Escanaba, promised a $1B investment, carries on despite project cancellation

Michigan state government gives large subsidies to select corporations in the hope of creating new jobs — $4.4 billion in 2023 alone — but in the case of a paper mill in Escanaba, big promises led to a bigger disappointment for local residents.

“Today’s approvals will help us continue to grow our economy and compete for every good-paying job,” Gov. Gretchen Whitmer said in December 2022, as the Michigan Economic Development Corporation announced plans to award $29.4 million in public money to Swedish paper producer Billerud for an Escanaba mill.

The governor signed legislation the following month that allocated a total of $200 million to the paper project. The development corporation expected the subsidy “to generate a total capital investment of approximately $1 billion and retain at least 1,240 well-paying jobs.”

Less than a year later, Whitmer touted a smaller number.

“We’re transforming Escanaba’s Billerud Mill, supporting 800 good-paying jobs at the facility, and hundreds more during construction,” she told a local crowd in August 2023, according to the Upper Peninsula’s Radio Results Network.

In May 2024, however, Billerud said it would cancel the project.

It was a discouraging end for a deal the Michigan Economic Development Corporation had called a “historic investment” that “will help ensure continued prosperity for generations to come.”

“Such a project represented not just economic security, but also was leading a vision for future growth,” James McNeil, Escanaba’s city manager, told Michigan Capitol Confidential. He noted that members of the community made important personal and financial decisions in anticipation of the development.

News of the cancellation has prompted a renewed local focus on economic diversification, McNeil said, adding that the community hopes to get the MEDC’s help on other projects.

These efforts show that the community is determined to thrive and adapt, McNeil told CapCon.

“Despite this setback, it’s heartening to see ongoing generational investments in housing, downtown development, and public infrastructure,” he said.

Escanaba could have used the business. It is in Delta County, which had a poverty rate of 12.5% in 2023, according to the U.S. Census Bureau, and its median household income is almost $15,000 lower than the state median.

Another local official said the deal offered residents a cause for optimism.

“Through a number of owners, the paper mill has supported generations of workers and families across our region, drawing from several counties across the central Upper Peninsula,” Ronald Beauchamp, a member of Escanaba’s city council, told CapCon. The mill remains a strong community asset, he said. Beauchamp hopes for growth in the future, but he told CapCon he never gets his hopes up when investment news comes out.

Quintin Messer, chief executive officer of the MEDC, did not respond to a request for comment.

Between 1995 and 2012, only 2.3% of companies that were subsidized by the state’s main jobs program met their jobs target, James Hohman, fiscal policy director at the Mackinac Center for Public Policy wrote in a Detroit News op-ed.

Only one company created jobs through Good Jobs for Michigan, another government program that ran from 2017 through 2020, Hohman added.

Republican Rep. David Prestin, who represents Escanaba in the Michigan House, did not respond to an email seeking comment.