Manistique Paper Closes

Manistique Paper Industries (MPI), Manistique, Mich., has closed its paper mill its operations, filed for bankruptcy protection and is seeking a buyer. The mill had been in operation for 90 years.

In announcing the decision to close, the paper company, which is a large consumer of recovered fiber, blamed declining demand and increasing material costs as key reasons. According to a release issued by the company, Manistique’s lender informed the company that capital needed to keep the mill running would not be provided, despite MPI having never missed a loan payment and its majority stock holders offering guaranty payments and support collateral value.

"In light of the lender's decision, we examined our few options with legal counsel and we regret having to make the decision to file bankruptcy," said Jon Johnson MPI’s director and general manager in the release. "The business circumstances leading to this decision were unforeseen - we are as shocked by this as everyone else. We had thought and hoped that the lender would allow us to continue operations while we searched for alternative financing."

A volatile market also played a role in the company's decision to close its doors.

"While our values and service have not changed since 1920, the American economy has changed," Johnson added. "Due to the current economic situation and the inability to obtain our working capital needs, we are left with no choice at this time but to close this chapter of Manistique and Michigan history."

According to the release, the cost of raw material has increased $1 million per month since January 2011 - severely impacting the company's bottom line. Market conditions also resulted in a significant decrease in demand, creating excess inventory and falling revenues.

"We are hopeful that a new owner will re-open MPI and that its skilled workforce will continue to thrive in the current market and banking conditions," Johnson said. "I want to thank all of the employees and their families for the dedication, hard work and sacrifice they have given the company. We will work diligently to find new owners and to bring the noise of a successful paper mill back to Manistique."