Trouble in river city

A paper mill on the Pigeon River brought it prosperity. But market forces — and those of nature — now batter Canton
By Edward Martin

The September sun gives it life, siphoning moisture from the Atlantic off the coast of Africa. The earth’s rotation coaxes it into a counterclockwise spiral as it begins its two-week journey to the Gulf of Mexico, where, nudged by the jet stream, it tears northward across the Florida Panhandle into Alabama. By now it has a name — Ivan.

On Wednesday, atop Cold Mountain in southern Haywood County, mist with a tepid, almost tropical feel swirls through gnarled oaks. On radar in Greer, S.C., 50 miles southeast, government meteorologist Wayne Jones watches approaching cloud bands. The heaviest precipitation lies in the right leading quadrant, aimed at the mountain — but first it must clear the Blue Ridge. Jones frets about that. “When all that moisture rises over that escarpment and condenses, it’s going to boost the rainfall tremendously.”

By Thursday, 12 to 15 inches have soaked the forest floor atop Cold Mountain, still sodden from Frances, a similar storm nine days earlier. More is falling. In the headwaters near the 6,030-foot summit, creeks swell and plunge toward the twin forks of the Pigeon River, which enfold the base of the mountain like a wishbone. Below its collar lies the little town of Canton.

In late afternoon, water surges through the crossroads of Bethel, near where the forks merge. In the driving rain, people whose memories of Frances are less than two weeks old pack and leave. As night falls, the Pigeon pounds a house and the cottage next door, smashing windows, ripping off garage doors. Doris Baxter, 69, lives nearby on higher ground. She decides to wait it out. Her mother, who is in her 90s, is in a nursing home in Canton. It’s just across the river.

In town, Tom Wilson races to save customers’ clothes from his dry-cleaning shop, two blocks from the rising river. Lights flicker off. Broken lines spew natural gas. Water swirls over the U.S. 19-23 bridge, pouring into City Hall and the 1932 Colonial Theater, newly restored at a cost of $1 million. Police order Wilson, 66, to leave. He glances back. Much of his equipment is new, including a $75,000 dry-cleaning machine, the latest zero-pollution model. Soon, only the roof of his building is above water.

In blackness now, the river smashes through the sprawling Blue Ridge Paper Products Inc. plant in the heart of town, wrecking its waste-treatment plant, which also treats the town’s sewage, and wreaking $30 million of damage. Beyond the mill, the Pigeon gouges huge chunks from streets and swallows the tiny mill houses of Fiberville, the village built for workers not long after James Robertson’s grand-daddy came to Canton in 1905 to help establish the mill. Water stops rising just below Robertson’s doorstep. His is the only house spared from flood damage.

In the predawn, Doris Baxter slides behind the wheel of her old blue Oldsmobile Cierra. Maybe she thinks there’s trouble at the nursing home or that her mother needs her. They will find her car next to a tomato field, wedged upside down in a grove of trees 10 feet above the riverbank, with her body inside it.

Friday morning, the muddy water recedes. They say such storms — remnants of Hurricane Frances on the 8th and Hurricane Ivan on the 16th and 17th — come once a century. These two hit Canton within 10 days. Some remember similar storms of the century in August of 1940. They came 17 days apart.

For a century now, they’ve been intertwined — the town, the mill and the river. The town, which owes its existence to a ford on the river, depends on the mill, which is Haywood County’s largest employer. The mill needs the river’s water to make paper and wash away its waste. That’s as true today as it was when Champion Paper President Peter G. Thomson — they still speak of “Peter G” here as if he were in the next room — began building the mill.

About 1,000 people work there at wages averaging about $45,000 a year, which is nearly twice the county average. But people are beginning to wonder if the mill, with its hydrogen-sulfide fumes, smokestacks and billowing steam, hasn’t scared off cleaner, good-paying employers, along with well-heeled retirees and young high-tech entrepreneurs looking to put down roots.

Then there’s the river. Soon after the mill began operation in 1908, pollution overwhelmed the Pigeon, turning it brown as shoe polish and lacing it with frothing mounds of toxic foam. Fish died. Older residents tell of tossing their dogs into the river to kill fleas and ticks and cauterize mange sores. “My dad grew up a mile from here,” Robertson, 56, recalls. “The mill burned coal. I’d get up in the morning and have to sweep the sidewalk and porches. Mama couldn’t hang her clothes outside.”

“Champion never polluted on purpose,” says Wayne Carson, 66, who worked there 36 years before retiring in 1995. “But that’s the way the whole country was back then. It was just a great big mill on a little river.” Too big. The Pigeon typically flows at the rate of 300 to 400 cubic feet per second, says Roger Edwards, supervisor of the N.C. Division of Water Quality office in Swannanoa. “An owner today would never put a mill that size on a stream that size.” Forty miles away, across the state line, generations of boys in Hartford, Tenn., grew up skinny-dipping in the Pigeon and fishing for smallmouth bass, carp and catfish. About 30 years ago, health workers noticed a trend. Over several decades, hundreds of men — one study says 600 — developed cancer. Some residents still call their town Widowville.

Now the river is forcing the mill and town to pay dearly for its abuse. Under threats from two states and federal authorities, Champion Paper and its successor, Blue Ridge, have pumped about $600 million since the early 1990s into cleaning up the water and pollution. The mill has slashed 90% of the discharges of chemicals that colored the river. New technology has diminished — but not eliminated — its perpetual odor of rotten eggs. A new bleach-filtrate recycling process helps strip chlorine and related toxins from the effluent.

“They are one of the top, if not the top, pulp mills in the world in terms of effluent quality,” Edwards says. Carcinogenic dioxin and other chemicals have subsided, and since 2001 regulators have deemed Pigeon River fish safe for eating by all but children and pregnant women. But the price has been steep. Blue Ridge CEO Richard Lozyniak says 15 years of pollution remediation, coupled with depressed paper prices and increasing competition, has left the mill little to spend on upgrading production equipment.

In fact, Champion was on the verge of shutting the mill — which has a replacement value of $1.3 billion — when the company put it up for sale in 1997. Two years later, the employees and their union bought it. They agreed to a seven-year, 15% pay cut and other concessions. A New York private-equity fund that bills itself as “a buyer of last resort” engineered and underwrote the $200 million deal. The mill still loses money — about $31 million on $479 million of revenue last year.

“It’s an old mill, and we’ve got a bunch of old equipment,” says gravel-voiced Rufus Lindsay, financial secretary of Smoky Mountain Local 507 of the Paper, Allied-Industrial, Chemical and Energy Workers International Union — PACE. Even the average age of a Blue Ridge worker — 49 — is high. “A lot of paper mills have shut down across the country. How we’ve hung on, I don’t know.” RFS Ecusta, less than 40 miles away, closed in 2002, putting 623 people out of work.

Even seemingly unrelated events appear to thrust the town, mill and river together. When they built the big road — Interstate 40 — Canton became even more dependent on the mill, which pays about 60% of its $5.5 million annual budget. “When I was growing up, we had hotels and five gas stations within a quarter mile of Town Hall,” says Mayor Pat Smathers, whose ancestors settled here before 1800. “I-40 came, and they all left.”

Meanwhile, the increasingly pressed mill began demanding tax cuts. The town granted 10% in 2003, but feelings occasionally are bruised. “The mill wouldn’t be here if not for the river and forest, and the town wouldn’t be here if not for the mill,” says Smathers, a Duke University law graduate and varsity football player in the 1970s. “There are times we don’t see eyeball to eyeball, and we recognize that Blue Ridge is a two-way sword. It keeps a lot of people here, but it keeps a lot of people from coming.”

Few climb this hill, covered in knee-high grass and briars. Below, thousands of tons of golden wood chips sprawl on Blue Ridge’s receiving yards, destined to become bleached paper used mostly for coated food containers, such as milk and juice cartons, and for envelopes. Freight trains trundle into the mill through Hominy Gap to the east. Across the valley lies downtown, with its 100-year-old brick buildings. Above them, on steep streets, are Canton’s older, more-expensive homes. Another hillside holds the small, frame houses of working-class families. A white church steeple catches the late-afternoon sun.

At Main Street Café and Sandwich Shop, owner Joyce Murray rings up lunches for Blue Ridge workers while her granddaughter serves dishes of fried okra and potatoes on red-checked tablecloths. At the first table sit men with safety glasses and earplugs dangling. A rotund man leans back. “There she was, nothing on but an apron, bent over cleaning that oven ... ” He slaps his thigh. The others chortle.

Murray laughs too. “Those guys? They’re here every day, always right there at the same table. Canton’s a lot like Mayberry.” Mayberry with a paper mill.

In Locust Field Cemetery, on a ridge above town, stand hand-chiseled tombstones dating to the 1700s. Here lie a Revolutionary War hero, Civil War veterans and mountain mothers who died in childbirth. Many in town descend from those who called their village Pigeon River and then, in the late 1800s, Pigeon Ford, Ford of the Pigeon and Buford before settling on the name of the Ohio town they found on the nameplate of the foundry that cast the trusses of their first iron bridge.

In the town museum — Ivan flooded its basement so deep that ceiling tiles floated out of their frames — yellowed news clippings and artifacts chronicle the past. Wrested from the Cherokee in the 1700s, Canton was little more than a river ford until after the Civil War, when the Western North Carolina Railroad reached it. Here hangs the black wool suit that circuit-riding preacher Jim Fowler wore in 1872. There’s a ticket for the 1948 Paper Bowl — Waynesville versus Marion, $1 admission. And, from perhaps the 1960s, a clipping with a picture of the high-stepping Canton High School “Band of Bears” marching in front of Woolworth’s.

“We were the quintessential mill town,” Smathers says. “They provided housing, a doctor, everything. My dad’s grocery began because the mill shut down its store. When he came back after World War II, he and my uncle together ran a meat counter. The Champion store closed, and they picked up the accounts.”

On a Saturday morning seven months after Ivan, Zeno Lancaster, the strapping, 6-foot-4 owner of Cold Mountain Hardware Store, discusses training bear dogs with a customer. Everything is 20% to 80% off because of flood damage. Lancaster, 47, had bought the inventory of his father-in-law’s flooded hardware store in nearby Candler for 10 cents on the dollar — $45,000 for $450,000 of goods. His father-in-law, 70, then retired. “We had a week of pretty weather between the first and second floods, so everybody put everything outside to dry. The first flood, it stayed in the buildings. The second time, it just washed on down the river.” A customer approaches him with a Crock-Pot, stained with mud. “You take $5?” “Sure.”

At the museum, Carson, now a volunteer, describes an age when the mill pumped vibrancy into Canton. Smathers adds, “In the 1920s and ’30s, the question was, which was going to be bigger — Asheville or Canton?” Historical records are vague, but older residents say the town’s population peaked at about 10,000. The mill employed about 5,000. Between 900 and 1,000 now work at the mill, Lozyniak estimates, with about 200 more at a coating plant in Waynesville, about 10 miles away.

As paper’s fortunes cooled, the town’s followed. By 1970, population had dipped to 5,158. In 1990, it stood at 4,029. It was 3,957 in 2003. From 1996 through 2003, fewer than eight houses a year were built, at an average cost of less than $70,000. Last September, the river destroyed or damaged so severely that they had to be condemned 24 homes and did $9 million damage to town property. When they grow up, most of Canton’s children leave. There were six siblings in Donna Guge’s family. “All but two left,” says the 54-year-old Bethel resident, whose house was damaged in the flood.

Smathers’ son is studying law at Duke and, as his father did, plans to return to Canton. The mayor was elected in 1999 partly on his ambitious plans to reverse the town’s slide. But in his dim, book-lined law office in what was his father’s supermarket overlooking Main Street, he concedes that few follow his son’s example. Smathers is pumping hundreds of thousands of dollars — $500,000 or so, he’s not sure — into renovating the former Imperial Hotel, which began life as a private residence circa 1880. It will have shops, a restaurant and perhaps other features.

“You’ve got to have jobs but also entertainment,” he says. “If you don’t, your best and brightest are going elsewhere. The ones who come back are the ones that have opportunities waiting — their families are in business or they have the education and skills to make it, like doctors, attorneys and CPAs.” Or, he adds, they work at the paper mill, where blue-collar jobs pay enough to attract two- and four-year college graduates. “If you don’t have manufacturing jobs in your community, you’re in trouble.” But that, he and others say, is part of the paradox of the mill.

For decades, it deterred diversification. “Other companies didn’t want something like Blue Ridge around because they have to compete with their wage scale,” Smathers says. “Even now, we couldn’t support another industry as big as Blue Ridge. Everybody says we want tourism or the retirement industry, but they can’t compare with manufacturing.” Others, though, say the traits that make Canton as timeless as its river have made it reluctant to reduce its reliance on the mill.

James Robertson stands on the crumbling riverbank in front of his house in Fiberville. Two-thirds of what once was the mill village’s main street washed away, leaving a sheer drop to the river 20 feet below. Clothes and other debris still flutter in tree limbs. “People here have a hard work ethic. My dad worked for the plant for 46 years. My grandfather worked there for 53 years. But over the years, we’ve gotten smaller and smaller. I grew up here, but the first thing I wanted to do was get out.” He joined the Air Force but eventually returned to Canton and now owns a battery store in Asheville.

“We’re cliquish, like any small town,” Wilson, the dry cleaner, says. “Canton is a great place to live. I’ve been here since 1983. But there hasn’t been the initiative politically to solicit new industry. I have to relate that back to government officials — city and county — who are just not progressive enough.”

Like the floods of September, the news that first sent Canton reeling came with a jolt. In October 1997, after years of losses, mounting environmental troubles and declining paper demand, Stamford, Conn.-based Champion revealed it had asked Goldman Sachs to find a buyer for the Canton mill and its five-plant Dairy Pak division. When that failed, employees and the KPS Fund, a New York investment house, stepped in. But the crisis divided the town. Workers split on whether to buy the mill under an employee stock-ownership plan — an ESOP. One reason: The deal would give New York-based investors a controlling 55% interest. Workers and their union hold 40%; senior executives, 5%.

During the debates, one worker called a KPS executive “a fast-talking New York lawyer who thinks he’s talking to a bunch of hillbillies.” Workers in favor of buying out the mill published a newsletter called Scab Rhetoric, attacking workers who were opposed. Opponents called the pro-buyout faction “the Judas crew,” accusing them of betraying other workers.

In April 1999, the buyout passed, with nearly two-thirds of the employees voting in favor. But Lindsay, a boiler operator at the plant, says ESOP concerns remain. “Some people feel like they were misled” on such issues as profit sharing. There has been nothing to share. Workers agreed to a seven-year contract due to expire in 2006 but agreed to move negotiations up a year. Talks were under way recently. “Our wages have been frozen since 1999. Right now, benefits aren’t a big issue with us, but wages and pretty much everything else in the contract is at issue.”

Now, Lindsay and others say, a new realization is setting in. In the relationship between mill, town and river, everybody had assumed the mill would always be there. Now nobody does.

It is a mournful sound, haunting like the lonesome wail of a steam locomotive. Lozyniak cocks an ear toward it in his upstairs office of the two-story headquarters of Blue Ridge on Main Street. “The noon whistle,” he explains. “We stopped blowing it once, and everybody in town complained.” No one can forget that, as Smathers says, “this is a town that works.” In Canton, the steam whistle is a clear link to the past. But the mill’s future — and those of the town and river — is anything but clear.

Since 2000, Blue Ridge has boosted productivity even without new equipment. It shipped 521,000 tons of paper and packaging in 2002 and 552,000 tons in 2004. “We probably will ship 7% more this year with 20% fewer people,” says Lozyniak, 43, whom KPS hired in 1999 as Blue Ridge’s chief financial officer. He was promoted to CEO in 2003. But consumers and competition — maybe nature, too, with predictions of an unusually active 2005 hurricane season — seem aligned against Blue Ridge.

A postal rate increase is expected next year, which means fewer letters and other items will be mailed. So do Internet advertising and paying bills online. Imported paper and slower economic growth will hurt domestic producers through 2007, says Richard Skidmore, a Goldman Sachs analyst who follows the industry. Plastic containers continue to cut into Blue Ridge’s specialty — cartons.

“Our prices today are about the same as in 2000, but our health-care bill is $15 million higher, our energy bill is $14 million higher, and our cooking-chemical bill is $7 million higher,” Lozyniak says. “Add it up, and our [total] costs are up about $60 million. If everything were the same, we’d be doing great.” Blue Ridge has lost $73 million since the buyout, squeezing out a profit for the first time — a paper-thin $717,000 on sales of $128 million — in this year’s first quarter.

Union officials say KPS controls all major decisions affecting the mill but is likely to try to sell its stake in the company to the public or employees next year. David Shapiro, a managing partner, declined to comment on the firm’s exit strategy. “They strictly control everything, and they’re getting out,” Lindsay says. “They made no bones about that from the start. They’re not in it for the long term.”

Even the river adds an element of uncertainty. Blue Ridge’s license to dump treated waste into the Pigeon must be renewed this year, and some critics say they’ll challenge it. One issue is the technology that Blue Ridge uses to burn pollutants it removes from the river. “Now they are sending them east by air over North Carolina, instead of west to Tennessee by water,” says Louis Zeller, campaign coordinator for the Blue Ridge Environmental Defense Fund, a coalition of organizations in the Carolinas, Tennessee and Virginia.

Smathers and some others here are beginning to think the once unthinkable: Will the day come when the plant no longer figures in the trinity of town, mill and river? “We’d be foolish not to make other plans,” the mayor says. Five years ago, Canton adopted a plan that calls for manufacturing — Blue Ridge specifically — to be a bulwark of the local economy.

On the outskirts of town is Haywood County’s 100-acre industrial park, but its three tenants employ only about 150 people. The mayor also mentions plans for a motor-sports park and talks about leveraging the town’s location as a tourist destination. But right now, as it has for nearly a century, what breathes vitality into Canton can be heard above the gurgle of the river that is its lifeblood. In the distance, the mill sighs the constant muffled-bass rumble of heavy industry.

Lozyniak recalls the day, about a month after the floods of September shut it down, when he ordered workers to refire its boilers. As the moribund mill came alive, the first billows of steam rose from its stack. “You know, it was like watching the Vatican when they select a pope