Local paper makers struggle to survive

Jobs expected to decrease another 10 percent by 2020.

The paper industry in Hamilton and Middletown dates back 150-plus years, predating the steel industry. It was once the county’s largest industry, said Middletown historian Sam Ashworth.

SMART Papers, formerly Champion Papers that once had 2,500 employees in Hamilton, made industrial history by making the first two-sided coated paper used for magazines, said the company’s chairman Tim Needham.

But in the digital age, post-recession, the few paper mills left standing in Butler County might not all be left a year from now.

“We are fighting to regain our margin,” said Needham, whose company announced two weeks ago it was looking for a buyer. “We’re never going to outrun the E-readers.”

By 2020, about 10 percent of jobs in paper manufacturing in Butler County are estimated to be cut and will mean a large loss in tax revenue for Middletown and Hamilton, according to Benjamin Passty, research assistant professor for the Economics Center at University of Cincinnati. The estimates don’t take in account if SMART Papers, which has more than 200 employees, closes, he said.

Employment in paper manufacturing has been declining since 2006, according to Passty.

A total of 6,053 people are estimated to work this year in paper manufacturing in the Cincinnati metro, including Butler and Warren counties. Five years ago, closer to 7,000 people worked in paper manufacturing, and it’s projected employment in the industry will decline to 5,652 jobs by 2020, according to Passty.

It’s more likely paper will still be made in the future in Middletown because of recent investments made at Wausau Paper’s Middletown mill that makes towel and tissue paper, a growing market in paper, according to the American Forest & Paper Association.

“The combination of a prolonged weakened economy and the financial burden of federal regulatory overreach creates a challenging environment for U.S. paper manufacturers,” stated Jessica McFaul, a spokeswoman for the Forest & Paper Association.

“Ultimately the plant closing like this means there’s less demand for paper,” he said.

That means there’s also less demand for related products such as newspapers, books and magazines, he said.

The industry for high-end paper and paperboard made by local companies including SMART Papers, Mohawk Fine Papers and Franklin Boxboard also has been contracting the past 10 years as the use of the Internet and electronic readers rise, Needham said.

Inexpensive paper products from foreign competitors flooded the market and threatened to put paper mills out of business, Needham said. Those problems were made worse by the poor economy, he said.

On top of that, paper makers say the cost of pending environmental regulation alone could put them out of business.

As a result, SMART Papers said this month it could close next year if it doesn’t find buyers.

Mohawk Papers, the oldest paper mill in Hamilton, temporarily laid off 45 people in September, according to the city manager at the time.

Franklin Boxboard in Warren County closed in August.

Graphic Packaging International, which owns a coated recycle board mill in Middletown, closed a Cincinnati location in August.

The American Forest & Paper Association says there are 16 paper mills in Ohio, including four in Butler County. Ohio produced 1.78 million tons of paper and paperboard in 2010, 2.2 percent of the national total, according to the Forest & Paper Association. Alabama had the highest production of 7.75 million tons of paper and paperboard last year, according to the association.

Mills located in Hamilton are SMART, 601 North B St. in Hamilton; and Mohawk, 400 Dayton St., Hamilton, formerly Beckett Paper that formed in the 1870s.

In Middletown, there is Wausau Paper, 700 Columbia Ave., formerly Bay West; Sorg and Erwin Brothers Paper Company; and Graphic Packaging International, 407 Charles St., Middletown;

Other area mills include Appleton Papers and NewPage Corp. in Miamisburg, and Ahlstrom in West Carrollton.

“The paper industry was very important to this area because at one time there were seven or eight different companies,” Ashworth said, adding it was instrumental to Middletown’s growth.

Needham has been chief executive officer or chairman of SMART for the past 10 years, since it bought the mill from International Paper. He first started in the paper business in the 1970s, a time when there were few copiers.

He said from 1965 to 1995, there was an explosion of fine paper due to copiers and ink jet printers, and everyone wanted to advertise. That explosion was stunted by technology and the opening of international markets.

The company was back on track until the U.S. EPA proposed a Boiler Maximum Achievable Control Technology rule for emission limits for industrial, commercial and institutional boilers, Needham said.

The U.S. Environmental Protection Agency is in the process of reconsidering the final standards, according to spokeswoman Enesta Jones. “This is the best approach to put in place cost-effective, protective and achievable standards that will bring significant health benefits to the American public.”

The only Butler County mill that seems to be doing well is Wausau.

In 2007, Wausau, a Wisconsin company, announced plans to invest $31 million in the Middletown property to increase toweling capacity, according to the company at the time.

The announcement said the company was pleased with its operating margins from its towel and tissue segment.

“The capacity and product capabilities of this rebuild directly support our expectations for continued growth of our higher-margin value-added products, such as our highly successful Green Seal-certified EcoSoft line of environmentally preferable products,” said Thomas Howatt, Wausau Paper president and chief executive officer, in a 2007 statement.

Forest and Paper Association’s McFaul said studies show paper is preferable for everyday tasks like reading and note taking. Paper also has a more emotional tie than digital.

“Paper is here to stay,” she said.

Contact this reporter at (513) 705-2551 or clevingston@coxohio.com.

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