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Wednesday, 25 October 2006 00:00

Optimisim reigns at Blue Ridge

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The ups and downs across a graph that tell of a business’ profits and losses may not be very interesting, but look beyond those peaks and valleys and a fascinating story might emerge.

Blue Ridge Paper’s last 15 years, viewed by a historian sometime in the future, will mirror the nation-changing events that have swept across the American manufacturing landscape. This snapshot, just a short segment of a 100-year-old company’s life, is inextricably tied to significant events in U.S. and regional history. During these years, Blue Ridge Paper and its predecessor Champion have gone from an environmental pariah in the 1980s to a champion of workers rights in the 1990s, from a survivor in the new millennium to a company that is poised and ready for a major expansion.

 

Mountain made Expansion?

Bob Williams, who acts a spokesman for Blue Ridge but has worked for years in the environmental end of business at the Canton paper mill, says Blue Ridge lost out on an expansion opportunity a few weeks ago that could have included a $750 million financing package. Details of the acquisition are hidden under a confidentiality agreement, but the Associated Press reported last week that International Paper sold a division of its company to a competitor that would have been attractive to Blue Ridge.

“It’s a small community. People are saying that we made an offer, but the seller went in the other direction,” said Williams, alluding to the deal that fell through.

What? Blue Ridge expanding, looking to grow, flexing a little industrial muscle? This is a mill that had been written off by most observers as on its last leg, just one breath and a gasp from the same mass grave already filled with hundreds of old-style American manufacturers. The company may not be a Wall Street darling, but according to Williams it’s doing well enough to have attracted the $750 million from investors. Williams acknowledges the surprise many may have associated with last week’s news, but he pointed to the company’s recent history.

‘We have the best workforce around, we’re a scrappy organization and we pay attention to our customers,” said Williams. “If you live through what we live through, you must be doing something right.”

One key to Blue Ridge’s success may be the very primal act of survival. Hang around, they say in business circles, and you’ll succeed. Don’t give up. Find your own way. In these mountains, that sounds like a pretty normal way of life for generations of families, and that spirit infuses the mill.

“Because of the contraction in our industry, we’ve benefited from supply and demand,” said Williams. More than 100 paper machines at various plants have shut down since 2000. To keep operating, Blue Ridge has continued to keep costs down.

“It’s clear that we are one of the leaner companies in the industry,” said Williams.

And so along come the investors willing to come up with the money for expansion. Williams says the community shouldn’t be surprised if Blue Ridge makes an announcement in the next year about an acquisition that will allow it to grow, but only time will tell if the right deal materializes. If it happens, things in Canton could change in several ways. It could lead to a re-capitalization of the entire company. In other words, all the money available from investors might not be spent on an acquisition, according to Williams. Some might be used to re-structure the company’s debt and change its relationship with KPR, the investment firm that came up with the cash for the buyout from Champion in 1999.

 

A long way to here

It remains to be seen if Blue Ridge will reach the potential Williams and other executives are eyeing. This company has seen its share of ups and downs, though, leading one to believe that almost anything is possible.

It wasn’t that long ago — in the late 1980s and early 1990s — when environmental regulations and lawsuits from residents in Tennessee over pollution in the Pigeon River threatened to shut down the old Champion mill. I remember attending a bizarre event in Waterville in the early 1990s, the community on the North Carolina-Tennessee border on the shores of the Pigeon River. Champion was heralding efforts to clean the Pigeon while at the same time CP&L (now Progress Energy) announced plans to begin regular water releases from Walters Lake that were expected to jump start the river’s whitewater industry.

As hundreds of visitors gathered to watch world-class kayakers maneuver the rapids, Tennessee protestors descended on the river’s opposite bank, down the steep incline from I-40, some holding signs and others shouting and waving fists at the whitewater spectators. Some were dressed as grim reapers, a reminder of charges that dioxins in the river were causing cancer and endangering lives.

Champion made it through this struggle, but it decided to sell the mill in 1999. Financial experts from throughout the region worked to put together a plan to keep the region’s largest private employer open, and it worked. Employees would become part-owners of the mill.

But the future looked bleak. Paper prices began to drop as foreign competition increased. Just when things looked back, they got worse. 9-11 knocked a hole in the U.S.’s economy. In particular, the airline industry tanked. One of Blue Ridge’s major products is juice and milk cartons used by the airline industry. Losses mounted.

Things got worse before they got better. The anthrax scare that killed five people started on Sept. 18, 2001, just a week after 9-11. The poison was being delivered through the mail. Direct mail advertisements became a worrisome proposition, and the market temporarily dried up. One of Blue Ridge’s major products is envelope paper used by many of the companies in this business. More losses, and things were looking grim.

Finally, the twin hurricanes of September 2004 made history at Blue Ridge Paper. For the first time since it’s opening in 1909, the mill shut down completely, its waste treatment facilities and paper machines inundated. Company estimates say that $40 million in sales were lost during the time the mill could not operate.


The here and now

But all that is history. Blue Ridge turned a profit this past quarter. It has survived while competitors tanked, become lean, sought out and won new customers, and is in the best shape since the buyout in 1999.

“Taken together, all of this has presented us with choices we haven’t had in quite some time,” said Williams. “We’re in a growth mode.”

The huge Canton mill and its packaging plants are just small guys in the international paper industry. And there is always the danger that a company looking to expand is also needing to expand in order to survive.

Who knows if this optimistic cycle will last, but at least for now, Blue Ridge, its workforce and its executives can look at what they have gone through and take a little pride in their efforts.

“In the 15 years I’ve been with the company, we’ve died a thousand deaths,” said Williams. “But we remain standing. It’s kind of a case study in U.S. industry.”

(Scott McLeod can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .)

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