Historic Cheboygan mill faces lawsuit, uncertain future
It’s hard to miss the tall, brick smokestack of the historic paper mill in downtown Cheboygan. Visitors driving north will often pass underneath a part of the building that spans above M-27.
Seen from the banks of the Cheboygan River, much of the building is in disrepair. However, there was a time the mill employed hundreds of residents.
Now, the collective that oversees the mill’s operation is facing a lawsuit for allegedly neglecting payments on leased equipment.
Most recently, a temporary restraining order forcing the company to shut down its paper making equipment was approved by a federal judge in the U.S. District Court for the Eastern District of Michigan in Detroit.
Court records show rapid changes regarding the company's leadership and residents have expressed concerns about the facility’s future.
THROUGH THE YEARS
What started as a sawmill in the late 1800s was converted into a paper mill by W & A McArthur Lumber Company in the 1910s. The concentration of pine trees in Northern Michigan made the location ideal for the logging industry.
From there, the mill has had a long succession of owners including the Charmin Paper Co., which took ownership in the 1950s. When the company was bought by Procter and Gamble soon after, many residents said it kicked off a “golden age” for this small-but-growing community.
At one point, when the mill was owned by P&G and made Pampers diapers, it employed over 300 people.
But in 1990, P&G sold the facility for economic reasons and took much of the workforce with it. Many mill workers would move to places like New Jersey, Cincinnati, and Green Bay.
And the effects of P&G’s move are still felt today.
“When Procter and Gamble was here we had four elementary schools and one of them even had portable classrooms and the graduating classes were close to 200 [students],” said Kay Forster of the Cheboygan History Center. “Now we have one elementary school. … We lost a lot of people, a lot of families, you know, there's a lot of impact.”
In 1993, an investor group bought the mill in an $8 million deal. The new company, called the Great Lakes Tissue Co., was created by former P&G executive Clarence Roznowski, and a North Carolina paper company owner.
According to Forster the facility has held the GTLC name since the turn of the century but has had trouble capturing the success of former owners.
“I think people want to see it restored to resemble its former heyday when it was fully functioning and employed,” she said. “Right now, I think everyone is discouraged by how it looks.”
In recent years, ownership in the mill has changed hands multiple times.
In spring of 2022, Roznowski retired from his position as president of GTLC. Kip Boie formed an investment group called the Great Lakes Tissue Group to purchase the mill.
He made big promises at the time, telling the Cheboygan Daily Tribune the goal of the purchase was to create more jobs while retaining leadership, generate more profit and leverage the legacy of previous owners.
But for the second time in less than a year, ownership changed hands again.
In January, a new investment group called Patriot Advanced Environmental Technologies LLC finalized the purchase of the tissue manufacturing facility, all associated operations, properties and an adjacent warehouse building.
But that change in ownership wasn’t without its problems. The equipment in the building is leased, and the creditors behind that lease say the paper mill, now called Tissue Depot, allegedly owes them money.
Prime Bank Alliance in Utah and Sertant Capital, an equipment finance company based out of California, say in federal court that the owners of the factory missed two monthly payments of $68,082.
With other fees included, the suit claims the factory owners owe more than $2 million for leased equipment.
Prime Bank Alliance and Sertant Capital also said in court records that the change in ownership from Boie’s investment group to Patriot Advanced Environmental Technologies was a breach of the lease.
GTLC entered the lease agreement with Sertant back in October, according to the Verified Complaint for Claim and Delivery and for Damages.
The equipment leased included things like welding gear, sanding machines, saws and drills as well as specialty equipment like a bathroom tissue rewinder and napkin folders.
Many of the tissue and towel products from GTLC are made from recycled material. The facility gets some power from hydroelectric generators thanks to its position on the Cheboygan River.
In its response to Sertant’s complaint, the Tissue Depot’s defense denies “that Sertant was ever the owner of the equipment,” along with all other allegations.
The restraining order lasts until June 12 when the parties will meet to discuss next steps.
IPR News reached out to both parties in the lawsuit but has not received a response.
HOPE FOR IMPROVEMENT
Coming south on M-27, the mill appears under construction after the north end of the building collapsed in November, due to weather conditions. Forster said news of the lawsuit has been discouraging to the community.
“If it can be saved it will take a lot of money just to make it look aesthetically pleasing," she said. "Because right now it’s just an eyesore.”
While the mill has historically been a huge employer, Cheboygan has seen improvements in other areas in recent years.
As part of the Michigan Main Street Program, the city has received assistance from the Michigan Economic Development Corporation with a focus on revitalization strategies. MEDC Match on Main grants have already helped finance a handful of businesses in Cheboygan and around Northern Michigan.
Jim Conboy, who’s lived in the community since the 1970s, said he’s been encouraged by new businesses opening downtown following pandemic relief dollars and grant opportunities.
“You're going to have the doomsayers, but I think if they give it some time, the progress will continue,” he said. “I think there's a lot of demand right now for employment in the area.”
“In the overall picture of what's going on in Cheboygan, I don't think (whatever is happening with the paper mill) is going to really stall us in terms of the future.”