Oregon mill’s revival weighty Belgravia may take same tack at GNP

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Longtime workers of Simpson Paper Co. were put to the test almost six years ago when Belgravia Investments Ltd. purchased Simpson’s boarded-up mill in West Linn, Ore.

Nearly 2,000 people applied for 300 jobs, which each of the 400 former Simpson workers thought they had the inside track on by virtue of their working knowledge of the mill and their employment with the previous owner.

Like the other job seekers, the former employees had to fill out applications at the newly named West Linn Paper Co., and they had to undergo a series of aptitude tests on math and mechanical skills, verbal reasoning and spatial understanding.

Most failed the tests, according to published reports, and only 20 percent of the former workers were rehired.

In Millinocket and East Millinocket, union members who once ran Great Northern Paper Inc.’s paper machines are wondering what is in store for them if Belgravia buys the bankrupt mills there.

Belgravia Investment’s subsidiary, Belgravia Paper Co. of Vancouver, British Columbia, last week signed a “letter of intent” to purchase Great Northern for $91 million. Today, Belgravia goes to federal bankruptcy court in Bangor to ask a judge to approve monetary conditions that other suitors must meet during an auction of the mills next month.

If those conditions are approved, Belgravia this week will begin to negotiate new contracts with Great Northern’s 14 unions even though it is not yet officially the new owner. Undoubtedly, the talks will focus on Great Northern’s more than 800 union members taking job cuts and making wage and hour concessions that Belgrade will say are needed to return the mills to profitability.

Belgravia has taken similar steps at three other mills it has purchased, including the one in West Linn, according to published reports. Wages at the Oregon facility are about $1,000 less per year than they were under Simpson. In 2001, a new employee made $1,989 a month, while a paper machine operator, one of the highest-paid jobs, made $4,367 a month. The numbers included scheduled overtime.

At its mill in Pasadena, Texas, about 360 out of 660 jobs were cut and a new union contract was negotiated that included a 10 percent reduction in base pay.

At the third mill, in Sault Ste. Marie, Ontario, 405 unionized employees of St. Mary’s Paper Co. initially rejected Belgravia’s contract, forcing the mill to shut down for more than a week. The Ontario premier had to mediate the talks between ownership and the union, leading to wages being cut 20 percent and 30 jobs being eliminated.

At all the mills, however, the workers were given a profit-sharing plan, and in 1998, before an economic downturn in the paper industry, St. Mary’s employees each received a “bonus” of about $36,000 Canadian.

At West Linn Paper Co., however, no bonus check has been received yet because the mill didn’t shown a profit until five months ago, plant manager Brian Konen said in a telephone interview last week.

“But we weathered the slowdown,” he said.

Konen said the mood at the mills has changed dramatically since six years ago, when bitterness and anger were rampant.

“It’s a great place to work,” said Konen, who mentioned that sales this year should top $200 million, up from $170 million last year.

But six years ago, Simpson Paper Co., based in Seattle, believed the West Linn mill was antiquated and did not fit into its long-term productivity plans. After an unsuccessful seven-month search for a buyer, Simpson shut down the facility.

The shutdown, however, nullified the union contract and reportedly made the shuttered mill more attractive to potential buyers.

“Once the labor contract was voided, they got more interest,” an unnamed source told The Oregonian newspaper.

Six months later, Belgravia bought the mill and began a worldwide Internet search for workers. Most of the 400 former employees were not rehired. One Belgravia official insisted at the time that the company was not anti-union, but that did not ease the anger expressed by members of the Association of Western Pulp and Paper Workers.

“It’s really turned ugly,” Milt Rants, an ex-Simpson worker, said to The Oregonian at the time. “It’s kind of a sad deal when they reject a better grade of people than some of those being hired.”

Gene Hain, vice president of the paperworkers union, said in a telephone interview last week that Belgravia never had any intention of allowing a union to operate in its West Linn mill.

“It was designed to be nonunion from the get-go,” Hain said. “We have tried to organize that mill on numerous occasions, but people are fearful that if they are seen talking to us that they could lose their jobs.”

Plant manager Konen said he disagreed with Hain’s assessment of the employees’ mood toward union organization.

“There haven’t been any serious drives that have had any traction,” said Konen about union activity. “[Before Belgravia], we had a work force that wasn’t very interested in making the mills very profitable.”

He said part of the reason for lack of interest in union organization might be the attitude of Belgravia’s chief executive officer, Ronald Stern, toward employees. Stern changed the work schedule to allow employees to have consistency in their personal lives, from five eight-hour days that switched back and forth from day shift to night shift, to four 12-hour days or nights.

“He’s an operator-friendly operator,” Konen said. “I don’t think his intention is to make a lot of money. I think his intention is to provide a lot of jobs. He will come to the mill and he’ll talk to the hourly people more than he’ll talk to the salaried people. He loves to walk on the floor and interact with the operators of the machines.”

Like Great Northern, the West Linn mill has a century-old tradition of pride in its paper production, but both now sit with either two or three machines that are their moneymakers, when they once operated at least 10. At its peak, West Linn employed 1,500 workers and, before it closed in 1996, produced high-quality coated commercial printing paper and some recycled paper products.

After Belgravia took over, the mill changed its product line to meet specialized markets, including supercalendered paper, and it now has a reputation for “quick turnaround” on last-minute orders.

“When [Belgravia] came here, this was a mill that was an old mill,” said Jim Kadera, a reporter for The Oregonian. “[Belgravia] got it for a song. They got it dirt cheap, and they seem to be doing the best that anybody could do there.”

Stern, formerly of Winnipeg, Manitoba, just barely missed the “Rich 100” list of Canadian businesspeople in 2001. The multimillionaire – estimated worth at least $200 million – is a lawyer and one-time publisher of Vancouver magazine who also owns a British Columbia graphics business. He amassed his fortune, however, with his pulp and paper mills in Alberta, Ontario, Texas and Oregon, and with two newspapers, the Winnipeg Free Press and the Brandon Sun. With Bob Silver, a partner in the Manitoba papers, he owns Winnipeg’s Western Glove Works Co., a maker of Silver Jeans that, until 2000, also produced Calvin Klein jeans in Canada.

In a telephone interview with the Bangor Daily News last week, Stern said Great Northern’s 1,130-member work force “has considerable talent.”

“I’m not suggesting that it’s being used correctly,” he added.

In Belgravia’s “letter of intent” to buy Great Northern, Stern said the mills’ 14 unions, the towns of Millinocket and East Millinocket, and longtime suppliers and customers would need to reach “cost and quality component” deals with Belgravia. He would not elaborate during the interview, but said negotiations on contracts with everyone who has a financial interest in the mills would focus on “where do they have to be and how do we have to get there.”

“Hopefully, everyone will have the same attitude,” Stern said. “It’s only following [Feb. 18] that we can get at it with full vigor and do everything we can to meet those objectives.”

Richard Bryant, an attorney for nine of Great Northern’s unions, said Belgravia has not started the negotiations on union contracts yet, but noted that after today’s court proceeding, discussions should get “very interesting.”

He said Great Northern and Belgravia have at least two choices – to list modified versions of the union contracts as assets in the purchase and sale agreements, or not list them and try to bust the unions.

“As a practical matter, no one’s going to buy the mills without talking to the unions,” Bryant said. “I’m confident about that.”

In West Linn, discussions with union members were not required, Stern said, because the mills had shut down and “they were former employees.”

“West Linn was idle,” he said. “People were looking at West Linn and thinking about selling the equity. Now I have a mill that’s coming along quite nicely there.”

Unlike Great Northern, Belgravia has been on time in paying its tax bill to Clackamas County, where West Linn is located, and Belgravia’s employees are active in community projects.

“They have an excellent record of tax payment history,” said Ron Olberg, a spokesman for Clackamas. “They’re paid in full and they have always been on time.”

“Belgravia has been a good corporate neighbor,” said John Atkins, community services coordinator for the city of West Linn, who noted that Belgravia allows public access to some of its property next to scenic Willamette Falls and participates in citywide projects. “They have not hunkered down and tried to be invisible.”