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The Human Cost
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In reading through various press releases over the past many months, one of the saddest announcements goes something like this:

“This was a very difficult decision. Our dedicated employees have worked hard to increase the efficiency of the mill. Despite their hard work and innovation, market conditions [or other factors] have made the facility unprofitable. Management has decided to close the facility. We will do our best to help the affected employees find jobs elsewhere.”

Such a “difficult decision” is often preceded by a key decision/event or combination of decisions/events that inevitably condemn the mill to closure. Perhaps the company decided year-after-year to spend as little as possible on maintenance and improvements at the mill, or they spent a lot installing a new machine at another mill. Perhaps the company was sold or went out of business. Or perhaps the key event may have been a rapid decline in demand for the product produced by the company, as has happened with the housing boom that turned into a credit crisis. Companies that had ramped up production to try to keep pace with demand for building materials then found themselves having to cope with overcapacity.

Because the decision to close a production facility is essentially economic, the human cost may not be fully calculated. Each worker represents a considerable investment in training and experience. When possible, companies do try to transfer skilled workers to other mills or other jobs within the company. They also offer early retirement packages and work with local agencies to find jobs elsewhere for the workers who face layoffs.

But layoffs affect more than just the former employees. The effects ripple through the worker’s immediate family, the community they live in, to other parts of the nation, and back to the company.

Those workers who become unemployed may not find a new job for several months, and may end up relocating to find work. They cope with their reduced income by spending less and investing less; bills go unpaid and credit becomes harder to obtain. Layoffs and shutdowns can also mean less business for companies that had been supplying the mill or providing services to employees; tax revenues schools and public services also may decline. Fewer jobs in the industry may discourage students from pursuing careers in forest products industries. That may lead to cutbacks in pulp and paper programs and research at universities. Mills closures and layoffs may reduce demand for supplier products and services, resulting in layoffs in those industries (and potentially less investment in research and product development).

So the difficult decision to close a mill or layoff workers, though necessary for the immediate survival of a company, and possibly inevitable, might also weaken the long-term health of the industry. (Not to mention the chill it brings to the holiday spirit.) As with the decision to build a mill or install a new machine, the decision to close a mill or reduce the workforce should be preceded by careful thought and evaluation, and then planned to limit the harmful effects as much as possible.



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