The aftermath of the 2005 hurricane season has claimed another Gulf Coast plastics plant: custom film and bag maker Southern Film & Bag LLC of Summit, Miss.
The plant ceased production Dec. 15. The move affects 36 workers.
President Jack Riopelle said Southern Film faced a variety of challenges after it was forced to shut down for 13 days last year following Hurricane Katrina.
``Labor costs went up because a number of eligible or qualified potential employees went into the construction trades to be a part of the reconstruction efforts,'' Riopelle said.
``We [also] had employees leave the area because they didn't want to live in the area. The labor pool was smaller and labor rates went up, particularly for skilled and semi-skilled employees,'' he said.
The hurricane also delayed construction of a rail spur to the plant. Instead of being completed by fall 2005, the spur was not ready until June 2006. That meant Southern Bag had to pay an extra 2-4 cents per pound for resin, Riopelle said.
In addition, the custom poly bag and sheeting business nationwide has been dreadful, particularly in the South during the past four months, he said.
``I think an awful lot of end users built inventories through spring and early summer months in anticipation of a very active  hurricane season, and when hurricanes didn't come, end-use customers dramatically curtailed purchases and it had a huge impact on operating rates, particularly on plants in the South,'' Riopelle said.
``I've talked to many, many resin suppliers and other people who are vendors of one sort or the other. Our feeling is, that drop in demand may take a considerable amount of time before it recovers. We did not want to continue operations in an environment where competitive pricing was extraordinarily low and reflected competitors taking business at any price just to keep lines running.''
Southern Film & Bag is under the same ownership as Wisconsin Film & Bag Inc. of Shawano, Wis., and Riopelle is president of both companies.
Wisconsin Film continues to operate. Much of the equipment from Mississippi will move to Wisconsin. The 100,000-square-foot plant in Summit is for sale, Riopelle said.
The company is working with state and local agencies and private employers to place its workers.
``We do know that at least 16 of our employees have been offered employment,'' Riopelle said.
``I'm optimistic that our employees will find jobs. We have no plans to resume operations at Southern Film & Bag at this time. If unexpected market conditions change, I guess we'd take a look at it. We anticipate the market continuing to be soft for a number of months.''
Wisconsin Film & Bag bought the Summit plant from Desert Plastics LLC in early 2005.
Officials from the Mississippi Development Authority expressed surprise that Southern's business had been so impacted by the aftereffects of the hurricanes.
``The population has increased in Summit,'' Gray Swoope, MDA chief operating officer, said in a Dec. 14 telephone interview. ``We're seeing where people have pushed up from harm's way and we're seeing where business has increased in that part of the state. There's been a natural migration of people northbound.''
However, there is a short-term blip in the labor pool that companies will have to be patient with, Swoope said. The state lost 70,000 housing units, so manufacturers have had to compete with construction companies for labor.
``[In] the bottom six counties, 98 percent of the population is back where it was pre-Katrina,'' he said. ``I think those [companies] that stick with it ... will have a very loyal labor force because they know the employers stayed with them.''
He said companies interested in expanding in Mississippi are eligible for Gulf Opportunity Zone Incentives that include bonus depreciation and tax-exempt bond financing.