Another Paper Mill Closes

In just a month’s time a second American paper mill has announced that it will be closing its doors for good.

The Ivex Packaging Paper plant of Joliet, Ill. announced Thursday that operations would be phased out over the next 60 days.

“This was a tough decision for us,” Jon Pierce, president of Ivex Packaging Paper said in a press release. “This segment of the paper manufacturing industry has seen declines in the last several years. We’ve looked at a number of scenarios to improve efficiency at the plant, but, given the facility’s age, scale and inefficiencies, combined with declines in demand due to current economic conditions, it is not economically feasible to continue the plant’s operation.”

The plant has been in operation for 97 years.

In all, 79 employees will lose their jobs.

Earlier in the week, The Blue Heron paper mill closed its doors for the final time. The closure cost 175 Oregonians their jobs.

The company cited increased Chinese competition in its decision to close the plant that had been in operation for over a century.

“Mills like Blue Heron are where the actual recycling of the collected wastepaper 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 jobs,” Blue Heron Paper Company president Mike Siebers said in a statement.

Despite its lack of a competitive advantage in paper production and natural resources to make paper, China has surpassed the U.S. to become the world’s leader in that department in just under a decade.

Since 2000, China has increased its paper output threefold, which seems like a daunting task given the fact that China’s forest base is the smallest in the world per capita, it has an already saturated domestic paper market and very little competitive advantage, even in labor costs.

Instead, China’s growth has been fueled through illegal subsidies, mostly in the form of tax breaks, loans – some of which are not expected to be paid back – and discounted electricity and raw materials.

From 2002 to 2009, the Chinese government poured $33.1 billion into what should be an unproductive industry. But, with the help of government subsidies, China was able to ride export-driven growth to become the world’s leading producer of paper products.

In the same time frame that China pumped $33 billion into its paper industry, U.S. employment in the industry fell 29 percent, from 557,000 workers to just 398,000. That amounts to a seven year total of 167,000 jobs lost for an annual average of nearly 24,000 jobs in the industry.

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