Inland says thanks, but no thanks...

By Thomas Wilson
STAR STAFF
twilson@starhq.com

   Despite a plethora of financial incentives offered by local governments, Inland Paperboard & Packaging will move forward to shut down their largest Elizabethton plant next month.
   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 days.
   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.