Harbor Paper is on a roll

The paper mill in Hoquiam has a new owner, a new logo and a new name. And last Wednesday, Harbor Paper produced its first roll of paper since the mill shut down nearly 15 months ago.

“We’re here, we’re open and we’re making paper,” said CEO John Begley, who had spent the past year looking for a new owner to take over the mill. Begley called dibs on the first pallet of paper, attaching a note that it was reserved for him.

Thus far, Begley said they’ve hired about 130 people with several dozen more yet to be hired. A grand opening celebration is planned for late October.

During a tour of the plant last week, employees seemed genuinely upbeat.

Rich Patton and his friend and former co-worker Wally Cooper worked at the mill a combined 88 years before it shut down. Both are now retired and have been brought on as consultants to help ensure the machines are running properly. On Thursday, they were keeping an eye on the machines in the finishing room as the rolls of paper were cut down to size.

“I went into the machine room and watched that very first sheet come across and there had to have been 70 people in there, just cheering,” Patton said.

“It was just a jubilant mood, with smiles everywhere,” Cooper said.

“The way I look at it, to bring hundreds of jobs back to the Harbor and the way unemployment is on the Harbor, I’m going to do everything I can to help this mill start back up,” Patton added.

Grays Harbor Paper shut down in May of last year after sluggish sales and poor market conditions, laying off more than 200 people. Facing millions of dollars in secured and unsecured debts, the company’s assets were assigned by Grays Harbor Superior Court to a receiver to try to sell the assets and recoup as much money as possible for those who were still owed.

In August, Judge Gordon Godfrey approved the sale to Harbor Paper LLC for $3.66 million. In a separate sales agreement that closed at the same time, the Grays Harbor PUD sold its interest in three biomass turbines at the mill for $540,000.

Begley said the old company had about 190 production workers. His plan is to have about 150. The old company also had about 40 salaried workers and his plan is to have about 30.

“We had 1,400 to 1,800 applicants that all had to be sorted through,” Begley said. “Grays Harbor WorkSource (of the state Department of Employment) did a fabulous job.”

About half of the current 130 employees are new and half are from the old mill, Begley said.

Begley also gave credit to Greater Grays Harbor, Inc. for its assistance in getting started up, along with executives at Cosmo Specialty Fibers, which lent support to the fledgling Harbor Paper.

Like Cosmo, Begley said that Harbor Paper is a non-union shop, but is offering “competitive wages.”

A couple of employees told The Daily World they were making just a little bit less than they were before, but were just happy to have the job.

The company will also contract out trucking services, he said. And the company already has a contract with International Forest Products, which handled the company’s distribution before the shutdown. Begley said he’s asked the contractor to take on an expanded role. Locally, the paper will be available through Aberdeen Office Equipment on First Street.

Thus far, the company is taking baby steps in its operation, focusing first on its everyday brand of copy paper. By the end of October, Begley hopes to have the mill producing a 100 percent recycled blend of paper. The paper will continue to use the brand Harbor 100, which had been sold before to Nike, the City of Seattle, the City of Bellevue and many other big clients.

Begley said that some of those old customers reached out to the company to say they were interested in the product again.

“There is definitely a demand for Harbor 100,” Begley said. “It made a name for itself and we will keep the name Harbor 100 because it does have an identity. When we acquired the company, we acquired the intellectual rights.”

Mark Thornton of Aberdeen was among the employees laid off when the company went under last year. Thornton said he was one of four former Grays Harbor Paper workers who ended up getting a job at the mill in Port Angeles.

“I had worked here for 10 and a half years and I’m glad to be back,” said Thornton, who was hired to be a back tender. “I was at Port Angeles for a year and two months, kept my house here and actually was renting an apartment up there.”

Thornton said he has family still on the Harbor so it was critical for him to stay home.

“Nobody wants to lose their home,” he said.

Homer Dizol, a third hand who had worked at the mill for 12 years, said he couldn’t be happier to get his job back.

“I love this job,” he said, as a roll of paper wound above his head.

Begley said only one of the mill’s two paper machines are working right now and it’s currently producing classic copy paper. Begley said some major investment to the mill’s second machine needs to be done before it’s ready to roll. Begley said the company is prepared to make that investment and get the machine running again.

Over the past month, Begley said the company has spent hundreds of thousands of dollars in upgrades, fixing roofs, painting walls and making sure things work.

“We spent half a million dollars on the power house alone,” Begley said.

Although the company’s made an investment, Begley said most of the equipment did rather fine being mothballed for more than a year. He credits the company’s skeleton maintenance crew during that time for ensuring everything could start back up.

Tracing the ownership of Harbor Paper, LLC “is very, very easy,” Begley said.

“It’s just one guy and the board is just made up of him and me,” Begley said.

Harbor LLC is owned by Elliott Rust Holdings, LLC. And the holdings company, in turn, is owned by just one man — Cesar Scolari, who was the founder and CEO of StaffWorks, Inc. of San Clemente, Calif. Records show he founded the company back in 1998 and sold it in 2007.

The company served as a major distributor for large grocery stores such as Kroger and Safeway, Begley said.A press release from 2007 shows that StaffWorks had 17 distribution centers across the Western United States and had more than 700 freight handlers. The business was purchased at that point by Fenway Partners and RoadLink USA.

Begley said he became aware of Scolari when a sales manager was playing golf with one of Scolari’s friends.

Eventually, Begley and Scolari connected and discovered they shared mutual interests. Begley’s wife was from Gig Harbor and that’s where Scolari lives.

“It was just serendipitous,” Begley said. “It turns out he lives less than a mile from where my wife grew up. … He’d never been involved in the paper business so we’re teaching him everything and he’s been down to the mill many times now. He’s committed to this mill.”

Begley had been CEO of Grays Harbor Paper from June of 2009 to November of 2010. Before that, for about 11 years, he was president & CEO of Port Townsend Paper. He’s living in Westport, where he bought a condo in 2009.

“We were hoping to some day come back,” Begley said. “I really felt the business model here had a lot of potential and believed in it. I think there’s a lot of opportunity. The first thing is really focusing on the productivity and getting more productivity out of the mill.”

Begley said his leadership team consists of a few people from Port Townsend Paper, a few from Grays Harbor Paper and new blood altogether.

Begley said the mill is starting up at a time when pulp prices are going down. Just a year ago, high pulp prices and a high debt contributed to the mill closing.

“That’s good news for us,” Begley said.

“The offset to that is the drought in the Midwest has created price of corn to go way up and that’s a product we use for our starch. Chemical costs have gone up to about what the cost of pulp has gone down.”

The company is getting its pulp from Weyerhaeuser’s pulp mill in Longview, as well as Cascade Pacific in Oregon and a couple other suppliers in the Midwest.

With very little debt and a supportive owner, Begley said that he’s optimistic he can turn the company around.

One change he’s made in management isn’t in personnel at all. It’s in his office. Instead of being in a separate building from the paper mill, Begley has moved his office to right off the finishing room in the main paper building.

“I want to be right here, right where I can see things and be available to anyone who needs me,” he said.