By CRAIG FREILICH

UNIONVILLE – Potsdam’s century-old paper mill is working to develop new technology that its owner may use in paper plants in China.

Meanwhile, Potsdam Specialty Paper General Manager Ron Charette says the plant worked through a drop in sales that swept the whole industry, and is now back to pre-2008 production levels running three shifts with four crews.

Seafront Specialty Paper, which bought the mill from MeadWestvaco two years ago and dubbed it Potsdam Specialty Paper Inc., is a holding company based in the British Virgin Islands. Seafront has offices in Hong Kong, New York and Toronto, and is chaired by Kenny Chang, also a major stockholder. The Potsdam mill is on Sissonville Road along the Raquette River.

One of Seafront’s major aims is to develop products and procedures that would be put into use in paper mills it plans to acquire in China.

PSPI is specializing in production of what are considered niche products in the paper industry: base materials for wallpapers and tapes, papers used in medical settings, and paper used in industry for things like drywall corner bead.

“We would be, in Potsdam, the technical workhorse doing product development,” Charette says.

“We would own the intellectual property. Once it’s proven, it would be moved to Asia.”

Advice from Nobel Winner

China’s paper industry has grown to make China the largest paper-producing country in the world, but at the expense of environmental quality, particularly at older mills, industry reports say.

Seafront and PSPI say they are working to improve its products and the processes in making it, especially with an eye toward improving the environmental impact of their paper-making.

PSPI has signed on consultant Robert Mundell, 1999 winner of the Nobel Prize in economics, to help guide the Potsdam mill and Seafront in developing more environmentally friendly methods.

“Potsdam Specialty Paper will apply best-of-breed technology from its U.S. specialty paper production operation to its future acquisition of China based manufacturing plants,” says PSPI’s web site. “Potsdam Specialty Paper’s comprehensive green technology approach encompasses world-class waste water treatment, renewable energy strategies using hydro and biomass gasification, energy efficiency programs for power and lighting optimization, and working with industrial waste providers to utilize scrap industrial waste in many of the products.”

The website statement continues, “The Board of advisors believes that Potsdam Specialty Paper’s ability to apply the world-class expertise of its Potsdam, NY-based production operations to its Chinese affiliates will make it a long-term leader in the specialty paper industry.”

Exports to China

“We’re very interested in having a sister operation in the Pacific Rim,” Charette says. “We sell a lot of material to China. We’re what the U.S. needs, to balance the export-import trade imbalance. We export more than is used in the U.S.

“We don’t have an interest in making products to ship to China only to have them shipped back to the U.S. We don’t want to deter our own market,” Charette says.

A recent report by the Economic Policy Institute says China’s paper industry could not have expanded as quickly as it did without the huge subsidies it got from the Chinese government, and that those subsidies and the expansion of the industry in China has cost American papermakers sales and jobs.

At the same time, PSPI was given a $250,000 grant from New York’s Empire State Development Corporation and several low-interest loans amounting to $800,000 from the Development Authority of the North Country, the St. Lawrence County Industrial Development Agency, and Potsdam entities, to be used to help with the purchase price and expenses, with the understanding that PSPI would maintain staffing levels.

Self-Directed Employees

“Employment has been stable at 77 at the Potsdam facility and has not changed since we began,” Charette says. He also says that repayments on the loans are “on schedule.”

The employees “are self-directed – not unionized. They don’t have management on all shifts. The teams manage themselves.

“I have very high praise for our associates. I would match them against any in industry in the North Country. They run it like they own it.”

As the general economic picture took a downturn in 2008, Charette says the whole industry declined with it.

“We were down to 50 or 60 percent of capacity,” Charette says. That was late in 2008 and early 2009. “It began to swing up again in the second quarter of 2009. Now we’re running at pre-2008 levels again.”

“The entire market was very slow. I can’t say that the market has grown very much, but I think we have a bigger share of it.”