“You have brains in your head. You have feet in your shoes. You can steer yourself any direction you choose.” Dr. Seuss
Clark County officials and the Arkansas Economic Development Council (AEDC) have been celebrating the Sun Paper deal. It is time to take another look, sometimes things are not what they seem.
First, the good news. The Memorandum of Understanding (MOU) signed to meet the May 1 deadline to choose a location for the mill, is not a binding agreement. Creating jobs and selling excess timber are the two reasons given to invest in the mill.
Creating jobs is easy
The real challenge for Clark County and other low-income communities is the lack of funds for jobs, but the MOU shows Arkansas has millions of dollars available for new jobs. Mill jobs are a poor choice. Arkansas is not prepared for extreme floods, droughts, heat waves, and other weather threats. Forget the mill, we can have jobs for everyone and be prepared for severe weather.
Arkansas has excess timber?
Forest owners deserve compensation for their investments. Paying forest owners to keep standing forests is the highest and best use for the greater number of people for the longest time. One acre of forest will sequester over one ton of CO2 per year. Stopping the mill would sequester over 300,000 tons of CO2 per year, with no pollution from logging trucks and all other fossil fuels used to harvest, deliver, process, and ship 854,000 tons of fluff per year. Today, with a rising rate of 406 ppm of CO2 and methane leaks increasing the rate of climate change, selling timber pales in comparison to our survival. The MOU is full of holes, let’s look at some highlights.
The mill will create 250 new jobs with an average wage of $52,000?
Not everyone gets $52,000 per year. The average wage includes the salaries of all people at the mill. How many of these new jobs will be taken by Chinese managers, engineers, and supervisors? Not only that, the 250 people will be hired within four years of start-up of the mill, in about eight years.
We gain an intermodal facility?
No, intermodal facilities are state-of-the-art railroad yards with heavy machinery to transfer shipping containers from truck to train. What is the cost of the facility and who pays for it? Union Pacific has a large facility in Marion, Arkansas, why would they build another nearby? Minimum cost would be over $15 million for a 40-acre site, a massive infrastructure project that would attract additional trucking traffic with no revenues for Clark County.
No air and water pollution?
The mill will take 16 million gallons of water a day out of the Ouachita River; 11 million gallons of water will be returned in wastewater. Burning wood to generate steam and electric power comes with large CO2 and particulate matter emissions, a serious public health threat. PM is deadly.
We gain a bypass for all the log trucks?
No, we get road congestion and wear from 400 log truck deliveries per day. If a highway bypass is built, what would be the cost and who pays for it?
Arkansas 2015 tourist revenue was $7.2 billion
Dr. Seuss says “you can choose any path” but you can’t have it both ways. The Natural State and the Industrial-Smelly State are mutually exclusive choices. In 2015, more than 28 million visitors spent over $7 billion. With Sun Paper, tourist revenues would be at high risk.
Diligence or negligence?
AEDC’s goal was to close the deal. What is the expected world demand for fluff after 2024, and the impact of other mills in the pipeline? Sun Paper will run the mill or buy fluff from the lowest cost supplier. AEDC in the Big River steel mill fiasco skipped due diligence. It may be a good idea to check with someone that knows his fluff.
“With your head full of brains and your shoes full of feet, you’re too smart to go down any not-so-good street.” – Dr. Seuss
Dr. Luis Contreras
Here is a great article from December 11, 2015, El Dorado News
El Dorado City Council eyes pulp mill package
The El Dorado City Council and the El Dorado Economic Development Board (EEDB) on Thursday approved economic development funding that will put the city in the running for the construction of a new pulpwood mill in South Arkansas.
The EEDB met just prior to the city council, and chairman Robert Reynolds laid out estimates for incentives that could be offered by the state and Union County to assist China-based Shan Dong Sun Paper Joint Stock Company, Ltd., in the $1.36 million project to build a mill that would produce fluff pulp, a raw material that is used to make diapers and sanitary products.
Reynolds said the mill would produce up to 250 full-time, permanent jobs with an average wage of $27 an hour. He said he based his numbers on past assistance the state has provided El Dorado in trying to attract industry.
The bottom line was $237 million for an incentives package that covered four stages of development: pre-construction, construction, start-up/first 10 years, and long-term/20 years. The package included a mix of tax refunds, rebates, abatements and exemptions and customized job training for workers.
Reynolds said the Arkansas Economic Development Commission asked the city of El Dorado to participate in offering money on the front-end of negotiations to develop the site.
While it has been reported that Crossett is bidding on the project, Reynolds said he knows of only two other serious contenders: Camden and Arkadelphia.Because the latter two cities have mechanisms in place that do not require them to publicly disclose their offers, the News-Times has opted not to publish the amount that was approved by the EEDB and city council, which would use tax dollars for the city’s bid. “I prefer it the El Dorado way, so everybody will know what the score is and what the deal is, but it puts us at a disadvantage,” Reynolds said. AEDC will not share information about bids among the participating cities.
The EEDB recommended that half of the amount be taken from the remaining balance of the El Dorado Forward economic development tax.
During the EEDB meeting, treasurer Alan Gober pointed out that the incentives discussed by Reynolds are not specific to the Shan Dong deal and similar efforts are made with other industry proposals for Arkansas.
Gober also made the motion to approve funding, provided the environmental impact of the project is manageable and minimal and the water quality of the Ouachita River is maintained and enhanced.
When Reynolds called for the vote, local businessman and downtown developer Richard Mason spoke up.
“Rob, this is a farce and you’re an embarrassment to us. China is the most polluted country in the world and they want to come here because Arkansas has some of the softest pollution control laws in the country,” Mason said. He mentioned multi-million-dollar plans by El Dorado Festivals and Events, Inc., to develop an arts and entertainment district in downtown El Dorado, saying that a pulpwood operation does not mesh with the downtown project. Mason expressed concern about air and water pollution, adding, “This is a bad deal. You don’t need those jobs in El Dorado. You need quality jobs, and those jobs are the lowest of the low.”
Local attorney and former city council member Matt Thomas also raised questions about environmental impact and said the project is sure to attract lawsuits. Thomas referred to the multi-user wastewater pipeline to the Ouachita River, which is shared the El Dorado Water Utilities and three local industries. The project faced lawsuits from river preservation groups in Arkansas and Louisiana, and it took more than 10 years for the matter to work its way up to the federal court system, which ultimately ruled in favor of the project. “You remember what happened the last time we went down this road. I don’t think this project will get off the ground because of litigation,” Thomas told board members. “If you want to throw (money) on the front end, I think you’re wasting your money.” Mason and Thomas later reiterated their statements to the city council.
On a follow-up letter to the smelly mill, I said the Arkansas investment is over $260 million, excluding public health and tourism losses. On my previous comment, I said the investment would be over $220 million.
You may be wondering where my information comes from. Not from Mike Preston, Executive Director AEDC, or “J” a highly respected lobbyist at Mullenix & Associates LLC, they are not sharing what they know. Secret stuff, I guess. You may want to call their office, maybe is just me. J’s contact info is on LobbyArkansas dot com.
Here is an update for those keeping track of the numbers.
1. Sun Paper said their investment for the mill was $1.36 billion. The MoU says they will invest over $1 billion. It seems like a minor difference until but 0.36 billion is $360 million, more than the $220 million Arkansas will spend on the mill. Please don’t ask where the $220 million comes from, it is not in the MoU. Please call AEDC, they will be happy to explain. If they ask why you need to know, I would appreciate if you don’t mention my name, just say you are a taxpayer.
2. The capacity of the mill is 700,000 tons per year of fluff. How many diapers can they make in China with all this fluff? Sun Paper has several mills, their total capacity is 800,000 tons per year. Not all is fluff they also make paper. Why would they want to make 700,000 additional tons? If you look at the world demand and the price of fluff, a commodity product, the price curve is flat and some paper mills are planning to make more fluff. If you need to know, please call Chairman Li but don’t use my name. I have no clue, it will take up to 4 years to build the mill. Why would Li think there will be a demand for AR fluff in 2021?
3. AEDC said last year “we don’t have resources to do due diligence on the Koch Big River Steel mill if the K Bro’s think this is a good project, that is good enough.” Is AEDC is using the same logic, “if is good for Chairman Li, is good enough for Arkansas?”
4. The capacity of the mill is 700,000 TPY, not 854,000 TPY. My bad.
5. Some AR Foresters say it will take 3 million tons of trees per year to feed the mill, others say it will take 4 million trees per year. I used the lower number, but I could be wrong by 25 per cent! I asked AEDC “where will the trees come from?” they told me to call “J”. She told me these are not trees from a forest, but crops like potatoes and corn from farms; she said it takes 20 years to grow a new crop. “J” was very inquisitive, she wanted to know about my life. I told her I have 5 dogs but she wanted to know about my friends, the people I talk to and any organizations I belong to. I told her the names of my dogs, not the real names, not much else. By the way, “J” is a lawyer with a tiny lobbying firm in Little Rock. Do not use my name, OK?
6. I said one acre of forest sequesters one ton of CO2 per year. With 3 million tons of trees used as feedstock, 300,000 tons of CO2 per year would remain in the atmosphere. But according to EPA, “1.34 tons of CO2 are sequestered annually by one acre of average forest.” If we use 4 million trees per year, 5.4 million tons of CO2 would stay in the atmosphere every year. In 20 years, by 2041, we could have sequestered 107 million tons of CO2. Arkansas forests are better than average, Arkansas is the Natural State! Let me up my estimate by 20 percent: “130 million tons of CO2 will remain in the atmosphere just to make fluff for 20 years. Please write 130 million in your copy of the Independent. I will be long gone by 2041, there is nothing “J” can do if my numbers are off!