by Dennis Dalman
A giant question mark hangs over the City of Sartell.
That’s what just everybody is asking after the stunning news that the Verso Paper Co. will close its plant forever after doing business in the city for 106 years.
On Aug. 2, at an afternoon press conference at Sartell City Hall, a company official delivered the news as if it were a dreaded verdict from a jury. The Verso plant will not re-open, said Lyle Fellows, Verso’s senior vice president.
Everyone present suddenly looked crestfallen as a funereal mood darkened the council chambers.
Sartell City Administrator Patti Gartland said the news is “emotional” because Verso, she added, is part of the cultural fabric of the city. The feeling, she said, is similar to mourning and grief.
As it turned out, the May 28 Memorial Day explosion at the factory was the company’s death blow. The tragedy claimed the life of Jon Maus, 50, of Albany. Four suffered injuries. The blast and fire also caused extensive, and as is now known — terminal — damage to the facility.
The cause of the explosion has not been announced yet.
Company officials determined it would be prohibitively costly to repair and re-open — a cost in the “tens of millions,” according to company officials. Fellows said the plant’s internal infrastructure was destroyed by the blast and subsequent fire. To make matters worse, the market for the kind of paper products Verso made had been declining for years, and the paper-market future does not look brighter any time soon, he added. One reason for a declining demand for paper is the ever-increasing use of non-paper, computerized communications worldwide, Fellows noted. Verso made coated paper most commonly used in catalogues.
Fellows also said the Sartell Verso plant had been adversely affected for several years by a weakened market for coated paper. In December of last year, 175 Verso employees were laid off. At that time, the company shut down two of its three paper-making machines.
Even with generous offers of help locally and statewide, there is no way Verso could re-open its plant, Fellows emphasized.
Verso’s 259 workers are now out of jobs. Most of those employees had not worked at the plant since the explosion and fire. The plant was staffed by a minimal number of workers, and no paper was being produced.
Gov. Mark Dayton and area legislators will likely discuss the unemployment situation as part of the special legislative session later this month. Dayton has promised he’ll do everything possible to rally support for the unemployed Verso workers.
Just a couple of hours before the Aug. 3 press conference, there was a meeting in Dayton’s St. Paul office about the Verso announcement. Present at the meeting were the governor, Verso’s Chief Executive Officer David Paterson, Sartell Mayor Joe Perske, Sen. Michelle Fischbach and Rep. Tim O’Driscoll. All agreed to work with a task force to find some use for the abandoned Verso property.
Verso, which is based in Memphis, purchased the Sartell paper mill from Champion in 2006.
Matt Archambeau, Verso plant manager, also spoke at the Aug. 2 press conference. He said the final decision to close the plant was made just a couple of days before the press conference.
Archambeau thanked the City of Sartell and its residents, businesses, other area cities and all others who showed strong support for Verso. He, like Fellows, especially gave thanks to the excellent Verso workers through all the years.
“They have worked so hard to make our company successful,” he said.
Archambeau said Verso plant officials and he himself will meet with workers to explain the situation and will also meet with union representatives soon.
The press conference closed with remarks by Gartland.
“This is a new tragedy,” Gartland said.
She said Verso officials explored every possible option in trying to re-open the plant. But, after difficult evaluations, it just could not be done, Gartland noted. Everyone Gartland has talked with is vowing to help the unemployed workers in training and new employment.
Verso pays nearly $1.5 million in taxes annually to the city, the county and the school district. There will be no immediate effect on the city because of the closing, Gartland noted. Verso will continue to pay property taxes as long as it owns that property, although the assessed value will likely be much lower with the plant idled.
The Verso Paper Corp., based in Memphis, Tenn., owns three other paper mills – two in Maine and one in Michigan.
According to a Verso Corp. statement, the Sartell mill closure will result in an aggregate pre-tax charge to earnings of about $114 million, which is expected to occur in the third quarter of this year. That includes about $19 million for severance and benefit costs; about $81 million in non-cash charges mainly related to the impairment of property, plant and equipment; and about $14 million related to other costs expected to be incurred in the third quarter of this year. Settlement negotiations regarding the loss-claim with Verso’s insurance carrier are continuing, and a resolution is expected within a few months.