Subsidies threatening paper jobs

Nearly 4,000 jobs in paper manufacturing in the 23rd Congressional District are at risk because of subsidies for similar plants in China.

A report by the Economic Policy Institute, released last week, showed that China has put $33.1 billion in government subsidies toward domestic plants from 2002 through 2009. That pushed the country to rise to No. 1 in paper production, past the United States, in 2008.

"In March, we had just under 400,000 paper manufacturing jobs in the country," said Scott Boos, deputy director of the Alliance for American Manufacturing. "That is down significantly from 10 years prior."

The alliance, a nonprofit advocacy group made of manufacturers and the United Steelworkers union, commissioned the study.

The study showed the 19,500 New York jobs in paper are in jeopardy. The results, divided by congressional district, showed the 23rd Congressional District had the most paper manufacturing jobs in the state, with 3,375.

"Those jobs are very important to the region, in particular to the north country," said Richard J. Knowles, subdistrict director for the United Steel, Rubber and Paper Workers Region 3 in Plattsburgh. "We've got many paper production operations and smaller mom-and-pop shops."

The union region represents about 2,500 workers in paper plants.

The alliance wants to see trade rules properly enforced.

"China has dumped and sold paper at a price below market," Mr. Boos said. "We hope this spurs the administration to look at trade cases more closely."

He praised Sen. Charles E. Schumer, D-N.Y., for calling on China to cease currency manipulation, which suppresses the yuan's value compared with other countries' currency. That gives Chinese companies, which are mostly state-owned, a competitive advantage.

APC Paper Group, Claremont, N.H., has a plant in Norfolk that produces natural kraft paper for small bags and packaging from recycled paper.

"There's not a lot of that in Chinese production," said President Frank M. Tarantino.

But the company's plant in Putney, Vt., that produces tissue has been "extremely affected by Chinese mills," he said.

Instead of just enforcing what's already on the books, Mr. Tarantino said, more rules should be added.

"Chinese imports are going to continue to decimate the paper industry in the U.S.," he said. "In order to protect business in the U.S., the government has to do something."

In total, three APC Paper plants employ 250 people.

Since 2000, the Chinese production of paper and paperboard has tripled to 93.9 million metric tons.

But the country has few natural resources to support the industry and relies on raw materials imported at world prices, the report said. Though the country first focused on white paper and lower-quality products, it is making inroads in other types of paper.

"China doesn't want to make just low-end T-shirts," Mr. Boos said. "They want to move up the value chain — probably everything's at risk."

China does not have the timber resources of other top paper producers and has less efficient paper mills that consume up to twice the coal and water of European or U.S. mills, the report said. Nearly one-fifth, or 1,577 of the 8,731 paper companies in China, reported operating losses totaling $542 million in 2008.

"I think it's not really an issue of labor cost," Mr. Knowles said. "They're trying to contain and manipulate the market so they have the upper hand."

So the country props up the industry with subsidies, including $25 billion for pulp, $3 billion for coal, $1.7 billion for recycled paper, $778 million for electricity, $442 million in subsidy income reported by companies and loan-interest subsidies of $2 billion. Those subsidies peaked at $9.7 billion in 2008.

"The motivations aren't profit," Mr. Boos said. "It is a political calculation of keeping people employed."

The U.S. is importing more paper products from China than from any other country and that amount grows at 22 percent per year.

"There are lots of great ideas on how to get manufacturing back on track," Mr. Boos said. Those include a national manufacturing strategy, industry investment and infrastructure investment.

"Manufacturing brings two-thirds of the research and development investment and has 11.7 million employees," Mr. Boos said. "Four or five jobs depend on one manufacturing job."

An earlier institute study found that the district lost 3,600 of 286,600 jobs due to the trade deficit with China.

"These are fair-paying jobs," Mr. Knowles said. "The ripple effect in the local economy is huge. We want to have free trade, but we have to have fair rules."