Editorial - After First Urban's fall

August 11, 1997

While some Hagerstonians cheer the shutdown of the First Urban Fiber plant they blamed for noise and odor pollution, others must be distressed by the woes that have beset the enterprise former mayor Steve Sager called "the project of a generation."

First Urban came to Hagerstown when officials sought a buyer for the old Municipal Light Plant, shut down because it was cheaper to buy power wholesale from Allegheny Power.

As planned, the project would have refired the light plant to produce steam to blast the ink out of used office paper, producing pulp for recycled paper. But that process proved difficult to perfect, and developers switched to one using detergent instead.

Project costs grew from an estimated $40 million in February 1992 to $102 million in January 1993, but the company announced it had signed a 20-year contract with an unnamed firm to buy all of its recycled pulp. By March 1993, estimated costs had risen to $160 million.


At that point, city officials were still optimistic that the plant would create 120 jobs. In October 1993 President Clinton lent a hand with an executive order mandating greater use of recycled paper by federal agencies.

So confident were the plant's developers that on October 27, 1994, they took out four full-page newspaper ads to announce that their plant would open in 18 months and create 90 jobs.

What no one had predicted was a steep drop in pulp prices, from $800 to $300 a ton. The plant was shut down this past April, due to the price drop and because officials needed to revamp some of the machinery.

Then prices began to rebound, and the plant was scheduled to restart in 1998. But bondholders, on the hook for $160 million, weren't willing to wait. They seized control, laid off the last 53 workers and will presumably sell the plant.

What's next? We recommend the city government get actively involved in helping to market the property, and not only because it's owed $1.8 million for an electric substation. The area still needs what drew city officials' support for the project in the first place - good-paying manufacturing jobs.

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