Paper mill soldBuyer KapStone pays $485 million for local landmark By Kyle Stock
The Post and Courier
Tuesday, April 8, 2008
A strategic port, a weak dollar and a seasoned work force made MeadWestvaco Corp.'s North Charleston paper mill an attractive target for a new company in the old-fashioned paper business. KapStone Paper and Packaging Corp., which bought its way into the industry last year, agreed to pay $485 million in cash for the 1,000-worker factory, a plant that opened on the Cooper River nearly 71 years ago and is one of the region's most important manufacturers. 
Mic Smith The MeadWestvaco paper mill on the Cooper River in North Charleston, seen from Interstate 526 on Monday, is being sold to KapStone Paper and Packaging. Related storyFormer employee: 'Good times and good, real people' 4/8/2008 KapStone also will take ownership of a 100-megawatt power generator at the mill, as well as five "chip" mills around the state and a lumber mill in Summerville. Combined, those smaller operations employ about 100 workers. No layoffs are planned, at least not in the short run, KapStone said. Meanwhile, MeadWestvaco will keep the 600 employees who run its other local operations, including its chemical business and land-management estate division. It also will continue to provide timber to the paper mill once KapStone buys it. The deal is expected to close in the third quarter. Richmond, Va.-based MeadWestvaco has been shedding its timberlands and traditional paper product lines in favor of more-complex goods, such as plastic dispensers and chemical solutions. The sale of its North Charleston plant, which produced 833,000 tons of paper for cartons, corrugated cardboard and pet-food bags last year, is part of that strategic shift, said John A. Luke Jr., chairman and chief executive officer. The questionsWho's buying it? Illinois-based KapStone Paper and Packaging Corp. is paying $485 million in cash for the paper mill, as well some smaller MeadWestvaco mills around the state. Will the mill keep operating? Yes. KapStone, which is new to the paper industry, said it sees opportunities to grow the business at the North Charleston mill. Will there be layoffs? None are planned, KapStone said. But an industry analyst said the mill seems to have too many workers compared with other paper factories. KapStone agreed. "The North Charleston mill is an industry-leading facility and is well positioned to succeed in its markets, yet it is no longer an optimal fit with our long-term consumer packaging strategy," Luke said. KapStone, a relatively tiny operation with just 710 employees, is bullish on so-called commodity paper products. It raised $120 million by selling shares to the public in August 2005 and set out to buy traditional mills. In January 2007, KapStone spent $155 million in cash to buy two plants from International Paper Co. — a mill in Roanoke Rapids, N.C., and a paper bag factory in Arkansas. "We have a couple of niche markets, and now we're the leaders of those two niche markets," said Andrea Tarbox, KapStone's chief financial officer. By Wall Street's measure, KapStone made out well in the deal announced Monday. Shares of the nascent company surged almost 8 percent in trading on the Nasdaq, while the price of MeadWestvaco stock edged down 1.9 percent. Daniel Rohr, an analyst for Chicago-based research firm Morningstar Inc., said MeadWestvaco's strategic shift is not paying off as well as planned. Some of its newer products, such as compact disk cases, are fighting a decline in demand. And the company's traditional lines of business are not financial dogs, Rohr noted. MeadWestvaco's packaging resources department posted an 11 percent operating profit margin last year and the North Charleston facility racked up $521 million in 2007 sales, according to figures released by KapStone Monday "Generally, the weak dollar is making Southeast U.S. paper mills more competitive in the global market," Rohr said. The sale ended months of speculation, as rumors buzzed around the mill and on Internet message boards. The announcement was greeted with relief and cautious optimism. "I think employees know this is a good change," said MeadWestvaco spokeswoman Pam Wheeler. "I think it's going to give the mill a lot of opportunities to grow." By the numbers$521M How much the North Charleston MeadWestvaco paper mill made in 2007 sales. 1,000 Number of workers currently employed at the 71-year-old paper mill. 833,000 Tons of paper produced last year at the MeadWestvaco mill. Gary Stamper, a maintenance engineer who lives in Mount Pleasant and has worked for the company for 25 years, was enthusiastic about the purchase and the buyer. "This company wants to stay in the brown paper business, and that's a good thing for us," he said. Henry Cook, a subcontractor who has painted the mill's steel on and off for the past three decades, was more skeptical. He's concerned about his benefits. His son, Ryan, has worked there for two years and also is anxious to hear about any changes. We're not union," he said. "We want to know what the real deal is." KapStone's Tarbox said Monday that no layoffs are planned as part of the acquisition. "We think it's a terrific group of people down there, and we don't have plans to downsize," she said. "That being said, we might reconfigure things at some point, but I can't even say that yet." North Charleston Mayor Keith Summey called the sale "the best-case scenario." "It's just a matter of changing the name on the side and front of the building," he said. However, acquisitions in the manufacturing industry are often followed by layoffs as buyers try to wring savings out of their purchases to pay down debt and generate returns for investors. Deutsche Bank analyst Mark Wilde has predicted a sale of the North Charleston plant for some time. During a conference call with KapStone executives Monday, Wilde noted that the mill has nearly twice as many employees as some larger rival paper factories. "That seems to me like a lot of labor on a three-machine mill," he said. Roger Stone, KapStone's chairman and chief executive officer responded: "I think that's a fair observation." MeadWestvaco Corp. -- Headquarters: Richmond, Va. -- Background: Formed in 2002 as a merger between Mead Corp. and Westvaco Corp. -- Products: Office paper, cartons, boxes, CD cases, notebooks and chemicals used in inks and varnishes. -- Employees: 24,000. -- Financial snapshot: Made $285 million on $6.9 billion in revenue last year. -- Assets: 817,000 acres of forestland and six paper mills. KapStone Paper and Packaging Corp. -- Headquarters: Northbrook, Ill. -- Background: Formed through an August 2005 initial public offering. -- Products: Unbleached paper and paper bags. -- Employees: 710. -- Financial snapshot: Made $27 million on $257 million in revenue last year. -- Assets: Two mills in the United States. A long legacy MeadWestvaco Corp.'s North Charleston paper mill has led to numerous spinoff investments in the past 71 years. 1899: Westvaco is incorporated as the West Virginia Pulp and Paper Co. 1923: Company begins buying land in North Charleston for a paper mill. JULY 1, 1937: Mill opens with 800 workers. Production is 300 tons a day. 1941: Company's research laboratory is located in North Charleston. 1947: Company installs second paper-making machine. 1953: Company establishes its polychemical division in North Charleston. 1957: Third paper-making machine is installed. JUNE 1996: Westvaco and Scana Corp. form Cogen South to build and operate a $160 million power plant at the local mill. At the same time, Westvaco unveils plans to build a $20 million research and development center in North Charleston. JANUARY 2002: Westvaco and Mead Corp. merge. Name is changed to MeadWestvaco Corp. APRIL 2007: MeadWestvaco unveils plans to develop its 72,000-acre East Edisto tract west of the city of Charleston. APRIL 7, 2008: MeadWestvaco sells the North Charleston paper mill and other assets to KapStone Paper and Packaging Corp. for $485 million. MeadWestvaco's specialty chemicals division and land-management group will remain based in the Charleston area. |
Article tools |
|
Notice about comments: Charleston.net is pleased to offer readers the ability to comment on stories. We expect our readers to engage in lively, yet civil discourse. Charleston.net does not edit user submitted statements and we cannot promise that readers will not occasionally find offensive or inaccurate comments posted in the comments area. Responsibility for the statements posted lies with the person submitting the comment, not charleston.net. If you find a comment that is objectionable, please click "suggest removal" and we will review it for possible removal. Please be reminded, however, that in accordance with our Terms of Use and federal law, we are under no obligation to remove any third party comments posted on our website. Full terms and conditions can be read here. |
Comments
This article has 36 comment(s)
Posted by Paul on April 8, 2008 at 8:14 a.m. (Suggest removal)
Most of the employees are probably most concerned with how it affects them personally, such as retirement, benefits, and insurance.
The part that stands out in the above article is Kapstone's CEO agreeing that the mill has about twice the number of employees compared to larger rival mills.
Posted by DCartisan on April 8, 2008 at 8:14 a.m. (Suggest removal)
---------------------------
During a conference call with KapStone executives Monday, Wilde noted that the mill has nearly twice as many employees as some larger rival paper factories.
"That seems to me like a lot of labor on a three-machine mill," he said.
Roger Stone, KapStone's chairman and chief executive officer responded: "I think that's a fair observation."
---------------------------
Sounds like there will be A LOT of layoffs in the next few months. So sad...
Posted by CADguy on April 8, 2008 at 8:29 a.m. (Suggest removal)
Although it may seem like a lot workers, there was a serious reduction in force after the Mead/Westvaco merger in 2002. You need people to produce paper and to maintain equipment in order to produce over 800,000 TPY of paper.
Posted by whome on April 8, 2008 at 8:35 a.m. (Suggest removal)
Kapstone seems to be a type of equity type company, more interested in short, rather than long, term gains.
Posted by nochucker on April 8, 2008 at 8:37 a.m. (Suggest removal)
I wish they'd tear that place down...it STINKS!
Posted by ImplantedYankee on April 8, 2008 at 8:43 a.m. (Suggest removal)
nochucker -- I'm glad to see it there. A. It provides jobs. B. It takes a really deep recession to affect the demand for paper products, making it immune from minor corrections. C. A LOT of land is managed by MeadWestvaco that might otherwise fall into the hands of developers.
My thoughts are with the employees who are likely very concerned today. I've been through this before and it's tough to look around you and wonder who might go.
Posted by Paul on April 8, 2008 at 8:59 a.m. (Suggest removal)
Early: The Charleston mill meets all current DHEC and EPA regulations for wastewater discharge and air emissions.
Posted by sbishop on April 8, 2008 at 9:18 a.m. (Suggest removal)
Early, you hit the nail on the head. Ever since the merger with Mead, the company has been missing the numbers. Never did see the savings they claimed would occur with the Mead merger. In a 3 year span they moved their corporate offices from Richmond/Charleston to Dayton and then back to Richmond. Don't know how you wring out savings with actions like this.
Posted by jnot on April 8, 2008 at 9:31 a.m. (Suggest removal)
It may be stinky, but the paper mill isn't nearly the polluter that the port (and the ships it brings in) is. Charleston would be a healthier city if every one of the port terminals were replaced by a paper mill... of course it would stink to holy hell and nobody would want to live here.
Though, it would probably be a wealthier city not only because it they employ more people (even with potential job cuts), replacing the port would severely cut down on traffic (making it a more attractive place to move business), they would have to pay for the land, and they would contribute taxes to the local coffers.
Posted by CADguy on April 8, 2008 at 9:39 a.m. (Suggest removal)
nochucker - the mill has been around longer than most of developed North Charleston. The scent you smell is money. And you really do not want it to away. There may be 1000 workers qouted, but there are far more than that who support the operations of the facility. For one, take a look at all those chip trucks on the road.
The mill does meet and can exceed DHEC and EPA regulations. If they didn't, they would be fined out of there ying-yang.
Posted by Paul on April 8, 2008 at 9:58 a.m. (Suggest removal)
There is no grandfathering to a lower standard at the mill, they meet and even exceed the current standards.
Posted by ImplantedYankee on April 8, 2008 at 10:14 a.m. (Suggest removal)
From what I understand, it's a lot better than it used to be. I talked to a guy who went to The Citadel in the 1970s and he told me that the fog from the mill used to be yellow and opaque, reaching all the way to campus and beyond many mornings (about 7 miles as the crow flies).
Posted by CADguy on April 8, 2008 at 10:33 a.m. (Suggest removal)
nochucker - if the mill were to go away, so would the hundreds of thousands of dollars it gathers through employee contributions, as well as, the hundreds of volunteer hours spent in mentoring programs like those at newly formed magnet schools.
Posted by CADguy on April 8, 2008 at 10:35 a.m. (Suggest removal)
The employee contribution are distributed to non-profit charitable orginizations.
Posted by Hutch on April 8, 2008 at 11:37 a.m. (Suggest removal)
maybe this new company will smell better, what
will be will be, God's still in control of even
the small things.
Posted by jammanofdi on April 8, 2008 at 11:50 a.m. (Suggest removal)
I am all for growth in Charleston and hate to see anyone lose their job, but I agree with nochucker - I hate the place. From the smell I pass every morning, to the wood chips that fly off the trucks on 26, I believe that Charleston would be a better place without that mess. I've argued with so many other people that take the side of "WestVaco supplies tons of jobs and really is sanitary" and - "it's not pollution, it's steam..." "Steam" doesn't have a color or a smell that I can notice from 10 miles away. In my opinion, if it provides an unpleasant color or smell, then it's called pollution. Hopefully the workers read the writing on the wall and find other jobs before it's too late.
Posted by toastchee on April 8, 2008 at 11:58 a.m. (Suggest removal)
Imagine the repulsion potential business visitors smell if they come visit the area. I think the mill contributes to a definite lower quality of life.
Posted by CADguy on April 8, 2008 at 12:38 p.m. (Suggest removal)
Again, this mill has been around longer than most of developed North Charleston, Summerville, Goose Creek, and some of Charleston. It apparently did not thwart the developement of these areas. In fact, it has help these areas grow by helping fund the fresh water tunnel from the Edisto River that supplies water the three counties. In addition, the expenditure of creating a power generating facility that North Charleston, Charleston, and Daniel Island utilize.
If you were to look at any other paper producing facility or any manufacturing facility for that matter, many towns have been created from their existence.
If you want to talk about pollution. What about the plastic bags that you see everywhere? I remember when I was working in Evansville, Idiana seeing the landscape after a Wal-Mart was constructed. Nearby farm fields had plastic bags everywhere. Unfortunately, Evansville is not exclusive. Next time you drive around, just look. Then be sure to thank your plastic bag lobbyist.
Posted by mominthesouth on April 8, 2008 at 12:45 p.m. (Suggest removal)
For you that want this mill shut down are not even thinking of the impact it would have on the entire Charleston, Mt. Pleasant, N. Charleston area. The numbers wouldn't be just 1000 it would be multiplied several times.
Families not living and spending money in the area. This would certainly affect the areas economy. This mill has been here a lot longer than most of us. When my son was 2 he would love seeing his Daddy's work that smells like money. The money part is our livlyhood. The company has been good to us and hopefully will continue to do so.
I am sure some of the comments are from people that just look at the surface of things and do not really know what they are talking about. You have to have factual evidence before accusations are made. If you have a job and are not in fear of losing it, then good for you. If the Mill shut down, YOU might be the one to suffer the most.
Posted by DP83Lowcountry on April 8, 2008 at 1:19 p.m. (Suggest removal)
The two glorious smells of Charleston that keep me coming back and keep the outsiders at bay: the ole mill and the salt marsh. Wouldn't be Charleston Without either. THE SWEET SMELL OF HOME! AHHHH!
Posted by ForPnC on April 8, 2008 at 1:28 p.m. (Suggest removal)
I can't help but think of the people that are most likely going to lose their jobs. I've been there. It sucks. There's nothing you can do about it. And nobody cares. Things like this cause families to break up just to stay together. I hope all of the employees are safe in their employment.
Gotta love this new, improved, non-recession economy we're in.
Posted by jammanofdi on April 8, 2008 at 1:32 p.m. (Suggest removal)
Like I said, I am not for anyone losing their jobs - but I am for improving the quality of life for everyone here in Charleston. I'm sure that when the naval base shut down things looked bleak. The paper mill hasn't even announced closings, layoffs - anything yet, and people are already jumping to all kinds of conclusions. All I said is I hope that it closes - and hopefully the current employees are smart enough to realize the writing on the wall and get out before the market is flooded with a thousand other unemployed workers.
Posted by toastchee on April 8, 2008 at 1:41 p.m. (Suggest removal)
Paper Mill - the buggy whip maker of the 21st century.
Posted by CADguy on April 8, 2008 at 1:56 p.m. (Suggest removal)
jammanofdi
"Like I said, I am not for anyone losing their jobs - but I am for improving the quality of life for everyone here in Charleston." "All I said is I hope that it closes"
It is not going to close any time soon. Would you shell out $485mm to close something that has sells of $520mm per year? Not sure of what actual profit is.
Posted by MMitchum on April 8, 2008 at 3:06 p.m. (Suggest removal)
Well I hope these people will not come in and start laying off. I have family and friends who work there and it is a big concern. My father even worked here. When I use to complain about the smell he would say that is the smell of money,because of the people who works there it's their livelyhood. So I hope all goes well for them all.
Posted by JohnS on April 8, 2008 at 3:54 p.m. (Suggest removal)
Instead of a benefit package like Health Insuarance and retiremnent it will be points and credits for benefits the employee can buy from the company pretaxed at a reduced rate. This is the lastest thing in company benenfits. It saves the company alot of fixed cost and passes the rising cost of health insurance to the employee.
Posted by cinnabar on April 8, 2008 at 4:37 p.m. (Suggest removal)
Good luck to the employees and keep the plant going. To all envirowimps complaining about the odor...Name a time in your whining existance when you have not emitted noxious odor for more than 12 hours...If you don't like the smell, move to New England or any where else you desire and do Charleston a favor. The papermill has fed more babies, sent more kids to college, and done more general good for the community than you ever will. We are talking about 1000 jobs...Cheers!
Posted by LocalTruth on April 8, 2008 at 7:55 p.m. (Suggest removal)
Forget the smell, Does anyone realize the potential for loss of life in regards to chlorine being so close to the don holt bridge? Does anyone know where the retention spillover went after hugo? I can think of one place. Anyone remember the stories of "glowing" shrimp in the cooper river? I do. Does anyone really know how many fires happen in the mill? From what i understand quite a bit on the chemical side. Ever wonder why at night when most are asleep you can REALLY smell the mill? Or how about when its cloudy outside and the "steam" blends with the clouds they really start pumping it out, and by the time it passes through your a/c it smells like a dirty diaper in your home. The smell seems to carry further than it use to and anyone who thinks that the odor isnt harming us is mistaken. By the way, dont throw any cigarette butts off the opposite side of the bridge it might land on the gasoline tanker docked at hess. wooof! Happy motoring.
Posted by a_set_love on April 8, 2008 at 8:01 p.m. (Suggest removal)
Posted by jammanofdi (anonymous) on April 8, 2008 at 11:50 a.m. (Suggest removal)
I am all for growth in Charleston and hate to see anyone lose their job, but I agree with nochucker - I hate the place. From the smell I pass every morning, to the wood chips that fly off the trucks on 26, I believe that Charleston would be a better place without that mess.
If you really believe that Charleston would be a better place without it, then you need to get your Mayor Riley busy on running them out of Charleston.
Posted by cinnabar on April 8, 2008 at 8:29 p.m. (Suggest removal)
Take action...Stay off the Don Holt if you are that concerned about chlorine. Also, while you are at it, stay out of your car, that pollutes our air and is far more risky and more dangerous to you and other drivers than the mill. Read up on your 8th grade science and determine why air currents are reduced at night (ie., when we have fog hugging the ground at night under air inversion conditions). Also, while you are at it, please advise the local emergency personnel how you prevent overfill issues on a riverbank operation during a hurricane. PS, Don't eat shrimp after a hurricane, the seagulls will take care of them and also don't eat yellow snow...
Posted by ImplantedYankee on April 8, 2008 at 8:48 p.m. (Suggest removal)
That mill has been around longer than anyone posting here. If you hate it that much, move!
Posted by Cid95 on April 8, 2008 at 9:59 p.m. (Suggest removal)
I'm an East Cooper native. It would be nice, in a candyland sort of way, to imagine Charleston being filled with affluent, polite, educated people living in nice homes enjoying pristine air and water without any industry more intensive than sweetgrass basket weaving and shrimping, traveling around on uncrowded roads with the harbor devoid of anything larger than a 16' Boston Whaler.
But...wake the hell up! Charleston is and has always been a working city, not a vacation resort. This mill, the port, and other stuff like them are what made Charleston.
Posted by COVINGTONVA on April 9, 2008 at 1:57 a.m. (Suggest removal)
It's the same story in every town in America. Those who don't work at a paper mill always hate the smell and conjure up worst case scenarios of evil doings. Those who do work at them are thankful to have a job so they can raise their families. I'm one of those thankful. I work at the Meadwestvaco in Covington Va. Meadwestvaco has spent millions complying to EPA mandates. Let me ask, what takes longer to bio-degrade, paper or plastic? Next time you buy something, see what it's wrapped in.
Then there's the old bumper sticker that says- If you object to logging, try wiping on plastic.
Posted by a_set_love on April 9, 2008 at 7:54 a.m. (Suggest removal)
Oh,thats right, the mill isn't in Charleston is it. For those of you from Charleston who want the mill gone, So Sorry.
Posted by LocalTruth on April 13, 2008 at 12:36 p.m. (Suggest removal)
Don't worry folks,we know what usually happens when a company buys a dinosaur at a bargain. Layoffs will happen first, then a short struggle, then CLOSURE. Good riddance to the cancer causing dump. Smells like money? Then you better follow your nose to georgetown cuz the odor is about to disappear in Charleston. I give it less than 3 years folks.
Posted by dfb777 on August 4, 2008 at 5:12 p.m. (Suggest removal)
my name is daniel blose i just moved here 2 months ago i;am interested in working for your company i was wondering if you were hiring and if so where to go to put app in so please let me know the anwser i can work any shift
thank you
daniel blose