The old adage, “The smell of the mill is the smell of money,” appears to hold true, according to an economic impact study released today that details the Port Townsend Paper Company’s (PTPC) economic impact on Port Townsend and Jefferson County. 

Mill executives anticipate the report will inform discussions as they and city leaders evaluate the current rate model. It sets the rate per 1,000 gallons that the city and the mill pay, currently set at $1.20. The Leader estimates that PTPC pays about $4.7 million, based on its current usage. 

“The water supply agreement specifies that we update the rate model every five years,”Mauro said. “Working together with the mill, we will evaluate the OGWS Fund (the balance, revenue and expenses for the proceeding five-year period,) as well as a projection for operations and maintenance costs and investment into capital needs during that subsequent twenty-year period.” OGWS stands for Olympic Gravity Water System.

Mauro said the current agreement was adopted in 2021, and “we anticipate updating the rate model at that five-year period by the end of 2026.”  

According to a white paper published by the city in 2021, “Like the development of the Olympic Gravity Water System in the late 1920’s, the development of an agreement between the [city and PTPC] is a significant undertaking with the stakes being high for both parties. As such, the negotiation of a mutually beneficial agreement warrants thoughtful collaboration based on the best data possible.”

According to the study to be officially released June 11, “The company (the mill) employs nearly 100 Port Townsend residents and more than 300 Jefferson County residents, company-wide, with an average annual salary of $92,600. This figure is significantly higher than Jefferson County’s median household income of $64,800.” 

The mill also provides, “40% of all manufacturing jobs in the region, offering crucial career opportunities amid declining manufacturing employment of over 7% since 2019,”according to the study.

The mill hired Philadelphia-based Econsult Solutions, Inc. (ESI), a consultancy focused on economics, planning, and public policy to complete the study. Its clients include government and quasi-government organizations, the private sector, economic development agencies, and community-serving organizations across over thirty states. Their work has included analyses for the University of Notre Dame, Carnegie Mellon University, The Pew Charitable Trusts, and the Children’s Hospital of Philadelphia.

Mill executives say the mill as employment anchor has become increasingly vital given Port Townsend’s working-age population is projected to decline by 1.8% over the next five years while the retirement-age population is expected to grow by 7.3%. 

The mill’s economic impact extends beyond direct employment through an extensive supply chain network, with over $100 million in annual expenditures circulating throughout Washington State’s economy, according to the study.

“This study confirms that [the mill] is not only the economic engine of Port Townsend and Jefferson County, but its success and longevity is absolutely vital to our region,” said Rob Kreizenbeck, chief executive officer of Crown Paper Group, which owns and operates PTPC. “In just the last few years, when many paper companies have struggled to survive and been forced to close their doors, we’ve doubled down on our commitment to Port Townsend and Jefferson County. We have invested well over $80 million in private sector dollars since acquiring the company just a few years ago and, as this new study shows, the direct and indirect impact on families, businesses and the broader community from that investment is enormous.” 

While the report underscores the mill’s postive economic impact on the city, county and region, it also forecasts a bleak economic future should the mill close. 

“Should PTPC cease operations permanently due to rising water utility costs (which have increased by 4,400% since 2020), the economic consequences to the entirety of Jefferson County would be severe,”the report states. “The immediate loss of 310 direct jobs in

the county would result in a total loss of 434 jobs — including direct, indirect, and induced positions — along with $46 million in lost employee compensation. This employment contraction would likely trigger housing market depreciation as displaced workers relocate, declining school enrollment, reduced property tax assessments, and diminished consumer spending at local businesses. Restaurants, retail stores, and service providers would experience immediate revenue declines, with businesses heavily dependent on mill employees potentially facing closure.

The study’s key findings include: 

The mill’s annual operations generate:

•  $14 million in total economic output within Port Townsend, supporting 160 jobs and more than $12 million in employee wages and benefits. The mill sits just outside the town of Port Townsend; therefore, no direct economic impact is experienced there. However, indirect and induced impacts produce millions of dollars annually in economic gain for the city. 

• $319 million in total economic output within Jefferson County, supporting 434 jobs and

more than $46 million in employee wages and benefits.

• $452 million in total economic output across the State of Washington, supporting 878 jobs

and more than $88 million in employee compensation. 

While the Econsult Solutions report focuses on the mill’s economic benefits, 

environmentalists and health activists say the mill has had a negative effect on Admiralty

Bay and local air quality.

The mill has been in continuous operation since 1927. PTPC produces sustainable Kraft pulp, Kraft Paper, containerboard, and specialty products by blending virgin and recycled fibers.