Down and Out in Port Townsend
Between 1890 and 1927, Port Townsend was in a severe economic depression. Because the transcontinental railroad never reached the city, it never grew as expected. The great land boom of 1889-1890 was predicated on the arrival of the Union Pacific Railroad, linking Port Townsend with the rest of the nation. Lack of finances caused the Union Pacific to abandon the project, causing the boom to collapse in 1891. When the Panic of 1893 hit the nation, many people left the city, abandoning their businesses, houses, and properties. The economy of Port Townsend was bankrupted and within months, the population dwindled from more than 7,000 inhabitants to fewer than 2,000. The city may have been perfectly situated for sailing ships, but steamships could proceed into Puget Sound without concern. The loss to Seattle of the U.S. Customs Office in 1913 was a final blow to Port Townsend's grand ambitions of becoming a great Pacific Northwest port.
The city languished until 1927 when the Zellerbach Corporation of San Francisco decided to built a kraft paper mill in Port Townsend. Kraft paper is heavy, unbleached paper used to make grocery bags, multiwalled bags for heavier products such as cement, fertilizer and feed, and cardboard containers and boxes. The company had been surveying the Olympic Peninsula, where timber and water were readily available, to find the best location to build a paper mill.
On July 1, 1927, James David Zellerbach (1892-1963), president of the National Paper Products Company, a Zellerbach Corporation subsidiary, recognized the potential of Port Townsend and announced plans to build the mill at Glen Cove, the site of the homestead of Albert Briggs, one of Port Townsend's early settlers.
Bringing in Water
A big problem that required immediate attention was that of water supply. The mill needed a large, reliable water supply to operate, and Port Townsend's old water system was badly in need of replacement. The city voted to issue $800,000 in municipal bonds to provide the money necessary to build a dam and pipeline capable of bringing 14 million gallons of fresh water per day from the Big Quilcene River, more than 30 miles away.
The Zellerbach Corporation agreed to pay $200,000 in advance royalties and $10,000 per year to lease the water system from Port Townsend for 30 years plus operate and provide all the maintenance on the pipeline. This beneficial arrangement allowed the city to decrease the bond issue to $600,000, giving a $12,000 saving in interest per year. After the town selected a contractor, work on the Big Quilcene Water Extension Project began in September 1927. Construction of the mill also began in September, with the Olympic Piledriving Company driving 6,000 piles into the tide flats of Glen Cove, providing a foundation for the 850-foot-long main building and a dock. The first unit of the mill was optimistically scheduled for completion by May 1, 1928.
With the sudden increase in jobs and population, Port Townsend once again became a boomtown. Crown Zellerbach spent more than $2.5 million on the construction of the mill's first unit, more than $3 million on the second unit and ancillary buildings, and employed approximately construction 600 workers. Hundreds more came to Port Townsend to work for supplier companies, in service industries, and later, at the paper mill. According to the U.S. Census Bureau, between 1920 and 1930, the population of Jefferson County increased of approximately 27 percent, from 6,557 to 8,346. The immediate impact of the new mill to the local economy was readily apparent. Between 1930 and 1940, the population only grew approximately 7 percent, from 8,346 to 8,918.
In April 1928, Zellerbach Corporation, one of the largest companies on the West Coast, acquired the stock of Crown Willamette Pulp and Paper Company in Camas, Washington, and the ensuing merger created the Crown Zellerbach Corporation. Although the merger was beneficial to both companies, it was not without substantial controversy.
There was national concern that the newly formed company, now the second largest paper company in the country, would monopolize paper production. In 1934, the Federal Trade Commission questioned the merger as a violation of the Anti-Trust Act, but took no action. Due to the large size of the companies, the merger took more than nine years to complete. Formally the National Paper Products Company, the new mill was now the Port Townsend Mill Division of the Crown Zellerbach Corporation.
Water was available from the new pipeline on October 5, 1928. The following day, the first digester was started up and the first of the mill's two paper machines went into operation. Paper began rolling off the second paper machine in May 1929. The capacity of the mill was 200 tons of pulp per day, which required approximately 10 million gallons of water to process. Approximately 99 percent of the wood used at the Port Townsend Mill was wood chips and waste material from sawmills, plywood plants, and tree farms around Puget Sound and British Columbia, which arrived at the Glen Cove wharf by barge.
In 1929, the Crown Zellerbach Port Townsend Mill had 275 employees earning $325,000 annually. The Great Depression (1929-1939) hit just as the mill was starting to operate, but the mill did not shut down at any time during this period. In 1933, the mill expanded with the construction of a breakdown plant to assure a steady supply of wood chips, boosting the number of employees to 375. In 1935, a bag factory was added along with 40 additional employees, boosting the annual payroll to $626,000. The mill expanded further in the 1940s with the construction of a multi-wall bag factory. By 1949, there were 630 employees earning $2,200,000 and by 1955, there were 820 employees with an annual payroll of $3,800,000. In 1950, the Port Townsend Mill, in competition with 70 other pulp and paper mills, won the National Safety Council award for safety,
Between August 1978 and April 1979, a company-wide labor union strike shut the mill down. Approximately 100 jobs were lost and the multi-wall bag plant never reopened.
In 1980, Crown Zellerbach became the West Coast leader in emission controls by installing new furnaces and smokestacks and by improving its wastewater treatments facilities. On December 20, 1983, Crown Zellerbach sold the mill to Haindl Papier GmbH of West Germany, which renamed it the Port Townsend Paper Corporation, employing 500 workers.
In December 1997, Haindl Paper GmbH, after losing money for several years, sold the Port Townsend Paper Corporation to Northwest Capital Appreciation Inc., a private equity firm that was credited with saving the mill from closure. In March 2001, the corporation purchased Crown Packaging Ltd. of British Columbia for $61.5 million, which added four plants that manufacture boxes and packaging materials from kraft paper.
Today (2005) the Port Townsend Paper Mill, located at 100 Paper Mill Road, has approximately 325 employees in Jefferson County, manufacturing 325,000 tons of unbleached paper and cardboard every year. Combined with the Crown Packaging operations in Canada, the corporation sells more than $200 million of paper products annually. This privately held corporation continues to be the backbone of Port Townsend's economy as well as the largest single employer in Jefferson County.