In a victory for Norpac — and potential blow to local newspapers — the U.S. Department of Commerce announced Tuesday that it will start imposing preliminary antidumping and countervailing duties on Canadian paper producers.
The move comes in response to a petition filed in August in which the Longview papermaker alleged that Canadian paper manufacturers hold an unfair advantage over domestic producers. Norpac claimed that Canadian paper companies benefit from 65 different subsidies that add up to hundreds of millions of dollars.
“Today’s affirmative decision by the Department of Commerce confirms that Canadian uncoated groundwood papers benefit from significant levels of government subsidies,” Norpac CEO Craig Anneberg said in a press release. “What the U.S. uncoated groundwood papers industry wants is a level playing field, and this decision is an important step forward for American producers, workers and their families that have been the victims of unfair Canadian trade practices for too long.”
The federal and provincial subsidies include government grants, tax breaks, subsidized loans, raw materials at below-market costs and cheap subsidized electricity, according to Norpac.
A Commerce investigation found that Canadian uncoated groundwood paper — the same product used to print newspapers — was subsidized by an average of 6.53 percent, Norpac said Tuesday.
Anneberg told The Daily News that it’s too early to say how the duties will affect the company’s paper mill in Longview.
“There will be no immediate change to our production,” he said Tuesday.
Commerce is expected to release a memo detailing its reasoning late Tuesday or early Wednesday, Norpac spokesman David Richey told The Daily News. It was not immediately clear Tuesday how much more a metric ton of groundwood Canadian paper will cost.
Commerce is expected to make final antidumping and countervailing duty determinations in July, and the International Trade Commission will make its final injury determination in August 2018, he said.
Meantime, the new duties will also put many local newspapers at risk of failing, according to U.S. newspaper coalitions.
The News Media Alliance, which represents more than 1,100 newspapers nationwide, sent a Dec. 4 letter addressed to Commerce Secretary Wilbur Ross urging the agency to closely scrutinize Norpac’s requests. The letter also noted that the American Forest and Paper Association, which represents the U.S. paper industry, opposes the duties.
Norpac’s petitions “are based on incorrect assessments of a changing market and appear to be driven by short-term investment strategies of the company’s hedge fund owners,” the letter said.
Norpac has been struggling to stay profitable in the face of shrinking newsprint and paper markets, and it is under pressure to cut costs from its new owners, One Rock Capital.
In response to the Dec. 4 letter, Norpac sent another letter to Commerce last month accusing the News Media Alliance of supporting Canadian paper producers at the expense of American jobs and industry.
Anneberg also addressed local newspapers’ concerns in Tuesday’s press release.
“While we understand the concerns recently surfaced by some newspaper publishers, we strongly disagree with the notion that their industry requires low-priced, government-subsidized, imported newsprint from Canada to sustain its business model,” he said.
Anneberg said the company estimates the duties would increase the cost to produce the average printed newspaper by less than 5 cents per copy.
More than 10 domestic paper mills have closed since 2012, resulting in the loss of approximately 2,150 U.S. jobs, according to Norpac. Since then, U.S. producers’ share of the American market has plummeted from 60 percent to 36 percent, the company said.
With nearly 400 non-union employees, Norpac is one of Cowlitz County’s largest employers. The Daily News is printed on paper manufactured at Norpac.
In August, Norpac announced plans to idle one of its three paper machines, framing the production cuts as a response to competition from subsidized Canadian manufacturers.
The company confirmed in October that it planned to shed less than 12 percent of its workforce when it took the paper machine offline.
Norpac also cut its employees’ wages by 10 percent in May and reduced retirement benefits; the company has also placed new restrictions on vacation time aimed at reducing labor costs.
The company recently added a new and improved “Natural Choice” sustainable office paper to its product mix in an effort to diversify. The paper is made with a process that yields twice as much paper from the same amount of wood compared to standard copy paper, the company says.