Producing paper

 

The Essity tissue mill in South Glens Falls shut down in July, eliminating 300 jobs and ending a tradition of nearly 140 years of paper manufacturing at the site. But industry insiders say the Essity mill faced special pressures that don’t reflect a broader threat to the region’s papermaking businesses. Joan K. Lentini photo

 

By MAURY THOMPSON
Contributing writer

SOUTH GLENS FALLS, N.Y.

One of the region’s oldest paper mills shut down this summer after nearly 140 years as a local manufacturing hub.

The Essity tissue mill in South Glens Falls, built in 1883-84 along the banks of the Hudson River in Saratoga County, abruptly ended operations July 20 as its owner consolidated operations at other mills in the South and Midwest.

Essity, the Swedish company that had run the local mill since 2008, also closed two related facilities in Greenwich and Saratoga Springs, putting a total of 300 people out of work.
But by September, local officials said many of the people laid off by Essity had already lined up new jobs, in part because several other paper companies in the region held job fairs specifically to recruit Essity workers.

That’s a testament to the tight labor market regionally and nationally, but it also underscores the fact that paper manufacturing remains a significant force in the region’s economy. Even after the Essity mill closing, at least nine paper companies still employ nearly 3,000 people directly in manufacturing and processing facilities from the Albany area northward to Ticonderoga, N.Y., and eastward into the Berkshires.

And while consolidation, technological changes and shifting markets have trimmed the industry’s work force in recent decades and led to several other plant closings, industry insiders and local government officials say the region’s paper business in general remains stable and healthy.
They also say it has the potential for growth in emerging markets — as environmentally conscious customers increasingly opt for paper over plastic and seek out recycled paper products and those made from hemp, straw, bamboo and cotton fibers.

 

Paper as a green choice?
Todd Kusnierz, the town supervisor of Moreau, which includes the village of South Glens Falls, said that in the aftermath of Essity’s closing, an “environmentally friendly” company that makes paper products from hemp expressed interest in taking over the South Glens Falls mill.

That doesn’t appear possible, because Essity is refusing to sell the mill and its machinery intact, but Kusnierz said the prospective new company, which he would not identify, is considering other locations in Moreau and perhaps elsewhere in Saratoga County.

The company likes Saratoga County because of the area’s close proximity to farms, because of the availability of experienced papermakers who formerly worked for Essity, and because the company is eager to expand into the Northeast market, he said.

Paper made from hemp, straw, cotton fiber and bamboo has been a rapidly growing market in the paper industry, according to a recent industry trends report by Gitnux, a business strategy and education consulting company.

The trend is partly driven by consumer preferences for products that mitigate environmental concerns. But another factor is the spiraling price of office waste paper used for recycling to make paper, said Joe Raccuia, owner of Morcon Paper Co. in Cambridge. During the Covid-19 pandemic, he explained, most offices were closed, and as a result collections of waste paper decreased, driving up the price for this recyclable material.

 

Replacing plastic
Mohawk Fine Papers, a family-owned paper mill in Cohoes, diversified in 2020 into making paper from straw, hemp and cotton fibers.

“We are really excited about this market,” said Melissa Stevens, the company’s chief revenue officer.

Originally, she said, the plan was to use straw husks left in farm fields after harvest, following a model that has been successful in the Pacific Northwest. Ultimately, though, there did not seem to be an adequate supply in the vicinity, and the company has focused instead on using hemp and cotton fibers to make printing papers. It also is expanding to producing paper packaging as alternative to plastic packaging.

“From a plastic-to-paper perspective, we think there is tremendous opportunity,“ Stevens said.
The plastic-to-paper segment represents the greatest growth potential in the paper industry, according to the Gitnux report.

“The future of the paper industry is marked by a strong focus on sustainability, eco-friendliness, and technological advancements,” the consulting firm’s industry outlook report concluded.
Raccuia said it remains to be seen if paper made from materials such as straw, hemp, cotton fibers and bamboo will achieve the market success that some are predicting. A lot will depend on whether mills are readily able to obtain an adequate supply of raw materials, he said.

In some sense, these emerging products are a throwback to the 19th century, when area paper mills, including the South Glens Falls mill that recently closed, made paper from straw, hemp, or recycled rope, for a time, before wood pulp was adopted as the primary raw material.

Paper mills originally grew up along the rivers of the Northeast because of the availability of water power and access to transportation to get products to markets. As wood pulp became the main raw material, mills in this region flourished because of their proximity to the dense forests of the Adirondacks and northern New England.

Today, two of the largest paper mills in the region – Finch Paper in Glens Falls and Sylvamo in Ticonderoga – still make their own pulp from wood. But many other mills in the region now rely on pulp from recycled paper.

 

 

Post-pandemic path
Paper industry employment across the nation declined by 7.1 percent over the past decade to 351,000 jobs as of May, according to the U.S. Department of Labor.

But global paper industry sales are projected to grow from about $354.4 billion in 2022 to $372.7 billion in 2029, according to Forbes Business Insights.

The market was tumultuous during and after the Covid-19 pandemic but has now stabilized, Stevens said.

During the pandemic there was little demand, so paper companies cut back on production, she explained. Immediately after the pandemic, customers were panic buying, because it was difficult to get product, resulting in customers having stockpiles of paper and then cutting back on orders for a time.

Laura Oswald, the director of economic development for Washington County, said that locally, Morcon, Irving Tissue in Fort Edward and Finch Paper in Glens Falls all are strong.
“While the paper industry isn’t an up-and-coming industry on a global scale, it’s holding its own,” she said.

Tissue has experienced the greatest growth of any segment in the past few years, largely because of increased demand for products such as disinfecting wipes from hospitals and medical offices since the start of the Covid-19 pandemic.

Raccuia said the increase in takeout and drive-through restaurant orders also increased the demand for tissue products somewhat, though not as much as one might think.

In the past, he explained, customers going inside a fast-food restaurant would take as many napkins as they wished from dispensers, but the shift to drive-through orders means restaurants get to decide how many napkins, if any, to put into each bag.
“There definitely is a pattern change,” he said.

 

Cost-cutting pressures
Raccuia said the tissue industry in general has had between 3 percent and 5 percent annual growth over the past decade, while Morcon has had 15 percent to 20 percent.
Finch Paper in Glens Falls, like Mohawk and Sylvamo (formerly International Paper) in Ticonderoga, focuses on high-grade printing papers, which typically have a higher profit margin and are less susceptible to foreign competition.

Demand for newsprint and other low-grade printing paper, neither of which is generally made locally, has dropped off significantly, while demand for high-grade printing paper has remained stable, in part because of new business with e-commerce companies that pack inserts into packages when they ship orders, according to industry analysts.

The consolidation of Essity’s local operations should not be considered an indicator of industry trends, Raccuia and Oswald said.

Raccuia said Essity, like all paper companies, has been under pressure to cut costs in general, and the aging South Glens Falls mill cost more to operate than the company’s newer mills.
He said it became evident in 2016, when Essity bought the Wausau Paper Co., which had a more modern mill, that the survival of the South Glens Falls mill was in jeopardy.

“I knew then that the end was going to be coming,” said Raccuia, who previously was president and chief executive officer for the North American tissue division of SCA, which became Essity, from 2002 to 2008. Before that, Raccuia was president and chief executive of Encore Paper Co., which sold the South Glens Falls mill to SCA.

In addition to shutting down its South Glens Falls mill on July 20, Essity closed a converting plant in Greenwich and a warehouse in Saratoga Springs. In total, about 300 people had worked at the three facilities. Although the mill went dark in July, Essity was obliged to continue paying workers through this month under the state’s Worker Adjustment and Retraining Notification Act.

 

Newsprint to tissue products
The South Glens Falls mill, originally the Glens Falls Paper Co., began operating on June 2, 1884, replacing a previous mill at the site that was destroyed by fire.

In its early days, the mill produced newsprint and supplied many of the metropolitan New York dailies.

It was one of the original mills of International Paper Co., which operated it until it was shut down during a major strike at most North American paper companies in the early 1920s.
Various owners operated it after that, and in recent decades the mill has made paper towels, napkins and toilet paper for “away from home” markets such as restaurants, factories and office buildings.

It does not appear the South Glens Falls mill will continue to make paper under a new owner.
Kusnierz, the Moreau supervisor, said that on a recent conference call, Essity officials indicated the company is not willing to sell the mill with its equipment intact, apparently to prevent its use by potential competitors.

“Right out of the gate, it became clear that Essity has no interest in selling the mill intact,” he said.

Kusnierz, who also is chairman of the Saratoga County Board of Supervisors, said he is disappointed that Essity is being uncooperative after the town agreed to a property tax assessment settlement that reduced the mill’s 2016 assessment of $25.59 million in increments to $14 million in 2022 and subsequent years.

“We worked really hard with them so that we were not a major factor in their cost of doing business,” Kusnierz said.

The United Steel Workers, which represented employees at the mill, also has said Essity is not willing to sell the mill intact to another paper company and will not allow the union to search for a buyer.

“This decision ultimately leaves these members, their families and the surrounding community in a devastating position,” union vice president Luis Mendoza said in a July 25 news release.
Saratoga County Economic Development Corp. is working with Essity officials to evaluate several possible reuses of the mill property, agency President J. Gregory Connors said, though he would not reveal details of these discussions.

Oswald, also without revealing details, said her office is working with Essity officials to explore possible reuse options for the Greenwich converting plant.

The paper industry has long been cyclical, with local mills closing during a down cycle, the most recent of which was in the late 1990s and early 2000s, when several area mills closed. But many of the region’s surviving mills have had major upgrades since then.

Among area manufacturing jobs, those in the papermaking business have long been considered highly desirable, with average salaries in the industry now in the vicinity of $70,000 a year locally. But in recent years the industry, like many others, has experienced labor shortages as longtime employees retired in a region that has fewer younger workers available to take their places.
Other paper mills that operate in the region include Cascades Tissue in Mechanicville; Hollingsworth & Vose, which has mills in Greenwich and Easton that make specialized paper such as paper used in air filters and batteries; Crane Currency in Dalton, Mass., which makes specialty paper for U.S. currency; and Onyx Specialty Paper at South Lee, Mass., which makes fine arts paper and other specialty papers used for banners and in the manufacture of laminate flooring, countertops and automotive parts.