First Quality takes over where paper mill left off

PHOTO PROVIDED In this archive photo from Feb. 3, 2003, Gov. Ed Rendell visited First Quality in McElhattan to present First Quality a state check to assist with the planned First Quality Tissue project in Castanea Township. Those on hand included, left to right, State Sen. John Wozniak, Gov. Rendell, Kambiz Damaghi of First Quality, and State Rep. Mike Hanna.

From staff reports

LOCK HAVEN — It was 20 years ago this October when the area was hit with a big economic announcement that, while totally not unexpected, still shocked the area.

On Oct. 18, 2000, International Paper announced it would close its Lock Haven facility over the next year or so, leaving more than 600 people eventually without a job. It was difficult to comprehend the impact on the workers, families, contractors, suppliers and the greater Lock Haven region. The trickle down impact of the eventual closure would be hard to measure, but it was huge.

International Paper/Hammermill had been heavily involved in the community, employed hundreds of people over 100 plus years in the greater Lock Haven area, but now was leaving, and leaving behind a campus that would be hard for anyone to retrofit to anything.

Today, it seems only fitting that this year’s Express Progress edition’s theme is “Change brings Opportunity” for that is what has exactly taken place at the former International Paper site over the last two decades.

“We had 47 different buildings there and almost of all them, at least to the unprofessional eye, looked like they needed to be torn down,” say Mike Flanagan, who at the time was Development Director of the Clinton County Economic Partnership, and is now president. “The mill had at one time served its purpose making paper and employing hundreds over many decades. But, in a word, the complex in 2000 and 2001 was a mess.

“One thing I recall was the fairly quick reaction of the state to come in with a response team to help those employees who wanted to seek additional education and training, etc. But we still had the major issue of what the future would hold for the site. The Partnership decided to form an IP task force, and that’s where things started taking off.”

Flanagan says one of the first times someone showed interest in the property was in 2001 when he was invited by Focus Central PA — a regional marketing group — to meetings in Harrisburg with representatives from two other counties to discuss a client’s needs.

“It was obvious we were competing with them for someone or something but I had no idea who the prospect was,” said Flanagan. “I just knew that water and rail was important to the prospect.”

Eventually, after a couple of meetings, the discussion turned directly to the International Paper property. Bill Marino and the late Ralph Lovette, who had been mill manager at one time, headed up the task force. The prospect was eventually revealed as First Quality, which already had an operation in McElhattan and was looking for a site with water to make paper towels and tissue. The canal off Bald Eagle Creek had provided IP with water for decades.

“I remember taking a couple of trips to Harrisburg to help negotiate with International Paper officials,” said Marino. “I believe they started at $7 million. We kind of went back and forth, like it usually goes, and we ended up at $2 million and shook hands.”

Partnership attorney Lewis Steinberg helped work out a plan for the Partnership to buy the facility and about 400 acres (both inside and outside the property’s fence) from IP for $2,000,020. In addition, IP agreed to pay off $520,000, the remainder of its pledged amount for the Lock Haven flood protection system. After a few weeks, First Quality bought the property from the Partnership and became the owner, and the “change brings opportunity” chain was set in motion.

On Groundhog Day 2003, newly elected Pennsylvania Governor Ed Rendell delivered a Redevelopment Assistance Capital Program check that would amount to $4 million to help with the First Quality Tissue project. This ceremony took place at a packed FQ Products warehouse in McElhattan with the Governor, State Sen. John Wozniak, State Rep. Mike Hanna, and Cong. John Peterson, as well as the Damaghi family, owners of First Quality. Then Lock Haven Mayor Rick Vilello served as master of ceremonies.

It didn’t happen with a snap of the fingers, but buildings eventually came down, some environmental spots were checked with DEP’s cooperation, and in another year or so, a modern, 900,000 square foot building cropped up, and so did the employees. The site which could have become an albatross for the greater community, had activity again and machines were up and running.

Today, First Quality Tissue has three paper machines operating at the former paper mill site under some 2.6 million square feet, and has about 600 employees, which is almost equal to the amount that IP had 20 years ago. First Quality uses many local contractors, utilizes a short line rail provider for raw material, has a new truck access road and one rather famous spare dryer. It is nothing short of amazing what has taken place in Castanea Township and surrounding area.

“It certainly has been a tremendous success,” said Marino.

“When we think back to the announcement date in October 2000, we couldn’t have come up with a better result two decades later — thanks to many, and obviously First Quality and the Damaghi family,” adds Flanagan. “Change certainly did bring Opportunity.”


Today's breaking news and more in your inbox

I'm interested in (please check all that apply)


Starting at $4.39/week.

Subscribe Today