Blue Heron Paper to Cease Operations at Oregon City Mill

Feb. 24, 2011 - Blue Heron Paper Company yesterday said that it is permanently curtailing operations at its Oregon City specialty paper mill and issuing WARN notices to its employees related to permanent closure of the facility.

On December 31, 2009, Blue Heron filed for bankruptcy protection and has been operating for the last 14 months under the Chapter 11 protective umbrella as it has refined its reorganization plan and tried to emerge.

Immediately after filing, the company went through a downsizing in which it cut about 3,000 tons per month of newsprint production, reduced headcount, increased worker flexibility with the support of its union employees, and began a focused effort to grow a new product line of environmentally friendly commercial toweling grades.

"The initial plan was successful in restoring profitability and the company received meaningful support from its suppliers and other creditors," said Mike Siebers, Blue Heron's president, "but lately those profits began to erode due to escalating waste paper prices and limited availability of that raw material. All the paper products we manufacture use a high percentage of recycled fiber in them.

"Mills like Blue Heron are where the actual recycling of the collected waste paper you set out at the curb takes place. But China and other far-East countries have developed an insatiable appetite for recycled fiber to support their own paper plants which are then subsidized by their parent countries in other ways to maintain their jobs. This allows them to drive up the price for waste paper to unsustainable high levels for periods of time, giving them an unfair advantage over companies like ours," Siebers said.

Concurrent with refining its reorganization plan, Blue Heron lately also actively sought an investment partner or buyer who could provide additional capital standing to secure trade credit and strategic or operating synergies with the company.

So far, Blue Heron said that it has been unable to identify an investor willing to proceed at an appropriate value.

"Unfortunately things have come to a quick head due to an unforeseeable and dramatic increase in waste paper cost in February," Siebers said. "In this month alone, our delivered cost for recycled paper has increased by $24 per ton adding around $240,000 to our monthly cost of production and basically wiping out any potential for profit in the near-term future.

"Our waste paper suppliers have told us to either meet the market price or they will not deliver. This has left the company with no other choice other than to curtail operations and announce the closure.

"The Oregon City mill is expected to only operate for a few more days as it runs out its supplies. Beyond that, it is unclear if the operation will ever be re-started," Siebers said.

Blue Heron is a 100% employee-owned company that has been in business since 2000. Currently, it employs about 175 union and non-union workers.

"I feel sorry for both our employees and customers," said Siebers. "The company has worked hard to produce new and unique recycled fiber products that support customers' demands for environmental attributes.

"I would like to thank our employees for their dedication to the job, the suppliers who have stayed with us through this entire process, and our customers for their support of our products.

"Unfortunately, these high-paying green jobs are now going to be exported to China along with the recyclable waste paper that is shipped there," Siebers added.

There has been paper produced at the Oregon City mill site at the falls for over 100 years, the company noted.

Founded in May 2000, Blue Heron Paper Company is an an integrated producer of newsprint, high brights, bag, towel and specialty papers all made with a high recycled content.

SOURCE: Blue Heron Paper Company

See related story:
» Blue Heron Paper Company Files Chapter 11 (1/7/2010)