Duluth could seek $1M forgivable loan for Verso paper mill upgrade

Duluth City Council will be asked this Monday to take a step that could keep the city’s papermaking industry alive and protect 240 full-time jobs.

Councilors will take up a resolution that would authorize city staff to seek a $1 million forgivable loan from the Minnesota Department of Employment and Economic Development to help the Verso Duluth Paper Mill upgrade its plant.

Verso Corp. is considering a potential plan to invest a total of about $21 million in its Duluth plant, converting a recycle mill so it can process packaging-grade scrap paper into a type of pulp that can be used to manufacture brown paper grocery bags, corrugated cardboard and other products. This product would be an addition to the supercalendared paper Verso will continue to produce in Duluth.

Mill Manager John Bastian noted that the average price for the paper products currently manufactured in Duluth has declined by 30 percent in the past four years.

In a letter to Duluth Mayor Emily Larson, Bastian said: “These price declines have resulted in the Duluth Verso mill becoming unprofitable. In the last 15 years, 50 percent of all mills in the United States have closed — four of them in just the last two years. Without a conversion to allow the mill to make new profitable paper grades, the mill will be a likely candidate for permanent closure.”

If the City Council authorizes the loan application and it is approved, Heather Rand, Duluth’s business development director, said the $1 million debt could be forgiven if the papermaker maintains the equivalent at least 195 full-time jobs for the next five years.She explained that the upgraded plant is expected to employ fewer people in the future, due to improved efficiencies gained through automation. Yet, she said the company remains confident those staffing reductions can be achieved through retirements and natural attrition. Bastian said the actual number of people employed at the plant likely would be around 200 if the project goes forward.
more detail at:  http://www.duluthnewstribune.com/news/government-and-politics/4389713-duluth-could-seek-1m-forgivable-loan-verso-paper-mill-upgrade

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