Harbor Paper management out, operations curtailed

Harbor Paper in Hoquiam announced Monday that the mill that reopened with fanfare in September after a 15-month shutdown will temporarily “curtail operations” during a transition period that involves a “wholesale management change.”

It wasn’t immediately clear whether the mill would cease operation completely during the transition, or how long it would last. Company officials wouldn’t comment beyond a one paragraph announcement from Elliott Rust Holdings LLC. Harbor Paper LLC, which owns the mill, is owned by Elliott Rust Holdings LLC, which is owned by Cesar Scolari of Gig Harbor.

A source said shutdown on one of the mill’s two paper machines started Friday night. About 180 people work at the mill.

John Begley, who has served as the mill’s top manager since it reopened in August, is reportedly out. A message left on his cell phone wasn’t returned.

Rumors have circulated for the past couple of weeks about local vendors and suppliers going unpaid.

The mill was rescued by local investors several years ago after it was shut down by a partnership of ITT Rayonier and International Paper. The local investors, led mostly by Bill Quigg of Hoquiam, struggled for years to keep the mill going and finally closed it in May of 2011. At one time, Begley managed the mill, then known as Grays Harbor Paper.

It was Begley that reportedly got Scolari interested in investing in the mill and developed the business plan.

In April of last year they announced their intention to purchase the mill, which was then in the hands of a receiver.

The sale was approved and production started in September.

“In any new enterprise, obstacles will present themselves, and not all of them can be foreseen,” read a portion of the one-paragraph press release from Elliott Rust Holdings LLC. “As Harbor Paper navigates these obstacles, we would like to express our greatest appreciation for the continuing support and understanding Harbor Paper has received from the Grays Harbor community. In light of the recent circumstances regarding operations, Harbor Paper’s Board has made the difficult decision of making a wholesale management change regarding operations at the mill. During this transition time, the mill will be temporarily curtailing its operations. Harbor Paper hopes these changes will improve viability of the mill as a long term enterprise.”

Tim Gibbs, CEO of Greater Grays Harbor Inc., the local non-profit economic development operation that worked to help reopen the mill, said he had heard rumblings recently that there might be problems, but he was still surprised by Monday’s development. He was also optimistic the new mill management would work out the problems.

“We were certainly not happy about what we heard today and stand ready to help in any way,” Gibbs said on Monday. “We’ve had conversations, and will continue to have them, about how to move forward in this. The jobs are the primary concern in our area. We stand ready to help the new management.”

Mayor Jack Durney this morning recalled Begley as someone who “was instrumental in putting the buyers group together that eventually paid off the banks on the bankruptcy and was crucial to reopening the mill and getting back to work. I hope he doesn’t get drug over the coals.”

Durney is optimistic that things will get straighted out, but said the up and down fortunes of the mill have been tough. “It’s a blow because of the history of the mill being closed originally by (ITT Rayonier and International Paper) and we all went through the ups and downs with the Quigg group, then it (closed) and we went through issues of finding a new owner and the excitement of getting it going again, and now it’s in — hopefully a temporary — decline. We have to hope they can keep going. Maybe with the new management it will get done.”