[This article first appeared in The Smoky Mountain News and is republished here with permission.]
In less than three months, Pactiv-Evergreen’s Canton mill will cease operations after more than a century of serving as the cultural, economic and geographical center of the tiny Haywood County town of Canton.
“As we continue to confront a challenging market environment for our Beverage Merchandising business, we are faced with these difficult decisions that directly impact our employees,” said CEO Michael King in a press release on March 6. “We assess all changes to the business with considerable thought for our employees, customers, shareholders and communities, and do not take these decisions lightly. We remain committed to doing what’s right, treating everyone with respect, and delivering on all of our commitments to our people, customers, shareholders and the communities where we operate.”
“I’m numb. Moreover, I’m heartbroken,” said Zeb Smathers, mayor of Canton, just after the news became public. “I’m heartbroken for the men and women who will go home tonight and tell their spouses and children that they won’t have a job soon. There are no words. There’s nothing more I can do than mourn and stand by the workers of Evergreen. Seeing grown men cry is not what I was expecting on a Monday afternoon.”
The move by Pactiv-Evergreen will have far-ranging implications on both the local and regional economy.
Rumblings of trouble at the mill had been heard for some time. On Feb. 8, company officials said that the facility would scale back production by shutting down one of its four machines, but there was no outward indication of anything larger afoot. Until March 6.
Workers were summoned to a series of meetings late that afternoon, where they were informed of the company’s decision.
“This is not at all a reflection of people in this room,” Byron Racki, president of beverage merchandising, told a group of about 40 salaried employees gathered in an auditorium in one of the company’s facilities on Park Street, just across from the union hall.
Racki said that the decision had only been made within the last week, and that it was “almost exclusively a reflection of the market conditions, along with the capital costs that would be needed to upgrade the Canton facility.”
The closing will likely occur near the end of May or beginning of June, according to Racki. The Waynesville facility will see a substantial reduction in workforce, on the order of two-thirds to three-fourths of its employees, but Racki wasn’t clear about other impacts there.
“This was not just about Canton, or just about Waynesville or Pine Bluff,” he said, noting that a facility in Olmsted Falls, Ohio, would close as well. “We are going to explore strategic alternatives for Pine Bluff and for the Waynesville facilities.”
The impact of the mill’s closing on Haywood County’s economy will be substantial. It’s estimated that there are around 800 jobs at stake in Canton and around 300 in Waynesville. Those numbers do not include contractors who provide services or materials to the mill.
As of December 2022 — the last month for which data were available from the North Carolina Department of Commerce — there were more than 28,600 people employed in Haywood County, down from a 2022 high of 29,327 that May.
Unemployment, which has been at historic lows both nationally and statewide, was listed as just 788 people in Haywood County last December, after a June high of 1,061. December’s total represents an unemployment rate of 2.7 percent.
Were all of the mill’s employees to be laid off all at once, that number would probably end up over 7 percent. The mill is one of Haywood County’s largest employers.
A significant portion of the mill’s workforce lives outside of Haywood County, meaning the layoffs will also impact surrounding communities as well.
The tax ramifications of the mill’s absence will present a direct impact to at least two municipal governments, right in the middle of budgeting season.
“I’ve not heard specific numbers about the county, but I heard this morning Canton was looking at $1.3 million in tax base loss and maybe $300,000 in water,” said Kevin Ensley, chairman of the Haywood County Board of Commissioners. “I would think the county would be close to a couple million.”
The mill also treats the town of Canton’s wastewater. Those operations will not be impacted immediately, according to Racki.
“We will continue to operate that for the foreseeable future, and we’re working closely with the city on a transition plan there,” he said. “So that will be a small group of folks who will operate that. We do not need the mill to operate just the wastewater treatment.”
Tommy Long, a Haywood County commissioner who works as an electrician at the mill, said that town officials met with mill officials early on March 7 to talk about a plan for wastewater treatment, and also said that since 1964, the town has maintained a contract with the mill that guarantees it will run the wastewater treatment plant for two years after the mill shuts down.
Racki said that the most important concern right now was for workers to continue to operate the mill safely and avoid injuries for the rest of the time it’s in operation.
“I wanted to come and share this message personally, because I can’t pretend to say I know what it’s like, other than I know enough to know it’s terrible,” he said. “And we’ve not reached this decision lightly.”
Human resources professionals from Evergreen began meeting with individual employees on the morning of March 7 and will finish up by the end of the week, Racki said.
Workers will be provided with at least 60 days’ notice before their employment is terminated, per federal law. Some may be terminated sooner, but they’ll still receive full pay and benefits for 60 days.
Workers received Racki’s comments in stunned silence, albeit with at least one audible gasp from a member of the audience.
As word of the layoffs spread through the community — first by a Smoky Mountain News Facebook post at 5:50 p.m. — some were upset that Pactiv-Evergreen didn’t seem to have a solid plan for informing workers all at once.
“I think the way the message was relayed to the employees could have been handled better,” said Troy Dills, president of the United Steelworkers Smoky Mountain Local 507. “People don’t want to hear about their employment and livelihood online.”
After Racki concluded his March 6 presentation, he took questions from the workers gathered there.
The mill, he said, is not a Superfund site. The Superfund program was established in 1980 under the auspices of the U.S. Environmental Protection Agency for the cleanup of sites that are contaminated with hazardous chemicals.
That could open a huge swath of land straddling the Pigeon River, right in the center of town, for other uses in the future — if the mill is to be demolished.
“I asked the company representative if it was their intention to tear the mill down,” Dills said. “His reply was that it was not their intention. What I’m hearing secondhand is it’s not going to be sold, and I have no confirmation it would even be offered up for sale.”
Dills’ observation about a potential sale could be valid; Pactiv-Evergreen did cite the cost of upgrading the facility as one reason for the closure, which may scare off any potential buyers. And, if the plant were sold and continued production, Pactiv-Evergreen could find its remaining operations competing against Canton.
Racki elaborated on the specific market conditions that he said are responsible for the mill’s closing.
“In the last 15 months, there was a nice rebound from COVID,” he said. “Really, since November [or] December, markets have gone to hell, for lack of a better way of saying that. It’s not just us, it’s everybody, from a marketing standpoint.”
There’s a lot of excess capacity in the marketplace, Racki explained, which is why the company shut down the number 20 machine in early February.
“When we’re looking at forecasts, and when things might get better, if anything, I’ll tell you unfortunately, specific to the paper side, it’s only gotten flat to worse for the last 60 days,” he said.
He also said that due to challenging economic conditions generally, people are choosing to eat more at home than at McDonald’s or Starbucks — huge consumers of paper products of all sorts.
“It’s not a good market for cup stock, either,” he said. “The paper part [of the plant], [machines] 11, 12 and 20 specifically, are impacted by that. It’s just for lack of demand. People just aren’t printing things.”
Go on, take the money and run
A press release issued by Pactiv-Evergreen at 9 p.m. on March 6 mentioned “restructuring” in the company’s beverage merchandising division while also boasting of a strong fourth quarter and a strong 2022 overall.
For the full year of 2022, the company reported net revenues of $6.2 billion as of Dec. 31, up 14 percent from $5.4 billion the previous year. An adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] of $785 million represents a 48 percent increase over the $531 million reported the previous year.
Fourth-quarter net revenues exceeded projections, even though they were down 3 percent from fourth quarter 2021, and down 8 percent from fourth quarter 2020.
Pactiv-Evergreen’s stock price (NASDAQ: PTVE) tumbled on the restructuring news; it peaked at $11.69 per share at 9:30 a.m. on March 6, and remained at $11.38 as markets closed and workers were being informed of the layoffs.
When markets opened on March 7, PTVE opened at $11.04 but then tanked to $9.48 by mid-morning.
Four members of the company’s leadership team, however, were able to offload more than 58,000 shares of company stock on March 2 ahead of the layoffs and before the price dip, per Wall Street Zen, a market research firm. All four of them got $11.30 per share.
Michael King, president and CEO, sold 45,113 shares for $509,776. Douglas Owenby, COO, sold 3,969 shares for $44,849. Racki, who delivered the announcement to workers, sold 4,093 shares for $46,251 and Chandra Mitchell, chief legal officer, sold 5,613 shares for $63,427.
All told, the transactions represent more than $664,000 in stock sales by top execs just four days before laying off more than a thousand workers.
As far as employees go, they’ll get one week of severance pay for each consecutive year of service at the mill, according to Long.
Pactiv-Evergreen’s press release said the company expects to incur and pay cash charges in the range of $130 million to $185 million during 2023 and 2024 “for severance and associated benefits and exit and disposal and other transition costs.”
‘Being a mill town is about grit’
The town of Canton’s fortunes have risen and fallen along with those of the mill for more than 100 years. The mill’s closing will be transformational for the small town, in ways both immediately apparent and not. But Canton has been recognized as “the little town that wouldn’t stay down” after surviving flooding in 2004, the Great Recession in 2008, the COVID-19 pandemic in 2020, and another deadly flood in August 2021.
Canton Mayor Zeb Smathers thinks that this, too, shall pass.
“Everyone knows we’re a mill town, but not because of the mill,” Smathers said. “Being a mill town is about grit, and when the odds are against you, about overcoming challenges. Ironically, the values of being a mill town are exactly what will get us through this.”
Henderson County Republican Chuck Edwards, who represents the congressional district in which the mill is located, did not respond to multiple requests for comment on this story.
A timeline of Canton’s paper mill
• 1893 — The town of Pigeon River is reincorporated by the N.C. General Assembly as Canton, North Carolina.
• 1893 — Peter G. Thomson of Hamilton, Ohio, incorporates the Champion Coated Paper Company.
• 1906-07 — Construction of Champion Fibre Company in Canton, N.C.
• 1908 — The Champion pulp mill in Canton begins production.
• 1908 — Reuben B. Robertson Sr., Peter G. Thomson’s son-in-law, becomes general manager of Champion Fibre Company in Canton.
• 1922 — Paper production begins at the Champion mill in Canton.
• 1924 — Workers at Champion in Canton strike for a three-shift day and competitive wages. After a union attempted to organize the workers, mill management promised eight-hour shifts, an adequate pay scale for those who turned in their union cards and no repercussions.
• 1925 — The Champion Knight logo is used on a shipment of paper for the first time.
• 1931 — Peter G. Thomson, founder of Champion, dies.
• 1935 — The Hamilton and Canton operations are merged to form the Champion Paper and Fibre Company.
• 1940 — Two of the largest floods on record hit Canton and Champion within two weeks of one another. The mill is shut down for 100 hours and damage to the town is estimated at $303,000.
• 1946 — Reuben B. Robertson Sr. succeeds Logan G. Thomson as Champion’s president.
• 1950 — Reuben B. Robertson Jr. succeeds his father as the company’s president.
• 1960 — Reuben B. Robertson Jr. is killed in a traffic accident in Cincinnati, Ohio.
• 1972 — The company is renamed Champion International Corporation.
• 1999 — The employees of the Canton mill purchase the mill and rename the company Blue Ridge Paper, Inc.
• 2004 — The Pigeon River floods twice as a result of Hurricanes Frances and Ivan. These floods cause close to $50 million in damages to Blue Ridge Paper and $20 million in damages to other businesses.
• 2006 — Workers renegotiate and pass 3-year contract to continue operations at the Blue Ridge Paper mill.
• 2007 — New Zealand’s Rank Group purchases Blue Ridge Paper and changes name to Evergreen Packaging. Company headquarters moved from Canton to Memphis, Tennessee. Workers who were part of the Employee Stock Ownership Plan at Blue Ridge Paper received buyouts estimated to be in the $20,000 range.
• 2010 —Evergreen Packaging was acquired by Reynolds Group Holdings Limited, which already owned Pactiv and was an international supplier of food and beverage packaging and storage products.
• 2020 — Evergreen Packaging and Pactiv came together and created a public offering under the name Pactiv Evergreen. Pactiv-Evergreen trades on the NASDAQ Stock Exchange under the symbol: PTVE.
• 2021 — Flooding from Tropical Storm Fred damaged equipment and buildings at the Canton plant, shutting down operations for several days.
• February 8, 2023 — Pactiv-Evergreen announces the shutdown one paper machine at the Canton plant. Officially called a “curtailment,” the idling of PM20 could be temporary and last only a few months, plant officials said.
• Monday, March 6, 2023 — Pactiv-Evergreen officials tell employees the plant will close in the second quarter of this year.
Cory Vaillancourt is Politics Editor of The Smoky Mountain News. Contact him at firstname.lastname@example.org.