Company town, shrinking company: International Falls confronts its future

The Boise paper mill in International Falls, Minn., built more than 100 years ago by buccaneering entrepreneur and University of Minnesota dropout Edward Wellington Backus, has nearly always been the center of the city's life and livelihood. The ...

Boise employees head into work early
Boise employees head into work early in the morning on Wednesday, September 25, 2013 in International Falls, Minn. Credit: Derek Montgomery for MPR

The Boise paper mill in International Falls, Minn., built more than 100 years ago by buccaneering entrepreneur and University of Minnesota dropout Edward Wellington Backus, has nearly always been the center of the city's life and livelihood. The mill is its largest employer, even after the recent elimination of 265 jobs. It sits on an enormous, 55-acre site along the Rainy River near the center of town and is visible at the end of most streets.

When you talk to people in International Falls, it seems everyone has a connection to the mill, which still employs 580 people. Either they work there, used to work there, are married to someone who works there or have friends or relatives who work there.

Loggers, pulp-additive makers, cafes, grocery stores and other businesses exist largely to service the mill and mill employees. In these ways, the city of 6,400 is the epitome of a company town. Now that the company has downsized, the company town has a problem.

"I was at Boise for 51 years," Mayor Bob Anderson said. "I started as a laborer and progressed up to paper testing and quality control. At the same time, I was on the City Council and was the mayor (during a previous term). And the company asked me to take over public affairs. That's what I did for my last 25 years there. I managed public relations for Boise in Minnesota." Anderson said employees tend to stay at the mill for the bulk of their working careers, for 25 or even 45 years. "At 51 years, I'm a little unusual. But not that unusual."

The layoffs -- completed on Oct. 1, just after Boise announced it would sell to Illinois-based Packaging Corporation of America by year's end -- have created a heightened level of uncertainty in International Falls.


In the two weeks since then, residents have watched as former employees make decisions that could dramatically affect the community's future.

Some wonder if the city has leaned too heavily on the behemoth mill and its owners.

"It's just like in the westerns: This is my town and I'm going to run it the way I want to," said Fred Rusch, who worked at the mill for nearly 37 years before taking a voluntary retirement package in September as part of the job cuts. "It's the only show in town now. As far as the town and stuff, I worry what is going to happen."

Longtime City Council member Gail Rognerud said Boise has been good to International Falls. "People who worked there were well paid and had a nice benefit package," she said. "It provided a nice living for lots of our families. They were a good corporate citizen. They gave money to the community, to various organizations."

The larger trend of declining paper sales, thanks mostly to the rise in electronic communications, has hit the mill hard. And that means it's hit the city hard, too. Businesses have put expansion plans on hold. Ex-employees have moved to the Iron Range or even the North Dakota oil fields for work. Others are taking classes to learn new skills, but they wonder where the new good-paying jobs will come from.

"Basically, the economy is frozen up here right now because there is so much uncertainty," said City Council member Cynthia Jaksa, who worked at Insulite, a Boise division that made insulated board for home building until the division was shuttered in the 1980s. "Nobody is buying anything. The uncertainty is just a killer."

If you look across the Rainy River, you see another paper mill, in Fort Frances, Ontario. That one was also built by E.W. Backus, who was born in Jamestown, N.Y., but raised in Red Wing, Minn. For decades it was part of the Minnesota and Ontario Paper Company (Mando), along with the mill in International Falls.

Late last year, the Fort Frances mill laid off much of its workforce and stands mostly idle, an eerie harbinger of what could come on the U.S. side of the river.


Rognerud thinks International Falls will survive the recent layoffs, noting that after Insulite closed, throwing hundreds out of work, "we recouped and moved on. So there is no doubt we will recoup and move on again. We've been constantly looking at other jobs to diversify our economy since Insulite went down. It's scary to rely on one business."

The closure of Insulite led Anderson and others to recruit UnitedHealth Group to open an insurance claims processing center in International Falls. It started with two dozen employees and now provides 210 local jobs.

Yet, Rognerud said, "Economic development is very difficult. It seems like you take one step forward and one and a half steps back. It's difficult to get businesses to invest in your community. They are mostly content with where they are."

The most recent layoffs and Boise's pending sale have energized city and county leaders and others to once again consider ways to create new jobs. Yet locals are are in the precarious position of trying to do that while at the same time not undermining the mill and the jobs that are still there.

"I sure hope something comes," Rusch said. "I love this town. I love this area. We've laughed about it over the years, how this is going to end up being a retirement village where the only people living here are retired. And they go to Arizona in the winter. Maybe I'll be one of them now."

It's hard to imagine International Falls being the city it is, or located where it is -- 100 miles from another American city of size -- without the paper mill around which it grew. Their histories are really one history.

The city was incorporated in 1909, just a year before the paper mill opened. Backus had already dammed Koochiching Falls to generate hydro power. With that power and all those trees, the area seemed made to make paper. And that is what it did, through various sales to different owners, like Boise Cascade, Boise Inc., and several groups of investors.

In 1990, responding to increased demand for office paper, the mill was expanded to include the enormous paper machine known as I-1, which stands for "International Falls-1." The expansion was controversial because the company hired non-union workers to build the addition. Union workers picketed, struck and even set a park of temporary housing ablaze.


But with the expansion came more jobs. And the city's population swelled, hitting a high point of 8,300 in 1990. The population has been declining ever since, to its current 6,400. With the recent layoffs, the mill closed two paper machines and one coating machine, but I-1 continues to run and is considered "world class."

"International Falls is very important to the company," Boise public affairs manager Lori Lyman said. "The company has significant investment here. And there are natural resources available here and a good workforce."

Lyman said she is serving on committees set up by Anderson and others to look at a more diversified future for International Falls, a goal she endorses. "The company for a long time has really supported economic development in the community and diversification. It helps us retain employees. It helps with jobs for spouses."

The city has worked hard to support Boise and plans to continue to do so. "The business wants to be there and wants to grow," Anderson said.

"That is what our goals ought to be, to create the best climate for them to operate," Anderson continued. "We have got to keep our taxes in check. We have to keep our costs for infrastructure, water and sewer in check. The city supplies the mill with potable water and a sanitary sewer system. We need to keep those costs in check.

"We need to provide the kind of services that are going to make it convenient for the employees that work there and the vendors or suppliers that need to get to the mill," he said. "We need to make sure the roads are in good shape and plowed in the wintertime. That is the kind of climate we need to develop."

But it's a balancing act, especially if International Falls wants to draw companies that might tap the area's ample wood supply. "With the curtailments in the wood products facilities in the area, there is the chance for something in the wood products industry," said Koochiching County Commissioner Rob Ecklund, who works at Boise on the I-1 paper machine. Options include "a pellet mill or some kind of biomass generating electricity."

"The company I work for might not like that because they like the cheap wood," Ecklund said. "But we have to look at the health of the whole community."

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