One of Tacoma's larger industrial employers, the Simpson Tacoma Kraft paper mill on the Tideflats, will soon be operating under new ownership.
The mill, located between the Middle Waterway and the Puyallup River northwest of East 11th Street, is being purchased by Norcross, Ga.-based RockTenn Co. RockTenn is paying $343 million for the plant.
RockTenn in a news release said it plans to invest $60 million in plant improvements over the next three years. The new owner has entered into a seven-year wood chip supply agreement with the mill's present owner Simpson Lumber Co.
RockTenn is latest in a string of owners for the mill. The plant was built in 1928 by the Union Bag Co. Union Bag sold the mill in the early '30s to St. Regis Corp. The plant changed ownership again in the early '80s when Champion International Corp. bought St. Regis. Simpson acquired the mill in 1985.
The mill has two paper machines and dryers as well as a 55-megawatt power plant that produces electricity from steam created at the plant. The mill employs some 425. When the acquisition is complete sometime in the next quarter RockTenn will hire all of the mill workers and managers, said Jim Porter, RockTenn's president of corrugated packaging.
The same management team will continue to operate the mill under the new ownership.
The mill produces bleached and unbleached kraft paper and linerboard. The plant produces that pulp and paper using both wood chips and recycled paper and cardboard.
The company had put the mill on the market in 1999 but decided to keep the mill after several months of it being put up for sale.
In the last year, Simpson began talking with prospective buyers for the mill before reaching agreement with RockTenn.
Simpson is selling the mill because operating a paper mill is a capital-intensive business, said Allan Trinkwald, president of Simpson Investment Co.
"Simpson doesn't have the balance sheet to support it," he said.
Simpson, a privately-held company with several lumber mills and a door company, once owned a handful of paper mills around the country, but left that business in the '90s with the exception of the Tacoma mill.
Simpson invested substantial funds updating the mill. One of the benefits of that modernization has been the near disappearance of the characteristic "aroma of Tacoma," which the plant emitted for decades.
The Tacoma-based Simpson will retain its sawmill and its headquarters located near the pulp mill after the sale is completed. About 100 workers are employed at the sawmill, and another 40 work at the company's headquarters. Employment at the sawmill can as much as double when demand for lumber rises, Trinkwald said.
Simpson will use the proceeds from the sale to enhance its lumber and door business, said the investment company president.
"The Tacoma Kraft Mill is a great strategic fit for RockTenn," said Steve Voorhees, RockTenn's chief executive officer. "Adding a West Coast mill will improve our ability to satisfy West Coast customers and generate significant operating efficiencies across our system."
RockTenn has 24 paper mill properties in the U.S. Those properties are concentrated in the Southeast. The nearest mill to Tacoma is located in St. Paul, Minn.
Porter said having the Tacoma mill in its portfolio will improve service to the company's customers in the West. Those customers are now served by shipping products from its mills in the East.
"This is exciting news for Tacoma Kraft employees and the community. The Tacoma Kraft Mill will be better positioned as part of RockTenn - a successful fiber-based company that is committed to the long-term success of the mill," said Trinkwald.
Reaction to the news of the sale was positive from the Tacoma-Pierce County Chamber of Commerce.
“Simpson Tacoma Kraft has contributed greatly to the city’s success, both as a manufacturing business and through its community support. We are delighted Simpson Lumber Company, a U.S. top 10 manufacturer of lumber products, will continue to be headquartered in Tacoma. We are pleased the mill will continue as part of our industrial landscape. And having RockTenn—a well-respected integrated paper and packaging company—in town will positively enhance our local business community,” said Tom Pierson, the chamber's president.