Inland says thanks, but no thanks...
By Thomas Wilson
Despite a plethora of financial incentives offered
by local governments, Inland Paperboard & Packaging will
move forward to shut down their largest Elizabethton plant
In a letter received this week by Elizabethton
City Manager Charles Stahl, Inland District Vice President
Robert F. Schick of the company's Mid-Atlantic Region declined
the offers of the community's public and private sector to
keep the company in Elizabethton.
"We appreciate your offer to advocate for cost
reductions in the community, but we must rationalize facilities
to better utilize the available capacity in Inland," Schick
states in the letter.
Inland announced March 21 that it planned to
close packaging plants in Elizabethton and Hattiesburg, Miss.,
eliminating a total of 235 positions, approximately 150 of
which are in Elizabethton. The Elizabethton plant located
on West Elk Avenue plant is scheduled to cease operations
60 days from the March 21 date. Inland will continue to operate
its small sheet plant at 152 Iodent Way.
Carter County and Elizabethton officials approached
Inland representatives asking them to postpone the plant's
closure until the U.S. economy became more certain. Several
options were proposed including financial breaks on utilities
-- electricity and water -- assistance with collective bargaining,
and low-interest rate loans to assist.
"The decision to cease operations at our main
facility in Elizabethton was not based on employee or community
issues," Schick states, "but reflects macro economic issues
facing our industry and the U.S. manufacturing sector."
In February 2003, the company announced 2002
fourth-quarter net income of $19 million -- a $7 million drop
over 2001 fourth-quarter income. After posting a net income
of $109 million for 2001, the company's 2002 net income plummeted
to $53 million with major losses coming in the company's corrugated
packaging division, according to the company's financial report
released Feb. 7, 2003.
Containerboard production was curtailed by approximately
125,000 tons in the fourth quarter due to weaker than anticipated
demand. The company reported corrugated packaging inventories
were reduced by 70,000 tons in the fourth quarter of 2002.
"Due to a general drop in demand nationally for
our products, we have been forced to make many difficult decisions
regarding plant closures and consolidations," Schick states.
After floating in the low $50-per-share in September
2002, the company's stock priced nose-dived during the month
of October, falling by almost $20 a share in less than 30
When the Star contacted Doyle Simons of Inland's
parent company -- Timber-Inland in Austin, Texas -- last week
to see whether a local bailout was a possibility, he said
that he appreciated the community's gesture to retain the
company. Still, he gave a flat "no" to the question if the
Elizabethton plant's closure could be averted.
Inland's closure dealt another blow to the East
Tennessee Railway (ETRY). The packaging company was one of
only two customers -- the other being Blossman Gas -- served
by the Railway remaining in Elizabethton.
According to the city's audit information, Inland
is the city's fourth-largest source of property tax revenue,
paying over $50,000 for the tax year which ended June 30,
2002. Inland's closure also means roughly a $250,000 annual
revenue impact to Elizabethton Electric System, according
to electric system officials.