When Jason Gregory presented his new book on the history of manufacturing in Sylva at the Jackson County Public Library in August, the room was filled with residents who have a deeply personal connection to the stories Gregory wrote. 

Most people don’t kick off their retirement by becoming president of a company, but Nicki Slusser is not most people.

Jackson Paper Manufacturing hosted more than 45 local elementary students and their families at the company’s Christmas for Kids party on Dec. 11.

The guests were joined at the gathering by the children of employees of Jackson Paper. Staff at Jackson County’s elementary schools selected the students who attended.

“This annual event is a highlight of the Christmas season for us,” said Tim Campbell, President and CEO of Jackson Paper. “Our employees work all year long to make this party as special and memorable as possible, and we are so pleased to be able to include children from across our community.”

Party-goers enjoyed three hours of games and crafts, lunch and a visit with Santa Claus. Each child received a toy or game, a goodie bag and other prizes.

This is the ninth year that Jackson Paper has hosted Christmas for Kids. Party organizers were Human Resources Department staff Angie Rogers, Heather Stillwell and Renee Phillips, with help from 25 employees and family member volunteers.

Jackson Paper Manufacturing Co. is an independently-owned mill in Sylva that produces 100-percent recycled paper used by independent box manufacturers to make the fluted layer of corrugated boxes.

For more information on Jackson Paper, visit www.jacksonpaper-nc.com/.

After being hit with a county audit of its machinery, Jackson Paper factory in Sylva is disputing what it considers a highly inflated tax bill.

The business audit claimed Jackson Paper had been underestimating the value of its equipment for tax purposes. The mill was charged $72,000 in penalties and interest and another $195,000 in back taxes owed to Jackson County and the town of Sylva.

Jeff Murphy, chief financial officer for Jackson Paper, said it has “resulted in a significant detriment to our company,” in a letter sent to county commissioners protesting the outcome of the audit.

Jackson Paper wants the county to waive the penalties and interest. It also claims the county has pegged the value of its machinery too high, resulting in excessive property taxes, and that the value needs to be adjusted.

Jackson Paper’s equipment taxes doubled following the county business audit in 2008. That alone caused an unexpected blow to the company’s bottom line — one that will recur every year unless their appeal is successful — not to mention the one-time blow of hefty back taxes, penalties and interest.

Jackson Paper swallowed the back taxes and paid up as a “good faith effort,” but not because the company agrees.

“In no regard are we conceding to the assessment,” Murphy wrote.

Jackson Paper has withheld paying the interest and penalties in hopes they will be waived, and further hopes to get a refund on the back taxes it claims are excessive. It has asked the county to reopen the audit in order to straighten things out.

But there’s a glitch. Jackson Paper failed to appeal the audit within the required 30-day window.

“If you don’t get on your horse and ride up here to the tax office in 30 days, or fax it or whatever, that’s just tough,” said Bobby McMahan, county tax assessor.

State statute in fact bars the county from adjusting a tax bill outside the appeal window — a safeguard likely intended to prevent favoritism or quid pro quo by the tax office.

The county’s hands were tied, and Jackson Paper seemed to be out of luck.

But eventually, a little known clause in state property tax law was uncovered that may help Jackson Paper yet. Aptly called the “power to compromise,” it allows a taxpayer to take their request directly to the board of county commissioners.

Jackson Paper wrote a letter seeking an audience with the commissioners in February, but the company is still waiting for a resolution.

The county turned the matter over to its attorney, Paul Holt, who has been consulting with the N.C. Department of Revenue in Raleigh to understand how the power to compromise is supposed to work.

“We need to know what are our options are from a legal standpoint. What can we do and what can’t we do,” said County Manager Ken Westmoreland. “We know what Jackson Paper wants us to do, but whether that is in the purview of our authority hasn’t been determined.

“It is sort of in a gray area, and no one knows which way to turn on it,” Westmoreland said.

Simply put, the power to compromise grants county commissioners the ability to “compromise, settle or adjust” a tax bill.

Why the dispute?

Jackson Paper not only claims the county’s auditors made an error in calculating the value of its equipment and machinery, but that its own auditor failed to catch the error in time.

When Jackson Paper learned of the pending audit, it brought its own audit firm on board to represent the mill during the process, knowing that thousands of dollars could be at stake depending on which way the audit went.

The value of factory machinery declines a little each year as it gets older and is subject to wear and tear. The depreciation is calculated based on the equipment’s original value and how old it is now.

Jackson Paper claims the original value used by the county’s auditors was wrong. Instead of using the value of the equipment when it was first installed, the auditors used the value of the equipment at the time Jackson Paper purchased the factory in 1995.

That led to a higher baseline, and as a result a higher value for the machinery today.

Murphy said in his letter that standard protocol is to use the original value of the machinery rather than its value at the time of a later purchase.

The auditor hired by Jackson Paper failed to catch the error, and failed to file an appeal on the company’s behalf in time.

“It is unfortunate we received poor professional service that resulted in the incorrect tax assessment,” Murphy wrote in the letter to commissioners.

But the mistake should not cost the company such a sizeable sum, Murphy argued.

Officials with Jackson Paper would not comment for this article since the issue is unresolved.

Commissioners have not yet discussed whether to reopen the audit per Jackson Paper’s request, let alone whether to adjust the value of its machinery or waive the penalties — presumably pending advice of county attorney Paul Holt on what the course of action should be.

Last week’s announcement that 61 new jobs are coming to Sylva with the expansion of Jackson Paper is relief for a town hurting from the closing of the T&S Hardwoods sawmill that employed 75.

Stonewall Packaging LLC, a joint venture of Jackson Paper, is investing more than $17 million to build a second plant in Sylva.

Witness to the tough job climate, the Employment Security Commission Office in Sylva was filled Monday with people looking for work.

Jackson Papers, which currently employs 119, makes corrugated cardboard from recycled paper. The 61 jobs will come to Jackson Paper over a three-year period and pay an average of $39,344, better than the county’s average annual wage of $27,820.

Not only is this good news for Sylva but also for the manufacturing sector in general, which has had large declines in North Carolina and across the nation over the past decade.

According to a report from the N.C. Department of Commerce, manufacturing jobs in the state declined by 80,100 or 10.7 percent in 2001, partially due to the jobs going overseas.

During the seven year period beginning in 2001, manufacturing employment decreased by nearly 210,000, but the state added approximately 25,000 jobs in the finance sector, 85,000 jobs in the professional sector, and 130,000 jobs in health and education, reflecting the transition and diversification of the economy.

But don’t count manufacturing out yet.

A report on manufacturing from North Carolina State University states, “Manufacturing continues to be the leading contributor to North Carolina’s Gross Domestic Product at 18.6 percent, although that represents a decline of 5.7 percent from 1997 to 2007. Manufacturing continues to employ the most people at 16.7 percent of the total workforce, providing above-average wage jobs to more than 535,000 individuals.”

Of the 10,567 manufacturing companies in North Carolina, almost 80 percent have 50 or fewer employees.

A manufacturer in Waynesville, Haywood Vocational Opportunities, also recently announced that it would be expanding with the construction of a second plant and creating 50 new jobs. HVO currently employs 315.

The new jobs will be good for the area that is seeing double-digit unemployment. Jackson’s unemployment was at 10.3 percent in January, the latest figures available. That’s up 5.2 percent from the year before, accounting for 2,028 without a job.

Stonewall Packaging LLC, a joint venture of Jackson Paper Manufacturing Co., announced today that it will invest more than $17 million to build a new facility in Sylva for the production of recycled cardboard packaging. The investment will result in the creation of 61 jobs over the next three years.

“We are so pleased to be establishing this new operation in Sylva and bringing additional jobs to Jackson County,” said Timothy L. Campbell, president and CEO of Stonewall Packaging and Jackson Paper Manufacturing Co. “The venture, which allows us to expand and capitalize on the great work we’re already doing at Jackson Paper, is a reflection of our continued commitment to the region.”

Jackson Paper, which currently employs 119, produces 100-percent recycled paper used by independent box manufacturers.

Stonewall is purchasing and renovating the former Chasam Building on Old Scott’s Creek Road,, a 200,000-square-foot former sewing operation located approximately one-half mile from Jackson Paper, to house the cardboard sheet feeder operation. Production is expected to begin there in fall 2009.

In phase two, Stonewall will build a linerboard mill similar to the 139,000-square-foot Jackson Paper mill, including a wood-fired boiler.

Stonewall considered sites in North Carolina, South Carolina, Georgia and Tennessee before choosing the Sylva location for its new operation.

“We chose to build the plant in Sylva because of the infrastructure that is already in place at Jackson Paper and because of the highly skilled workforce and good business climate in the town of Sylva and Jackson County,” said Campbell.

The 61 new jobs will pay an average of $39,344 not including benefits. Jackson County’s average annual wage is $27,820. The company will advertise and hire for the new positions in late summer.

“With our nation facing the greatest economic crisis since the Great Depression, this project couldn’t happen at a better time for the citizens of this county,” said Brian McMahan, chairman of the Jackson County Board of Commissioners. “This expansion will provide much-needed jobs as well as boosting our local economy by providing opportunities for construction companies, retailers of building goods and supplies, and others. In the future, this project will add to the tax base of Jackson County, which will be a benefit to all the citizens of the county.”

Stonewall worked closely with the town of Sylva, Jackson County government, Southwestern Community College, the N.C. Rural Center, the N.C. Department of Transportation, the N.C. Department of Commerce and Duke Energy on the new venture.

“I’d like to thank Jackson Paper for being willing to make this happen for our community,” said Brenda Oliver, mayor of the Town of Sylva. “They already have been very good corporate partners, and I look forward to a great working relationship with them in the future.”

Today’s announcement is made possible in part by a $200,000 grant from the One North Carolina Fund, which provides financial assistance, through local governments, to attract business projects that will stimulate economic activity and create new jobs in the state.

“As global markets evolve, North Carolina’s manufacturing sector is keeping pace to take advantage of new opportunities,” said N.C. Governor Bev Perdue. “Companies like this one are investing in green-friendly products while continuing to enjoy our state’s top-rated business climate, skilled workforce and unparalleled quality of life.”

Established in 1995, Jackson Paper Manufacturing Co. is an independently-owned paper mill and is the largest producer of 100-percent recycled paper in the state of North Carolina.

“During these tough economic times, it’s critical to continue to make investments that will grow jobs in our state,” said state Sen. John Snow, D-Murphy.

“We must continue to build on our successful partnerships so that North Carolina will be well positioned when the nation’s economy turns around,” said state Rep. Phil Haire, D-Sylva.

Jackson Paper employee Tim Coggins Jr. has something a lot of people don’t have these days — job security.

Jackson Paper has not laid off any of its 120 employees and doesn’t plan to.

“That makes me feel excellent,” said Coggins, whose father also works at the plant. “Being a young father that’s really important.”

The Sylva company pays out $9 million in wages and benefits annually.

The plant produces corrugated medium — the middle layer of a cardboard box that gives it stability.

Jackson Paper is avoiding layoffs by keeping production costs low by burning wood shavings for fuel rather than coal or oil, said Vice President and Chief Financial Officer Jeffrey L. Murphy.

With 55 competitors across the country, Jackson Paper has the seventh lowest production cost.

Still the company saw a 20 percent drop in business in November, but rather than curtailing production and laying off employees, it expanded its customer base.

Murphy is not too optimistic about the stimulus package.

“We hope it works, but we’re not keeping our fingers crossed that it will help Jackson Paper,” Murphy said.

Waynesville manufacturer Associated Packaging also has not laid off any of its 150 employees. The company makes plastic packaging for the frozen food industry, like the trays microwaveable dinners come in.

Plant Manager Gerald Jensen said business is down a little but not substantially.

Jensen also has problems with the stimulus package. “My personal opinion, I don’t think much of it,” he said. “I don’t think it’s promoting growth. I think there’s a lot of pork spending. Basically it’s growing the federal government.”

There is not enough money in the stimulus package to turn things around quickly, said Tektone Sound & Design Vice President of Marketing Johnny Mira-Knippel.

Tektone, a Franklin company that manufactures nurse call systems for hospitals and assisted-living facilities, employs about 70.

If the stimulus package benefits health care, Tektone could see an increase in business.

“We are cautiously optimistic,” said Mira-Knippel, whose company has offered early retirement to some employees and temporarily laid off workers.

But in order for the stimulus package to be more effective it would require trillions of dollars, not $819 billion, which will only “soften the blow,” Mira-Knippel said.

By Sarah Kucharski • Staff Writer

Jackson Paper Engineer Chas Mathis strides confidently through the company’s used cardboard warehouse, up a steep metal grate, and up to the pulper. The machine churns like a giant blender as loads of cardboard boxes slowly move up the conveyor belt, and upon reaching its end drop down into the murky tank with a splash.

By Sarah Kucharski • Staff Writer

Images from Sylva-based photographer Matthew Turlington’s 1998 work “A Photographic Depiction of Jackson Paper Company” stand out on the company’s corporate office walls, lining the hallway with their stark black and white freeze frames of work in the mill.