The following is a speech delivered by Greg Van Voorhis, manager of International Paper Louisiana Mill, Bastrop, Louisiana, at Forestry/Paper Products Summit on March 22, 2005.

• Monroe, Louisiana

Imagine how excited economic developers would be if they got word of a business that provided 850 high paying jobs. And what about an annual payroll of nearly $60 million dollars?

This business would surely be the largest taxpayer in the parish, paying more than $11 million in state and local taxes every year.

Purchases in a two-parish area alone would top $20 million. The facility would also provide for nearly 500 associated jobs for area residents in transportation and harvesting alone.

Employees of this business would be active in almost every aspect of the community, from coaching Little League to singing in the church choir. Collectively, the group would give an average of $150,000 a year to the local United Way.

Conservative estimates of the total local economic impact of that operation would be well over 3,000 jobs and $250 million annually. That doesn't even include statewide purchases of $110 million for wood fiber, raw materials and chemicals and $30 million annually for energy to sustain the operation.

Wow! That would have economic development experts, local and area elected officials and the general public jumping through hoops to see what they could do to land such a prize.

But what if that business is one that already exists? It may be appreciated, but for some reason it doesn't generate as much excitement, or the need for urgency when help is needed. I don't know of such a new business looking to locate in our area. But I do know of one that already exists. The facts above are about International Paper's Louisiana Mill in Bastrop. The employees, the payroll, the taxes, the purchases, the community involvement.

We have a focus at the Louisiana Mill that we strive to meet in everything we do. It is, "You can rely on the Louisiana Mill" We want our corporation to rely on us to make a profit.

We want our customers to rely on us to make great products at a reasonable cost. We want our employees to rely on us as a source of employment And we want our community to rely on us to be good neighbors.

Can you imagine what would happen to our community if we lost that? That is why we are working as hard as we can every day to see that we do everything we can to make sure that doesn't happen. The same is true of Stone in Jonesboro-Hodge or the Pineville mill or Graphic Packaging any other forest products facility in the state. But right now we need help. Our industry needs help not just words or meetings, but action. And we must have a sense of urgency.

The economic environment for the forest products industry in the United States is not good. We see most of the growth overseas and in the Pacific Rim. It isn't domestic growth. We have excess capacity and basically it is coming down to the survival of the fittest in the U.S.

To be among the most fit, we have to get every advantage in Louisiana that we can. Our corporations are only going to invest and look at long term strategies in states where the benefits are the best. That's part of the big picture: The business incentives. The tax structure. The forward-thinking plans of state government. Infrastructure. General business environment.

In Louisiana, we do not have a level playing field. The governor called me personally not too long ago and asked how she could help. I have told her these things and have also passed it along to anyone else that would listen. Our local legislators have heard it. I met with Commissioner of Administration Jerry Luke LeBlanc and he's heard it. Last week, we gave U.S. Representative Bobby Jindal the same information at the Bastrop Chamber of Commerce banquet.

I'll say it again here today.

No.1 -Energy tax relief

Energy prices are soaring with no relief in site. In times past, our cost of energy was reasonable, but with oil and gas prices at record highs, energy has become our second highest component when manufacturing paper, only behind the trees we utilize in our processes. Single-handedly, energy prices can now become the determining factor as to whether or not a facility is profitable or not.

And then there are the taxes that follow. In Louisiana, we tax every dollar industry spends on energy at a state tax rate of 3.8%. This puts the forest products industry and other manufacturers at a competitive disadvantage in the global marketplace. Our neighbor Texas, has no energy tax. Mississippi has a 1.5% energy tax rate.

Arkansas recently passed legislation through their House of Representatives to completely phase out the energy tax for Forest Products Manufacturers.

Our jobs are really good jobs. We are a mature industry that pays better than most other manufacturers in the US and if we are going to keep these jobs and get the continued investment, we are going to have to change the way we tax our businesses. Removing this tax needs to be a top priority for the State. It is for us.

No.2 Resolving tax issues with the Louisiana Department of Revenue

Our process is very complex and what should or should not be taxed is becoming more difficult to understand with the interpretations we often get from the Department. They have an important role to play, but oftentimes their attitude toward the taxpayers is, should I say, taxing! When we have taxes due we pay them. When the DOR disagrees with us in audit, they expect us to pay immediately and we do. But when we pay taxes under protest, and win in court, the state appeals and we never seem to find resolution.

To put this in perspective, remember that International Paper is the largest paper company in the world. Here's a fact: our company has more on-going tax cases with the State of Louisiana than in all other States where we do business, combined. This is wrong and it sends an unfriendly message to those thinking of investing in the State.

3. Fair share of the tax burden

Louisiana business paid $7.35 billion taxes in 2003. That represents 58% of all state and local taxes. The U.S. average is 42%. There are only four other states that have higher tax burdens on business than Louisiana.

Sales taxes are overwhelmingly unfavorable to business. Louisiana businesses pay a higher share of sales taxes than any other state.

In the state of Louisiana, businesses pay almost 70% of sales taxes. That compares to Mississippi--less than 40% and Texas, about 48%. The U.S. average is just over 40%. Again, in Louisiana, it's 70%. It makes you wonder if we shouldn't say "Louisiana is open for taxing business."

There are other issues as well, but these are the major ones and ones that we can, and must, address with a sense of urgency. I am not doing this to point fingers. The past is behind us, but we do have a choice in the future. Resolving the issues I have spoken of is up to our state leaders. They must be willing to make the tough decisions that will help our industry. We've got to level the playing field if we are going to stay in the game.

Randy Bowen showed a map here earlier. I do want to say here that the PPRC does a remarkable job of trying to protect the jobs of paper and forest products workers. We have the same goal in that respect--we don't want to see any more dots on that map in Louisiana. To keep that from happening, we've got to work together and make progress now.

Back