMING TOMORROW: More on this story in tomorrow's print edition of The Berkshire Eagle.

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