Community: City of Oroville & Graphic Packaging International, Inc.

Population: 15,566 (2012)

Summary

Graphic Packaging International, Inc. (GPII) is a leading manufacturer of paperboard and folding cartons serving the food and beverage markets. GPII has one recycled paperboard mill and two folding carton manufacturing plants in California. The company’s operations are responsible for diverting approximately 140,000 tons of recyclable materials from California landfills. GPII has been working with the City of Oroville and the Federal Aviation Administration since 2012 on a potential expansion of their facility located next to the Oroville airport. The process has been long, but recent incentives from the California Governor’s Office of Business and Economic Development (GoBiz) have helped to convince them that the wait has been worthwhile.  

Program Highlights

• Graphic Packaging International, Inc. (GPII), an international manufacturer of paperboard products with approximately 30 percent of the U.S. paper folding carton market, is the largest manufacturer of recycled paperboard. The company’s recycled folding cartons are primarily used for food and beverage products.
• GPII operates three manufacturing plants in California: A mill in Santa Clara (built in 1957, which currently employs 150 residents), and processing facilities in Irvine (1971; 200 employees) and Oroville (1995; 240 employees).
• In California, GPII’s operations form a continuous loop. Recycled paper and paperboard (also called recovered fiber) is collected from approximately a 200-mile area around Santa Clara. The recovered fiber is taken apart and manufactured into 100% recycled paperboard. The paperboard is sent to Irvine and Oroville to be processed into folding cartons, which are used by local beer and tissue manufacturers in California. When these paperboard cartons are recycled there is a possibility that it will return to the Santa Clara mill where the material will again be re-processed into paperboard and ultimately paperboard cartons.
• The company, looking to expand and center its west coast operations in California, has been working with the City of Oroville and the Federal Aviation Authority (FAA) since 2012 to purchase land to expand the capacity of its current plant.
• Mayoral support for the project has helped facilitate meetings between various partners and maintain momentum.

Lessons Learned

• Many small cities and counties in California have small municipal airports. Land adjacent to these airports can be good sites for manufacturers, but early work needs to be done with the FAA to make it attractive to businesses – either by releasing the land for sale or developing it as commercial or industrial space.
• A city or county should scan its community assets and work with relevant parties to make sure an asset is ready for business use. Businesses usually decide on an expansion six to twelve months before they want to be fully operational, so early work on available land (adjacent to airport or otherwise) can make your community more competitive. 
• Community assets can also include professional expertise. Given the new reality of smaller budgets and limited staff, look to your community for professionals and existing companies who can help fill in the gaps (ex. Small Business Development Corporations, Economic Development departments, Governor’s Office of Business Economic Development permits staff, and Recycling Market Development Zone Administrators).
• Do not underestimate the value of a face-to-face meeting to work on past preconceived opinions and to get partners to communicate. Having the support of the mayor or an elected official for a project can be key to jump-starting collaboration. 
• For a private business, it may be important to have a contact in the local community to help manage an expansion and work with a local agency counterpart, as land acquisition is not always straightforward or quick. Local contacts might include Economic Development staff, Small Business Development Corporations, and/or Recycling Market Development Zone Administrators.
• New efforts from the California Governor’s Office of Business and Economic Development (GoBiz) – for example the California Competes Tax Credit – have been awarded across a variety of manufacturing activities, and can be an important incentive for manufacturers. Tax credits such as these, and sales tax exemptions on equipment help California and local communities to compete with other states. Pacific Gas & Electric’s new economic development rate also helps bring power costs in line with other states (see “The Rest of the Story…” below for more details).

Resources to Learn More

• CalRecycle Business Portal
• Graphic Packaging International, Inc. Sustainability Vision 2016
• Graphic Packaging International, Inc. Sustainability page
• City of Oroville Recycling Market Development Zone information (Additional information on CalRecycle’s website)
• GoBiz- California Competes Tax Credit
• Chabin Concepts Press Release- GPI Tax Credit: GPI receives $1.15M tax credit with Chabin assist
• GoBiz Press Release- California Competes Committee Approves $28.9 Million in Tax Credits for Companies Adding Jobs in California
• Final List of Awardees for the Inaugural California Competes Tax Credit (PDF)
• PG&E Economic Development Rate Fact Sheet (PDF) 

The Rest of the Story…

About Graphic Packaging International, Inc.

Graphic Packaging International, Inc. (GPII) is an international corporation with approximately 12,300 employees worldwide. The company makes 30 percent of the folding cartons in the United States and is the leading manufacturer of recycled paperboard. With a focus on food and beverage markets, consumers interact with the GPII’s products almost every day.

Graphic Packaging International, Inc. operates three manufacturing plants in California: in Santa Clara, Irvine and Oroville. The paperboard mill based in Santa Clara accepts recycled paper and paperboard collected from communities within approximately a 200-mile radius of the city. The Santa Clara mill processes the recycled paper and paperboard to make 100 percent recycled paperboard. The 100 percent recycled paperboard is sent to the folding carton manufacturing plants in Irvine and Oroville, where it is converted into cartons for beer, tissue and food products. 

This process forms a continuous loop. These cartons, when sold in California and also recycled in California, comprise some of the recovered material that returns to the Santa Clara mill. Additionally, any waste-fiber that is not used in the Oroville and Irvine facilities gets re-bundled and sent back to Santa Clara to be used. The company’s operations are responsible for diverting approximately 140,000 tons of recyclable materials from California landfills.

Expanding Operations

Graphic Packaging International, Inc. is considering centering its west coast operations in California. In order to support increased operations, the Oroville processing plant needs to be expanded. GPII acquired the Oroville manufacturing facility, a 100,000 square foot building, from Sierra Pacific Packaging in 2011. The facility is located near the local municipal airport, in an area referred to as “outside the fence,” on six acres of industrial-zoned land controlled by the FAA. The City of Oroville is the “airport sponsor,” the public agency authorized to own and operate an airport. An airport sponsor has specific rights and responsibilities, but must seek approval from the FAA for certain activities. Graphic Packaging International, Inc. owns the building and leases the ground from the city via a long-term agreement. 

Since 2012, GPII and the City of Oroville have been working to gain approval from the FAA to release the existing six acres and an additional 13 acres. The city needs approval in order to sell or lease the property for GPII to expand the facility by 200,000 square feet. Because companies typically like to move quickly on expansions, particularly expansions that require construction, waiting several years for the FAA to release the land is a challenge.

To help accelerate the process with the FAA, and to investigate options outside of California, GPII hired a California-based economic development consultant. The City of Oroville, the consultant and GPII have been working together to get the property released for sale or lease.  This coordination has resulted in progress. The FAA has released the land under the existing building so the city can sell the land to the company, but has not made a final decision/approval to allow a lease of the expansion land. As the expansion requires 200,000 square feet and a significantly large monetary investment, the company would prefer to own the land versus having a long-term lease. Coordination between the three parties continues. 

In many small cities and counties that have small airports, surplus land connected with the airport often comprises most or all of the land a city or county can market for industrial uses.  Oroville has been very supportive of GPII’s expansion by processing all of the paperwork to make an application to the FAA. For the City of Oroville, being able to use and market the fully improved land at the airport provides an important economic opportunity. Given the extensive time to get releases approved, further work must be done to make the airport a long-term economic development tool.

As a small city an important economic development tool is to recognize the potential to develop unused airport land for commercial purposes and start working with the FAA long before a company is even interested in the site. Small municipalities do have some flexibility over FAA land as the airport sponsor.

Oroville was formerly located in a now-dissolved enterprise zone and is currently in a Recycling Market Development Zone (RMDZ). Designated enterprise zones provided tax incentives to businesses to encourage investment and job-creation to economically distressed areas in California. With the repeal of the Enterprise Zone Act and the dissolution of enterprise zones by the end of 2014, out-of-state locations became more attractive. In order to help level the playing field among locations in California, Nevada and Oregon, the consultant helped GPII apply for the new California Competes Tax Credit. The company was awarded the California Competes Tax Credit in June 2014. Additionally, to help keep companies in California, the Public Utilities Commission approved an economic development rate for power purchases by qualifying facilities – a 30 percent reduction in electricity rates over the next five years. The tax credit and the economic development rate have helped persuade GPII that staying in Oroville may be worth the wait.  

If GPII still decides to move operations, the City of Oroville knows it will not be for lack of effort. “The Mayor of Oroville, Linda Dahlmeier, became the champion for the city in moving the project forward and keeping it as a priority with the FAA. Without her, the project could still be in the pipeline instead of at the end of the pipeline,” says Audrey Taylor of Chabin Concepts, the economic development consultant for the project. With budget cuts and staff layoffs, efforts to work with GPII and the FAA had stalled at the city. When the mayor realized that there was a gap, she stepped in to fill it by personally calling meetings with the various parties to see what each needed to reopen the lines for communication. She also met with GPII’s consultant and credits continued success to the forming of that public-private partnership. The consultant has continued to work on the project as an interested community member.

Especially for small cities, find that [consultant]; find the few key employers that are already in your community and ask for their help. Consider forming a volunteer economic development group with economic development professionals. [In today’s reality], your community has to pick up the slack. – Mayor Dahlmeier

Why It Matters and Other Projects

Retaining and expanding GPII’s role in Oroville not only affects employment in Oroville and surrounding areas in Butte County, but is closely tied to employment in Santa Clara and Irvine.  The paper mill and processing plants also have a significant impact on California’s overall waste diversion rate, as approximately 140,000 tons of recovered paper fiber is diverted from landfills (0.5% of all waste diverted in California). Increasing operations in Oroville, coupled with new equipment investments in Santa Clara (described below) will increase the amount of recycled materials GPII can process. These investments will keep manufacturing jobs in the state and help California reach its goal of increasing recycling and composting and reducing solid waste 75 percent by 2020.   

Graphic Packaging International, Inc. uses recycled materials in its products for many reasons.  “We really think it is the right thing to do. You can recycle and reuse fiber a lot of times rather than allowing it to break down in a landfill and produce methane gas, a greenhouse gas that is more powerful than carbon dioxide,” say Andy Johnson, the company’s Vice President of Government Affairs and Sustainability. “It’s a strong focus of Graphic Packaging International to not only provide jobs and customer service, but to do it in a way that keeps our communities in mind.” With a company-wide goal to increase the recovery of paperboard by 70 percent by 2020, the company recently invested in advanced filtering technology at its Santa Clara mill to allow for capture of almost 100 percent of the fiber.

Think of a big blender. Put in paper, add water and blend. The blending action helps break down the paper, and water helps separate the fibers. All you have left in the end is the fiber, which comes out and makes a sheet. This is how pulping works. Each time paper goes through the process the amount of paper pulp gets smaller. With the new technology, none of the paper fiber goes to the landfill; only glue, plastic and other byproducts that are on the recycled material when it comes into the plant. The mill is working with a waste-to-energy facility to see if these additional by-products can be used to make energy, which would make the Santa Clara mill a zero-waste plant. 

This new advanced filtering technology is a good thing for California’s communities, for the environment and for business.