Tuesday, August 9, 2011

Paper Company in Michigan Closes; Lender pulls the plug

This, to me is a really sad story.

Manistique Papers is located in Manistique, a small city in Michigan; population is probably less than 5,000. If this company stays closed, it’ll have a major economic impact on that small town.

Costs for raw materials up, demand for paper down. To printers and reprographers, that’s not surprising.

Lender pulled the plug on the company. To printers and reprographers, and virtually all small and medium size companies, who have bank debt, this is also not surprising.

Anyone want to pull a group together to invest into a small paper company?

Manistique Papers closes

End of business leaves 150 workers jobless

August 6, 2011

By Ashley Hoholik - Staff Writer , Daily Press

MANISTIQUE - One of Manistique's largest employers is ceasing production, filing for bankruptcy and seeking a buyer - citing a financial impasse with their lender. After 90 years in the small waterfront community, Manistique Papers, Inc. (MPI) announced Friday that they would be unable to continue their struggle with declining demand and increasing material costs.

MPI employed approximately 150 people and produced 100 percent recycled fiber content specialty offset papers used for printers and converters.

According to a press release issued by MPI, necessary funding needed to continue operations was denied Thursday, despite the paper company's good financial history, stock holder guaranty payments and support collateral value.

"In light of the lender's decision, we examined our few options with legal counsel and we regret having to make the decision to file bankruptcy," MPI director and general manager Jon Johnson explained in the release. "The business circumstances leading to this decision were unforeseen - we are as shocked by this as everyone else. We had thought and hoped that the lender would allow us to continue operations while we searched for alternative financing."

A volatile market also played a role in the company's decision to close its doors.

"While our values and service have not changed since 1920, the American economy has changed," said Johnson. "Due to the current economic situation and the inability to obtain our working capital needs, we are left with no choice at this time but to close this chapter of Manistique and Michigan history."

According to the release, the cost of raw material has increased $1 million per month since January 2011 - severely impacting the company's bottom line. Market conditions also resulted in a significant decrease in demand, creating excess inventory and falling revenues.

Upon hearing of MPI's closure, members of the community expressed concern about the future of the city, which relied heavily on the financial impact of the paper company.

"Hopefully they find a buyer. It's just a trickle down effect; all of those people spend their money here in Manistique," said Debra Rumrill. "It effects the school system, too...it's tough."

Many were taken aback by the news, noting that, while the paper company's operations were often the subject of rumors, Friday's announcement came as a surprise.

"I heard rumors, but that's about it," said Sandy Patrick, owner of the Aunt Sandy's Health and Gourmet Foods in Manistique. "I mean, you always hear stuff, but you never really know for sure."

MPI's influence outside of the commercial market would be missed, Patrick explained, as they frequently contributed to events throughout the city.

"It's sad, you know," she said. "The paper mill is a big part of Manistique. They contribute a lot - they're a very philanthropic organization."

In a press release, Manistique City Manager Sheila Aldrich expressed sadness and optimism about the company's announcement and future.

"Out hearts go out to Jon, the employees and this community .... Manistique (Papers) is and has been an icon to Manistique and Schoolcraft County," she wrote. "The city of Manistique will continue to work with Manistique Papers and find a resolution. As a community, we will weather this storm," she said.

In regard to the numerous employees now left without employment, Aldrich noted the local Michigan Works! office would be there to help.

"Michigan Works! has called and wants the community and employees to know that ... (they) are here for them with counseling and training."

Despite a cessation in production and the intention to file for Chapter 11 bankruptcy by Monday, MPI is keeping limited personnel on hand to maintain equipment and operations while they look for a buyer.

"We are hopeful that a new owner will re-open MPI and that its skilled workforce will continue to thrive in the current market and banking conditions," Johnson said. "I want to thank all of the employees and their families for the dedication, hard work and sacrifice they have given the company. We will work diligently to find new owners and to bring the noise of a successful paper mill back to Manistique."

No comments:

Post a Comment