Chesapeake Paperboard Co., a Baltimore company that recycles waste paper into paperboard, may shut down and lay off most of its 134 workers by June 20 if it does not receive financial assistance from the city, state or other sources.
"The condition of the company is very serious," said Robert L. Hannon, executive vice president for business development for the Baltimore Development Corp. (BDC).
The company, which handles the paper collected in the city's curbside recycling program, is seeking about $12 million in financing over the next five to 10 years to modernize its South Baltimore plant at Fort Avenue and Woodall Street, Mr. Hannon said. He added that the company also has a "severe short-term issue," which he would not discuss.
Company officials met with BDC -- the city's quasi-government development agency -- and the state Department of Economic and Employment Development on April 25 to discuss possible assistance, Mr. Hannon said.
Mr. Hannon said the agencies are working to find a solution to Chesapeake's problems.
"We'll hope for the best," he said.
Murrell Smith Jr., chief operating officer of Chesapeake Paperboard, confirmed that the company may stop operations on June 20 and lay off most of its work force. Only a skeleton crew would be left to finish shipping remaining orders, he said.
He refused to elaborate and would not discuss the company's financial condition.
Started in 1910, Chesapeake Paperboard is privately held by the Smith family, which also owns the J. E. Smith Co., a Millersville maker of rigid boxes, and Chesapeake Fiber Packaging Co. in Cockeysville, which makes folding boxes.
It is the sole handler of the 15,000 tons of waste paper collected annually by Baltimore's curbside recycling program, according to Kenneth J. Strong, Baltimore recycling coordinator. The company accepts the paper for free, rather than charging a fee as many recyclers do. In exchange, the city disposes of a set portion of Chesapeake's waste without charge, he said.
If the city switched to another company, it might cost as much as $25 per ton, or a total of $375,000, in fees, Mr. Strong said.
Besides talking to city and state officials, Mr. Smith said the company is also exploring other options, which he would not describe.
If the company is successful in getting financing, the plant would be closed for a number of months for retooling, according to Roosevelt L. Jordan, local representative for the United Paperworkers International Union, the union that represents 115 to 117 workers.
The only other paperboard recycling operation in Maryland is Simkins Industries Inc. in Catonsville.
Paperboard is used in such products as shirt boxes, cosmetic packages and candy and gift boxes.
Sales have suffered in the last three years as a result of the general retail slump, the use of less packaging and the switch by some companies to coated paperboard or corrugated board, according to Les Deutsch, general manager of Simkins.