A new chapter opens for Melching Incs demolition and dismantling

February 5, 2012
| By Pete Daly |
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Melching Inc.’s acquisition in August of the historic 119-acre paper mill complex on Muskegon Lake is a new chapter for the 26-year-old demolition/dismantling company in Nunica. Although the company is only about a 15-minute drive east from what is now referred to as the Sappi mill, the project has given Melching a much higher profile throughout the region.

When Sappi Fine Paper North America, a division of a South Africa global corporation, announced the sale of the property last summer, its paper production had already stopped permanently two years previously in 2009, due to the decline in the world economy and the fine paper market in particular.

According to the S.D. Warren Employee Mutual Benefit Association, the first paper production began there in 1900 by the Central Paper Co. By the 1950s, the mill was expanding into production of high-quality coated paper for advertising brochures, annual reports and similar high-end publications. It was bought out by the S.D. Warren Co. in 1953, when it had about 700 employees, and in 1967 became a subsidiary of Scott Paper. By 1983, more than 1,000 people were employed at the plant, which paid $1.3 million in local property taxes and was one of Muskegon’s key employers for generations.

The mill site, which includes more than 4,000 feet of shoreline on Muskegon Lake, was a major polluter of the lake until the early 1970s, when it became the largest customer of the new Muskegon County wastewater treatment facility several miles east of the city.

In 1994, Sappi bought the mill and the employee roster for the next 10 years was approximately 700, but foreign paper mills were taking U.S. market share. When work at Sappi was halted in early 2009, it meant the loss of the remaining 190 production jobs.

Doug Melching’s purchase of the property last summer, reportedly for $2.3 million, triggered wide discussion throughout the Muskegon area regarding re-use of the site, particularly in regard to business enterprises that would add sorely needed jobs to the Muskegon economy. Most recently, the mill property was mentioned as a possible site for a Michigan Energy & Technology Center proposed by the Michigan Wind Energy Consortium, a group led by Grand Rapids logistics company Rockford Bergé and L-3 Combat Propulsion Systems, a Muskegon plant that has produced engines and vehicle suspensions for armored military vehicles since World War II and was long-known as Continental Motors.

Doug Melching, president of Melching Inc., told the Business Journal late last November that he was open to ideas for helping or providing facilities for the future of wind energy development in West Michigan. However, he added that he was “actively seeking more immediate development opportunities with other industrially based companies needing deep water dock access and manufacturing/warehouse space.”

By that point, Melching said, he was in the process of dismantling the obsolete paper-production infrastructure “and upgrading or maintaining the remaining 40 megawatt powerhouse and 300,000-square-foot warehouse.”

“At the same time, we are in the process of developing the 4,000-plus feet of shoreline to improve ship access and future commercial marine vessel repairs,” added Melching in his e-mail to the Business Journal. He said development of the site will take several years to complete.

“Our efforts will be focused on development of Muskegon industry and job creation,” he concluded.

Ken Callow, who was employed at the Sappi mill for 29 years, is now employed by Melching as its Sappi project engineer. He said the project entails separately selling the power plant and the former paper sheeting facility, which is the warehouse Melching referred to above.

Callow said the 300,000-square-foot building, which no longer contains any of the paper-cutting equipment, would make “a pretty nice warehouse or light industrial facility.

“The rest of the buildings are coming down,” he said, which includes empty buildings that had housed two huge paper-making machines.

“The vision is, we’re creating an industrial park — a business park — here and we’re looking for” business developers interested in parcels ranging from 10 or 15 acres up to 80 acres, according to Callow.

Callow noted that Sappi’s terms of sale and deed to Melching stipulate that the property can only be used for industrial purposes.

That stipulation by Sappi might possibly be intended to protect Sappi in the event subsurface contamination is discovered in the future, which would entail a major legal liability if the property is being used for residential purposes or is accessible to the general public, such as a park.

Callow said there is a party interested in acquiring the power plant, which had been coal-fired. The interested party has indicated it may want to use biomass as fuel — such as wood chips — which would thus qualify as renewable “green energy” and be of interest to the Michigan public utilities now required to increase their use of renewable energy sources.

Melching Inc.’s expertise is in demolition and hazardous materials remediation services, such as asbestos removal. It does business throughout the Midwest, and some of the company’s largest projects over the years include:

  • $500,000 demolition of the Steelcase power plant in Grand Rapids

  • $1.6 million demolition work at the Ypsilanti Waste Water Treatment Plant

  • $2 million demolition of a 300,000-square-foot chemical plant in Manistee

  • $1.9 million asbestos abatement/demolition at the site of the Gerald R. Ford Job Corps Center in Grand Rapids.

Melching Inc., said Callow, is in the business of “repurposing old facilities. You need to get rid of old to be able to start with the new, and he’s in the business of getting rid of the old.”

However, Callow added that in the case of the Muskegon paper mill, Melching Inc. has actually bought the property — “a different step for him.”

“In this case, Doug bought the property and he’s doing his own demolition work, and he’s the one moving forward to future development on the property. It’s a little different niche for him than his typical project.”

Although Melching Inc. lists industrial smokestack demolition as one of the firm’s specialties, it has contracted with AED, an Idaho firm, for removal of the 280-foot smokestack that was part of the wood pulp production process.

“It’s a challenging stack to bring down because it’s so tall,” said Callow, noting that AED specializes in controlled-explosion demolition.

“That’s what he was bringing him in for — that expertise to do that in a safe and controlled way,” said Callow.

The smokestack was supposed to come down in January, but test results indicated some contaminants on the stack that require an expanded demolition plan, and Melching Inc. missed the window of opportunity that AED had open in January. Now AED will not get to it until spring, according to Callow.

Callow, whose long experience at the S.D. Warren/Scott Paper/Sappi mill gave him detailed knowledge of the plant and the fine paper industry in general, noted that “annual reports were a big market segment for this type of paper when they used to mail them out. Now you get them online. That’s part of the problem there.”

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