Oregon Public Broadcasting

Last month, International Paper shutdown one of its two paper machines in Albany, south of Salem.

The company says the shutdown is temporary, and if market conditions improve, the machine could be restarted. But as Ethan Lindsey reports, that prospect seems unlikely in the current economy.

Driving I-5 between Portland and Eugene, Oregon commuters know to roll up their windows and turn off their fans when they get to exit 234.

The massive timber, mulch, and paper plants along the freeway in Albany are not the most pleasant on the nose.

In the recent past, Albany has tried hard to improve the city’s smell, but you can only do so much with burnt and chopped wood.

Albany is one of Oregon’s most timber-dependent cities, economically speaking.

The bursting of the housing bubble has devastated cities like Albany, around the Northwest.

Chuck Burley is a timber consultant in Bend.

Chuck Burley: “The whole economy is affecting everything. And of course the housing market, in a large part, drives the timber industry. But we’re seeing in this recession things we haven’t seen in the past, driven by the credit market drying up.”

But some timber companies are now dealing with the double-whammy of the housing market, and a global slowdown in consumption. Less consumer activity means people need  fewer cardboard boxes.

Scott Unger: “Generally speaking, demand for liner board correlates directly to economic activity because people are shipping less.”

Scott Unger works at a pulp and paper mill in the Pacific Northwest.

Ethan Lindsey: "You were saying that a lot of the liner board from the Pacific Northwest goes to agriculture in California?"

Scott Unger: “Yeah, it does, and when they have certain weather events down in California, it can directly impact orders for our product up here and that directly impacts the activity of our mill.”

Cardboard is a major revenue stream for the timber industry. It provides lower-quality woods to produce boxes and packaging for shipping goods around the world.

In March, International Paper agreed to pay $6 billion for all of Weyerhaueser’s containerboard mills and packaging plants, including plants in Albany and Springfield.

But a few months after the deal closed, the company closed its mills in Valliant, Oklahoma, and temporarily shut down its number 2 paper machine in Albany.

40 workers in Oregon will lose their jobs. International Paper says it will reevaluate the mill’s operations at the beginning of the year.

But if consumer demand is any indication, good news may not be in the offing.

Consumer confidence is at an all-time low. And American consumer spending is expected to drop this year.

Again, pulp and paper mill worker Scott Unger.

Scott Unger: “Liner board is basically the outside of a cardboard box, as most U.S. consumers understand. And if people, for this upcoming holiday season are buying less gifts, spending less money on electronics, maybe at Amazon for example, then there’s less demand for cardboard boxes, and that filters down and trickles down to the mills, and that trickles down to the local economies in a lot of these towns.”

Unger says the one positive development may be that consumers are  spending less money on gas and looking to do more of their shopping online.

And if you think about it, every time you order a book from Amazon, it comes it a pretty darn big box, at least for one book. That could be a helpful trend for an industry currently in trouble.