2013-10-31 / Front Page

Mill plans upgrades, requests tax break

Council approves exemption for $4.5M in equipment updating

MANISTIQUE – FutureMark – Manistique is making an estimated $4.5 million in upgrades to its plant, and receiving a little assistance from the city. During its regular meeting Monday, the Manistique City Council approved a personal property tax exemption for the mill’s upcoming additions.

According to Jon Johnson, the mill’s executive vice president and general manager, the mill is currently attempting to improve the quality and scope of its products.

“We’ve been moving in the direction to try to get out of some of the premium writing papers and get more into packaging,” he explained.

The former Manistique Papers, Inc. filed for bankruptcy in 2011 and was saved by the Boston-based Watermill Group, which purchased the manufacturer and repurposed it as one of its FutureMark mills. Since that time, the mill has been slowly shifting toward a more sustainable branch of the industry – packaging and industrial paper. This paper, recycled Brown

Kraft, is made from old corrugated containers.

In its application for the exemption, the mill notes the new packaging paper does not require the higher quality, so it reduces manufacturing costs by up to $100 per ton. The mill plans to convert 1/3 of its production to the Kraft grades, and has already identified a customer base.

Johnson explained the mill will “enhance” its ability to successfully make this switch by purchasing approximately $2 million in process equipment. This equipment will allow the manufacturer to produce the Kraft paper, with the sheet strength and properties its new customers are seeking.

The other approximately $2.5 million of its upcoming upgrade will go toward purchasing new natural gas boilers.

“We’ve been operating two coalfired boilers for the last 30 or 40 years now and with some of the new air regulations that are being passed through, we’re looking at having to put this investment into the facility,” Johnson explained.

The boilers would also offset the rising cost of coal, as natural gas prices are “favorable” right now, he added.

The new equipment purchases will result in two building expansions – one on the east and one on the west side of the mill.

“We’re working with the folks at mBank to secure the financing and also been working with the county building department for building permits to work on those expansions,” Johnson explained.

A loan package is expected to be approved by late this week or early next week and the mill is hoping for an end-of-the-year start-up, he added.

“We’re working very fast, and with the onset of winter coming at us, we certainly are pushing to get the project put in,” he said.

According to the Michigan State Tax Commission’s website, a new personal property tax exemption provides a tax reduction to eligible businesses, such as manufacturers, bringing new business or more business to the State of Michigan. In order to qualify for the exemption, the qualified personal property must be placed in an “eligible district” after the local governmental unit adopts the resolution which provides for the exemption.

The council unanimously approved a 12-year exemption for the mill, and will send their decision to the MSTC, which has final approval of the exemption.

“I just want to say ‘thank you’ to … FutureMark … for the future investment in Manistique,” said City Manager Sheila Aldrich. “This tells me that you plan on being here for the long term, and that’s very pleasing to me.”

Johnson agreed with Aldrich, noting the mill is happy to be out from under the bankruptcy and moving forward.

“It’s a lot nicer to be here, under this circumstance, than it was a few years ago,” he said. “I do appreciate all the help we got from the city and from the community. It’s good to be here.”

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