Thursday, September 09, 2010

LA Times does Pulp Mill. Port closing?

The timber industry has suffered a long decline in Eureka, an isolated community about five hours north of San Francisco.

Now, a group of entrepreneurs wants to restore a wood pulp mill there to its former glory. The hitch is they need someone to lend them $20 million.

If they can't get financing to reopen the facility, which closed two years ago, they say, the local port will fail, hurting surrounding lumber operations and the last remnants of a resource economy in this community of 25,000 people.
"The only thing that sets Eureka apart from Bakersfield or Grass Valley is this port, and without the mill, this port has a good chance of going insolvent," said Sid Berg, president of the Humboldt and Del Norte Co. Building and Construction Trades Council, which supports the reopening.

In its heyday, the Louisiana-Pacific pulp mill, which converts scraps from timber operations into material for paper, generated so much pulp that two cargo ships pulled into the Eureka port each month. Those ships and two others serving another pulp mill in the region would transport the material to paper factories in Asia. Three additional barges brought in gasoline for the region's filling stations.
Since the closure in 2008, a total of only three ships have entered the port. The harbor commission has been dipping into its financial reserves to keep the port running in the hope that the mill would reopen. If it doesn't, the port won't generate enough traffic to justify the expense of dredging the harbor or keeping bar pilots on staff to guide ships into the harbor, said David Hull, chief executive of the Humboldt Bay Harbor District.

If the port closes, gasoline would have to be trucked into the area over winding roads from San Francisco. That would put more trucks on the roads and raise transportation costs for the fuel, Hull said. The cost of Eureka's water could also go up, because the pulp mill was contributing 15% of the district's water revenue.
In addition, other lumber mills that traditionally sold their waste to the pulp mill — popularly known as the Samoa mill because of its proximity to the small town of that name — will have to burn it or truck it to Oregon to sell to other pulp mills.

Because of the increased expense, Schmidbauer Lumber Co. is making about half of what it did when the Samoa mill was still open, said general manager Richard Graham.
But opponents say it's time to let go of manufacturing and stop pouring money into the towering smokestacks that have chugged since the 1960s. They say the Samoa mill's backers are having difficulty raising capital because the deal simply doesn't make business sense.

Bob Simpson bought the mill for $2.8 million in February 2009. Its former owners had abandoned it abruptly the year before, leaving behind millions of dollars in debts amid a deteriorating pulp market.

Simpson initially sought $400 million in financing to convert the property into a mill that would make eco-friendly toilet tissue. When that effort failed he lowered his sights to $20 million to restart the plant as a traditional pulp mill. Requests for loans, government grants and federal stimulus money so far have gone nowhere.
He's now considering selling off the factory in pieces to recoup his investment. A Canadian company has offered to buy the mill's boiler, and Simpson has to give them an answer by Wednesday.

Without timber, he said, the hardscrabble area won't have much to sustain its economy. As fishing and logging have disappeared in the northern part of the state, many locals have taken advantage of the cool climate to venture into a more profitable business: cannabis.

"Humboldt County's economy will be dependent upon the marijuana industry for its economic recovery," he said. "I don't believe that would be in the best interest of the state or federal government."

Opponents say the mill polluted the environment and that the region would be better off focusing on tourism.

"It's time to let go of it," said Carol Binder, a West Eureka resident who can see the smokestacks of the mill from her home and runs a blog, People Against the Samoa Pulp Mill.


Tom Sebourn said...

We need to send finished goods from the port. Not pulp and whole logs to be milled elsewhere.

samoasoftball said...

Tom: I totally am in agreement. And I have been publically preaching that for many years. The only finished product we seem to be able successfully to export is our Humboldt raised children. My oldest son works and lives in Sacramento and my youngest son lives and works in San Francisco.

Anonymous said...

So let me get this straight, Tiger Woods can borrow $54,000,000 in federally backed money to build his dream home on a private island (as his career and earning power go down in flames), yet we can't get jack shit for a facility that produces legitimate goods and employs actual workers.

I am sorry, but Mike Thompson has gotten a pass for far too long on just one too many issues. WHERE IS HE ON THIS? I see roads getting paved, unemployment benefits extended..... WHAT ABOUT THE REAL FUCKING JOBS?? Are we all supposed to just be cashing in on growing dope?

Tom Sebourn said...

I am not in favor of letting the port close or anything like that.

I just don't know how to compete on the world playing field when the we're competing with slave labor and treaties like NAFTA, CAFTA. And don't forget the WTO.

What ever happened to tariffs?

I read that the U.S. slid down the world economic scale to the 4th most competitive economy.
Switzerland is at the top. The other social democracies in that region are also doing well. Germany and Denmark are holding their own because they invest in infrastructure and they actually make things.

If they can make pulp without making people sick from the fumes, then I say go for it. I would rather have a company making toilet paper though. That's manufacturing and that's what we need more of.
I think you and I agree on most of this stuff.

Anonymous said...

Last time I looked Eureka Ca was not the only town on the West Coast.
Other places have faced similar problems. Alot of them realized the natural beauty surrounding them could be a good addition to other industries. People born in the area tend not to understand this is a unique place that needs to retain the things that make it unique. Whats so wrong about a port serving tourist boats instead of feeding raw materials to China, which they then sell back to us?
Things might be better if not for a greedy scumsucker named Hurwitz, but we still need to move on.

Anonymous said...

Remember that guy you helped set up chairs, a stage, and clean up for? Remember Richard? It was a couple years ago... What was his name? Oh Yeah, his wife was running for President... Oh yeah, Bill Clinton.

Wasn't he one of those free traders? Didn't he sign something called NAFTA? Didn't he say this whole free trade thing was good for the people of America? That this whole thing made sense... to close down manufacturing and send it overseas? It makes sense, right? Ship raw products out of here, have value added overseas, then ship it back? Foreign workers go from 50 cents an hour, to $1.25? American workers go from $22 an hour down to... well... they can get food stamps, take on massive student loans, maybe even get help from a mental health professional....

Would you still pick up Bill Clintons trash today Richard?

Anonymous said...

I believe this county needs this pulp mill. Water rates have already gone up and will continue to do so. The port will no longer exist. This county will become a ghost county, empty & in despare. Or it will be noyhing more than a college county, if the schools can survive. Our government & the people opposing this mill should be real proud of themselves.

Anonymous said...

Freshwater Tissue Co. has five letters of support on their website from Representative Thompson and other dignitaries. These letters were sent to support a loan application to EXIM, the Export Import Bank of the United States. We contacted EXIM and they said that they had no such application, and furthermore that they had no program that would grant such a loan in the U.S. The question is whether Freshwater didn't know or whether they were trying to create the impression that they might receive funding.

Smurfit Stone said...

It's not all about jobs Richard. Kids leave Humboldt because they like the excitement of the big city! It's been like that for years. Older folks like the slow life, kids like it fast. If you want to live in the fast lane this is not the place for you.

As for Humboldt exports I guess you forgot about Lost Coast Beer, Cypress Grove Cheese,and Kokotat sports products. That's 3. (and I didn't even mention the finest Cannabis in the country) I am sure there are more. Those products don't leave here on ships, they leave via the highway. You being on the Harbor Commission and all probably know more about why that is than most of us.

I don't like the job situation locally, but a pulp mill is not the answer to our problems. I remember when there were 2 in operation and we had the highest unemployment rate in the state. I sure don't miss the smell or the health effects of same.

Since when do we care about what the L.A. Times thinks about Humboldt anyway?

samoasoftball said...

All I know is that there are nearly 100 ex-pulp workers who are now left thinking, "What Now?" Some did not have a back up plan and were really putting in their chips that mill would start. Does not make it right, but it a fact.

Bob Simpson said...


Thank you for this blog. I would like to clear the air on a couple of issues.

Contrary to a statement made to the Times Standard, I communicate with the AWPPW through John Rhodes and Greg Pallesen every week. They are fully aware of everything we are doing to finance the re-opening of the pulp mill.

I didn't speak with John Driscoll. He left me a voice message yesterday. I sent him an email an confirmed we are negotiating with a Canadian firm for the sale of the power plant. Again, both Greg and John were aware of this. But our primary exit strategy is to finance the pulp mill.

We are running out of options but there is still a glimmer of light in the window. We have been working with an investment fund to raise equity. The equity will strengthen our balance sheet and allow us to borrow the remaining funds needed to reopen the mill. If we fail to raise equity then we will be forced to liquidate the mill.

Lastly, I offered to partner with the Carpenterer Union, AWPPW and the Plumbers & Steamfitters. I have also asked the labor unions to provide a loan that can be paid off within 6-8 months of reopening. I have not received a response.

I am available to meet with the local 49 to answer all questions and explain the options this weekend or early next week.

Anonymous said...

$54,000,000 in federally backed loans (with interest deductions) for a rich bastards dream home... it will employ a gardner, butler, massuese....

$0.00 for a pulp mill that could employ 100 living wage workers. "Workers" being a key word here.



Anonymous said...

Freshwater Tissue Co. has five letters of support on their website from Representative Thompson and other dignitaries. These letters were sent to support a loan application to EXIM, the Export Import Bank of the United States. We contacted EXIM and they said that they had no such application, and furthermore that they had no program that would grant such a loan in the U.S. The question is whether Freshwater didn't know or whether they were trying to create the impression that they might receive funding.

I for one would like to know the answer from Bob Simpson about this one. Maybe he can explain why this did not happen.

As far as the pulp mill making everyone sick. When they switched to nonchlorine the air quality was much different. You see smoke and assume it is toxic. What about DFG ? There is smoke coming out of there too - toxic? Seems like no one seems to smell anything from DFG.

As far as "tourist boats" the Harbor District has tried that but most can't come into the port as they are not American flag ships so they can only stop at a certain number of ports in the US. What dock would they stop at - Redwood rotting dock? It needs mega bucks to have a ships stop there and the Harbor District does not have that kind of money and I don't think anyone will fund it. The people that complained about Goldman Sachs before the fall of the economy didn't know what they were talking about, but that is what the progs do. They want jobs but ......

Anonymous said...

smurfit lost coast beer woo what do they have 20 employes that make 10-12$ an hour you cant raise a family on that thats why the young raised around here are leaveing!!

Smurfit Stone said...

5:33 you seem to have missed the point. The owner of this blog stated that the only thing exported from Humboldt was our kids. I pointed out that there were other things being exported. Lost Coast Beer being one.

The pulp mill, if it was started, would hardly keep kids from leaving the area. As Richard said, his kids live in big cities down South. They could have stayed here to work in the mill if they wanted. It would seem that they wanted the excitement offered in S.F. and Sacto. Would you like to see Humboldt grow as large as either one?

Anonymous said...

Sure like to know what health effects you speak of.I grew up in Samoa and still know many families still living there.Know of 4 families that have lived there for over 50 years.No health problems other than old age.

Anonymous said...

Yeah, and I know several life long smokers who are well into their eighties in average health. That proves cigarette smoking isn't harmful to health.

Eureka has a high rate of cancer, and heart disease both of which have been proven to be caused and made more severe by the toxic compounds that the mill emitted. I'll bet that those disease rates will go down ever since the mill closed.

Anonymous said...

The mill caused heart disease?We've heard it all now.

Scottie Lee Meyers said...

I'm doing a story on the pulp mill for The Lumberjack - the Humboldt State University student newspaper.

I already contact some of you to set up an interview. I extend that invitation to anyone else that cares to be a source for the story.

I've been able to get the contact information of Union reps and workers; I'm trying to reach Mr. Simpson or other Freshwater personal. Ideally, I would like to visit the plant Wednesday, Thursday or Friday. Anyone who can facilitate this would be much appreciated.

I'm also visiting the Humboldt County Historical Society to get a historical context on the pulp mill.

Any time you can afford would be much appreciated.

Reach me at