A look at Cosmo Specialty Fibers, one year later

When the Cosmopolis pulp mill was shuttered back in 2006, workers wrote in big bold letters on one of the rolling machines, “Elvis has left the building. Good night folks!”

And so the machinery sat, until roughly a year ago when the mill started producing pulp again and someone took a new marker and wrote “He’s baackk!” under the old phrase.

It was such a simple gesture but epitomized the journey the mill has taken over the years, now known as Cosmo Specialty Fibers, where workers new and old continue the mill’s legacy and try to get it on track to produce the kind of high-quality dissolving pulp used in TV screens and plastics. Today, the mill is producing a lower quality grade used mainly in rayon for clothes. But Cosmo CEO Michael Entz says he’s optimistic the mill will produce the more profitable quality, perhaps even by year’s end.

The Weyerhaeuser Co. opened the mill in 1957, but over the years it became the only dissolving pulp mill owned by the giant timber company. In September 2006, it shuttered the facility and more than 200 workers lost their jobs. Potential buyers came and went.

Canadian entrepreneur Richard Bassett spent five years trying to find a partner to get the mill going. Teaming up with Irish paper entrepreneur Dermot Smurfit, the two found a private equity firm in the Gores Group of Los Angeles to come together and purchase the mill from Weyerhaeuser. Forbes magazine gives the net worth of founder Alec Gores at $1.9 billion and says he’s the 240th richest man in the United States, with his equity firm owning more than 80 companies, including a recent acquisition of auto shop Pep Boys.

Four decades with Weyco

Scott Marshall spent almost four decades with Weyerhaeuser and retired about a month ago as the company’s Vice President of Operations Support. One of his duties was to take potential buyers around the mill.

Marshall said he always had an affinity for the mill. He remembers meeting with Gov. Chris Gregoire and making a personal pledge to her: “I committed to her that we would put the mill into the hands of someone who would operate it, not just tear it into pieces.”

Marshall is the newest member of the board of directors at Cosmo, specifically brought on board because of his role in getting the mill re-started and his knowledge of the industry.

“I have invested so much time and energy in getting the mill into the hands of someone else, it’s hard for me to say, ‘You’re on your own,’” Marshall said. “That mill is what I’d call the gold standard in that high-end market. It’s got the equipment and the capability to be part of it and I don’t see why they couldn’t go back to the gold standard. I think the basics are there. It’s just a lot of work.”

Marshall said the mill may have continued to turn a profit even into its waning days of closure, but it needed millions of dollars in equipment changes and upgrades. Weyerhaeuser didn’t want to make that kind of investment.

“It was a very expensive mill to keep maintained and operating,” Marshall said. “Weyerhaeuser was working with limited capital and was making a lot of hard choices, and here was this mill, the only mill of its kind we had ever owned, which didn’t exactly fit.”

The Gores Group has spent “tens of millions of dollars” in getting the mill outfitted, the investment firm said during its grand opening a year ago. No specific dollar amount has been given for the capital investments.

“In the past year, we have put $160 million into this community in terms of what we spend on labor, materials, fiber and that’s big,” said Entz, the CEO. “And most of it is staying right here.”

Entz said the company is now employing about 200 employees, which includes contractors doing maintenance jobs working for Greenberry Industrial.

Cosmo is also donating thousands of dollars to local non-profits, under the auspices of a new foundation.

“We are trying to be a good neighbor here,” Entz said. “This is part of what we do as community citizens and we owe it to the community.”

A NEW ENERGY MARKET

Jack Roman worked at the Cosi pulp mill in the powerhouse for 29 years before he retireed as the mill shut down.

He and others helped facilitate the multi-million dollar investment the company was making into the powerhouse, restoring the antiquated biomass generators, which now usually produce around 8 megawatts of energy, although it could hit 9 megawatts, if absolutely needed.

“It’s been totally rebuilt, new bearings, new windings, new everything,” added senior operator Bill Elrod of Aberdeen, who used to work at Grays Harbor Paper.

The mill still utilizes the Grays Harbor PUD to bring in about 10 megawatts of power.

Cosmo spokesman Bob Buchan said the company is positioning itself to sell its power on the open market, taking the potentially lucrative “green power” and buying even more “brown power” from the PUD. State Sen. Brian Hatfield, D-Raymond, helped push through a new state law changing renewable energy definitions to include biomass facilities like Cosmo.

“We take the chemicals out of it, evaporate it and re-burn it,” Buchan said. “It’s basically deconstructed biomass, but before Hatfield’s bill, they didn’t define the red liquor as a renewable.”

Entz said that change in law will help as the company looks into the new market.

Roman said he sees a lot of potential in the possibility.

“Way back in the day, the mill didn’t see the generators as a way to produce power,” Roman said.

EMPLOYEES RETURN

Roman was among the first to return to the mill in February of last year when the company geared up to re-start the facility.

“I never thought I’d see the day I’d be sitting back here,” Roman, 66, said. “Although, I’m itching to retire again.”

Buchan jokes that he always checks the parking lot for new trucks.

“If they bought a new truck, it means we’ve got them at least for another five years,” Buchan laughs.

At the Chip-Receiving division, John Windle and Larry Sturgill watch as a big truck from Willis Enterprises dumps chips nearby.

Without wood chips, the mill would simply not be able to function. It’s about as important as the power to keep the machines running.

Windle points to a sign on the door that reads, “this is where it all starts.”

The chips used to come directly from Weyerhaeuser and all of its mills, including the now-shuttered mills in Aberdeen.

Buchan said the company gets most of its chips from Willis Enterprises, although it has smaller contracts with other companies. For instance, Cosmo will take chips from Sierra Pacific Industries’ nearby mill at Junction City.

Hemlock is the fiber of choice and is what makes the pulp so valuable to the mill’s customers. The wood is plentiful in the Northwest— although Entz admits the price lately has been on the high side.

“The fiber supply is still much, much higher than we had anticipated in the business plan,” Entz said, crediting the high price to whole logs being exported directly to China, where they’re milled, as well as fewer housing starts, which has led to the shutdown of domestic mils.

Sturgill is a retired probation officer, who worked at the Grays Harbor Juvenile Detention Center for 26 years. He said he always moonlighted at log-sorting yards and has the experience necessary to run “Big Bertha,” the huge loader used to push all of the chips around on a pile the size of a small hill.

Windle had retired from Weyerhaeuser when the mill closed back in 2006. He says he’s left and come back to the mill four times during his life, after high school, after college and after his military service ended, and again when Cosmo took over.

“My dad worked here, so I’m second generation,” he said. “But I told my kids to stay away and go to college. So far, they’ve listened to me. … The ex-boss asked me to come back for a little bit but that little bit is turning into a whole bunch,” Windle said.

Windle said that he’s been happy about the quality of chips he’s seen, although sometimes they need to be cleaned.

“I think they’ll be world class,” he said. “I really do.”

Buchan said what chips don’t work out, they end up donating. Some of the chips are heading soon to the Cosi playground.

WHAT THE FUTURE HOLDS

Entz, the CEO, says that the issues the company faces today are still the issues they faced a year ago: Chip supply may be fine, but fiber prices are too high. And quality testing continues to progress as the mill looks forward to building a customer-base for a more high-end product.

“We’re running well,” Entz said. … “We’re doing OK, but we have got to be careful with our cash. Any new business must be careful with the cash and to make sure we’re spending money on things that bring value and that make sense. When we get the great mix we’re looking for, life gets a bit easier for all of us. …

“Production is good and on target,” he added. “Quality is good. The whole goal is to move from the commodity market, which is viscose, to the specialty market, which is ethers and acetate.”

Admittedly, Entz said he wished the company was already producing the high-end dissolving pulp.

“We’re really close to landing a couple of the qualifications and that is what we have the business plan to do,” he said.

The company is on track to produce 140,000 tons of pulp, about the same ballpark as when Weyerhaeuser ran the mill, Entz said.

“We’re running the mill as full as you can run it,” he said.

The majority of the pulp, bundled together with a “Made in the USA” stamp on it, gets shipped out of the Port of Grays Harbor and exported to China. Smaller orders are put in containers and shipped out of the Port of Tacoma, because Grays Harbor can’t handle containers. The company also does the rare domestic order, typically shipped out via truck or rail.

Entz said the company has agents and sub-agents across Asia and Europe trying to work out deals with potential customers.

“There’s a lot of competition on the commodity side, which is what we’re producing now,” Entz said. “On the specialty side, there’s not so much because not that many people can do it. That’s why we want to be in that market. What we have to do is take away business from someone else. …

“Once we get our product through the door, it stands on its own,” Entz said. “But we have to fight for every ton we get because somebody else wants it.”

REGULATIONS

On the positive side, Entz said he has nothing but kind words for Gov. Gregoire, who has assigned a staff person to help Cosmo work out issues involving the effluence that gets discharged from the mill.

Too much effluence can lead to a state-mandated automatic shutdown of oyster beds as far away as South Bend. That costs the oyster industries thousands of dollars. Complaints have plagued the mill ever since Weyerhaeuser operated it, leading to fines and even legal threats.

Entz said Gregoire’s office is helping the company be pro-active to avoid shutdowns, and possibly even change the way the state looks at the science behind the effluence discharges.

“The blame is on Cosmo and we don’t think that’s fair,” Entz said. “Everyone has agreed that science has a more logical solution. We’ve met with academic folks, Fish & Wildlife, Department of of Ecology and oyster growers. The way the numbers are crunched now doesn’t make sense and a new study could support our position.”

However, Cosmo officials says they may end up having to pay for the study.

“We’re spending up to $100,000 a month to treat chemicals just to make sure we don’t get close to the limit to avoid the closure of nearby oyster beds. But the science says it makes no sense to keep limits that low if they’re not harmful, and the science supports us. On issues like this it’ll always be slow going. But we’re making progress.”

Entz said with Congressman Norm Dicks retiring, he hopes to meet with potential candidates who will support growing manufacturing businesses like Cosmo and “understand what it’s like to have a profit and loss statement, and who understand what it’s like running a business.”

“If I could ask congressional candidates a question, I’d ask what are they doing to support our industry?” Entz said. “Because the timber forest industry provides a lot of jobs and has in this area for a century. So what are you doing to support this industry because it pays well and the forests are plentiful when they harvest well. These jobs ripple in the community four or five-fold. What are you doing to help good-paying jobs in a town like this? We took the risk and put in a lot of money here, and what are you doing to help us?”

Entz said that plenty of private capital has been spent to put the pulp mill back on the map, but the mill consistently faces challenges. He says to get one environmental permit, the company had to spend $150,000 on a written report to support the company’s verbal position that “everything is fine.”

“The American economy is not going to move forward unless you create more jobs like these,” Entz said. “You’re not going to do it with fast-food jobs, with all due respect.”

Steven Friederich, a Daily World writer, can be reached at 537—3927, or by email: sfriederich@thedailyworld.com.