Recycling mill - test case for Dukakis

A skeleton in the closet of Gov. Michael Dukakis's ``Massachusetts miracle'' is the decline of industrial jobs in the state. While the state's service and high-technology sectors have boomed, Massachusetts has been losing industrial jobs at the second highest rate in the United States - 11.2 percent since 1984.

Fairly or not, Republicans are likely to raise this statistic if Dukakis is the Democratic presidential nominee this fall. But an old paper mill in the Hyde Park section of Boston could help save Dukakis some explaining.

It is the oldest such mill in the US. After years of stable ownership, it was sold to an absentee corporation in the 1950s. The current owner, the James River Company of Richmond, Va., closed the mill last December.

But a California company called Conservatree proposes making the Hyde Park mill a showcase of late 20th-century enterprise. It wants to produce recycled paper, with state-of-the-art environmental protection, and to give employees a share of the ownership.

The proposal would preserve about 200 industrial jobs - the type Massachusetts has been losing - and help solve Boston's burgeoning trash crisis to boot.

It would also showcase Dukakis's support of advance notice to workers of plant closings, a point at issue in the pending trade bill and another likely campaign issue this fall. Workers at Hyde Park got six months' notice, which was crucial to the effort to save the mill.

``We wouldn't be able to make this offer today if we didn't get that notice,'' says Ron Carver, an organizer with the United Paperworkers' Union.

Support for the recycling mill is diverse, ranging from environmental groups and unions to the Boston Chamber of Commerce. Pat Flanagan of Drexel Burnham, which wants to help finance the deal, calls the Conservatree proposal ``very viable.''

Still, the proposal has languished for months, for reasons neither James River nor the Dukakis administration has explained. ``It seems as if it's gotten to a dead end,'' says an aide to State Rep. Angelo M. Scaccia, who represents the district in which the mill is located.

Now, the Paperworkers are turning up the heat. An ad urging the sale is appearing today in a Richmond, Va., newspaper, signed by Boston notables ranging from Mayor Raymond Flynn to Bill Walton of the Boston Celtics. Says Mr. Carver, ``We are not going to go away.''

The proposal for a recycling mill comes at an opportune time. Trash disposal fees in Boston are among the highest in the country, and the word ``incinerator'' is about as popular in the local political lexicon as is the phrase ``nuclear waste dump.''

The state has made a major commitment - on paper at least - to recycling. But a fundamental weakness in such efforts has been a lack of markets for scrap.

Patrick Scanlon of North Shore Recycled Fibers in Salem, Mass., the largest recycler of waste paper in New England, says half of its paper goes to Japan and other Far Eastern countries, from whence Americans buy it back in the form of boxes for Sony televisions.

A paper mill providing a local market for scrap paper would keep those jobs in New England, and boost recycling, Mr. Scanlon says. He adds that California may move into the Far East market, causing Massachusetts scrap exports to ``dry up.''

``We need new domestic consumption capacity,'' Scanlon says.

The mill would also provide a much-needed industrial adjunct to the state's service and high-tech economy. ``The whole Boston scenario is a service scenario, which means paper,'' says the custodial director for a major downtown employer, who has started a recycling program. ``Japan is taking [our] jobs.''

Union and Boston city officials don't necessarily support Conservatree over other potential buyers. But both are clearly enthusiastic. The nearest mill making recycled writing paper is in Ohio, and the market is growing as more states give preference to such paper. ``The mill could supply the entire New England region,'' says Rob Bauman, an aide to Boston Mayor Raymond Flynn.

Alan Davis, Conservatree's owner, is a San Francisco philanthropist who got into the recycled paper business in the mid-1970s to advance environmental goals through private enterprise. He has built Conservatree into the leading US distributor of recycled printing and writing paper.

Basically, Mr. Davis says he needs a loan guarantee of $4.5 million, which would enable Conservatree to get a $15.5 million bank loan. He says the state would save almost that much a year on waste-disposal costs.

There are numerous theories as to why such an attractive proposal has met such hard going. State officials contend that Davis's early business plans were inadequate. (He counters that the state provided little guidance.) Drexel Burnham's Flanagan says the experience provides some insights into how the Dukakis administration works - not by masterminding deals as much as establishing a playing field and then choosing the winners. ``They leave them all in a pot, and when one pops up and says, `I'm real,' they pay attention,'' Flanagan says.

There's a feeling in some quarters, however, that the stalemate also illustrates the loss of John Sasso, Dukakis's former righthand man, who translated policy goals into savvy inside politics. ``Sasso would have said, `Let's roll it and see what comes up,''' said one official close to the negotiations.

A spokeswoman for James River says talks are proceeding with ``several companies'' and that the company is ``interested in selling as quickly as possible.

``This doesn't have to be like other plant closings,'' says the Paperworkers' Carver. ``This can be a viable business. If it doesn't happen, it means we all didn't work hard enough.''