Ponderay Newsprint shuts down paper mill in Usk, threatening economy of Northeast Washington

The Ponderay Newsprint Co. has indefinitely shut down its paper mill in the small town of Usk, likely dealing a major blow to the economy of rural Pend Oreille County.

The mill, which opened in late 1989, has employed more than 130 people and supplied newsprint for publications in the Midwest, along the West Coast, and in Asia and South America. The plant is jointly owned by Lake Superior Forest Products, a subsidiary of Quebec-based Resolute Forest Products, and five major U.S. publishers, according to its website.

Ponderay Newsprint President Myron Johnson didn’t respond to messages seeking comment Tuesday and Wednesday. The mill closure has been described as an “indefinite idling,” and it wasn’t immediately clear whether workers have been notified of layoffs.

“It’s bad news for the county,” Pend Oreille County Commissioner Mike Manus said Wednesday. “That’s all I’m working on right now – trying to figure out where we’re going, what’s going on and what we can do.”

Colin Willenbrock, general manager of the Pend Oreille Public Utility District, said the mill recently paused operations for two weeks and had been expected to reopen Saturday, but workers were told to stay home.

Manus said he recently met with a Ponderay Newsprint representative but couldn’t immediately share details of the situation. He indicated local managers are seeking information from the companies that co-own the mill.

“Right now they haven’t even got the clarity that they would like from their partners,” Manus said.

“Our partners at Ponderay Newsprint have been doing everything they can to figure out how to retool and make other products,” he added. “But you’ve got to have capital in order to do that.”

Seth Kursman, Resolute Forest Products’ vice president for corporate communications, sustainability and government affairs, said in an email he couldn’t speak on behalf of the mill and referred questions to Ponderay Newsprint.

A spokeswoman for McClatchy, which filed for Chapter 11 bankruptcy in February, said Wednesday the newspaper chain no longer has a financial interest in the mill. Representatives for Gannett, which had a stake in the mill as of 2018, didn’t immediately respond to a message seeking comment Wednesday.

Local officials have anticipated the closure of the mill for years, and concerns have intensified as demand for newsprint has fallen with rapidly declining newspaper circulation.

Manus said the COVID-19 pandemic prompted the recent two-week pause of operations at the mill, and it may have been the final nail in the coffin.

“COVID had a definite effect on the closure, because how many people are even advertising these days? When COVID hit, the orders basically stopped,” he said.

If the mill closes permanently, the Pend Oreille Public Utility District will lose its largest customer. Until recently, Ponderay Newsprint was using about 70% of the utility’s electrical load – much more power than any timber or mining operation in the county.

“To put it into perspective, those loads are maybe a megawatt or half a megawatt,” Willenbrock said. “Ponderay Newsprint was 87 megawatts.”

Ponderay Newsprint officials years ago notified the utility that declining demand for newsprint made the plant’s future uncertain. They said the mill could start losing money by the end of 2016.

In January 2016, the utility sued Ponderay Newsprint for breach of a power-purchasing contract that runs through June 2027. The parties reached a settlement after two years of litigation.

The utility agreed to pay Ponderay Newsprint $557,000 and give the plant a $50,000 monthly break on its electric bill as long as it continues to operate. In return, the company agreed to pay $150,000 toward finding new buyers for the electricity generated by the utility’s Box Canyon Dam on the Pend Oreille River.

“We feel prepared, as a utility, to manage the loss of that load. As a nonprofit, public, municipal utility, that’s all we’re looking to do is cover our costs,” Willenbrock said. “We’re more concerned about the community at this point. It’s quite a few living-wage jobs and families that will be impacted here.”

Customers of the utility are likely to see at least some increase in rates if the mill remains closed, but Willenbrock said officials are working to manage that.

In a public statement, he said the utility “has been working tirelessly over the past several years to lessen the blow to our ratepayers by building strong financial reserves and a rate stabilization account, making targeted cost cuts, improving our financial position through debt refinancing, and mitigating the potential loss of (Ponderay Newsprint) by finding alternative purchasers of our hydroelectric resources.”

Pend Oreille County was grappling with high unemployment before the pandemic, and recent efforts to attract other industrial employers have generated widespread opposition. In January, after months of limited communication, PacWest Silicon confirmed it was indefinitely halting plans for a smelter that had angered county residents and the Kalispel Tribe of Indians, who viewed the project as an environmental hazard.

The Spokesman-Review is published on newsprint from the Inland Empire Paper Co. in Millwood. The newspaper and the paper company are subsidiaries of the Cowles Co.