Michigan economic development officials on Tuesday moved to cancel hundreds of millions in taxpayer subsidies for an Upper Peninsula paper mill that nixed plans to invest $1 billion to retool the facility.

The Michigan Strategic Fund Board voted Tuesday to recommend the State Administrative Board rescind a 15-year Renaissance Zone tax incentive for Billerud U.S. Production Holding LLC worth $29 million.

The move, expected to be approved by the SAB, also effectively cancels a $200 million grant approved by Gov. Gretchen Whitmer and the Democratic Legislature for the conversion of the Swedish company’s Escanaba paper mill to cartonboard production, Crain’s Detroit Business reports.

Go Ad-Free, Get Content, Go Premium Today - $1 Trial

Otie McKinley, spokesperson for the Michigan Economic Development Corp., told The Detroit News the $200 million grant will now return to the state’s general fund.

“Also of note, none of that funding was distributed to the company,” McKinley wrote in an email.

Billerud announced in May it was abandoning its $1.06 billion plan to convert the 113-year-old paper mill to cartonboard, citing rising costs that diminished the company’s projected return on investment.

“After in-depth feasibility studies, evaluations, and supplier discussions, we have concluded that the projected return on investment is not sufficiently attractive to proceed with the conversion of Escanaba to cartonboard production,” Billerud CEO Ivar Vatne said in a statement at the time. “During the process, conditions have changed and the cost of equipment and services necessary to transform the operations have greatly increased. Instead, we will pursue a higher returning and more moderate investment strategy for our North American mills going forward.”

“We’re thrilled that we were able to win this project and it was not a fait accompli, it was not necessarily going to happen,” Whitmer said at the 2023 Upper Peninsula State Fair. “We had to compete. We had to roll up our sleeves and sharpen our pencils and make sure they grew here. We’re proud that we won this opportunity,”

Go Ad-Free, Get Content, Go Premium Today - $1 Trial

The incentive deal would have required Billerud to retain nearly 1,240 jobs at the 2,000 acre site in Delta County’s Escanaba and Wells townships. The Escanaba Mill has produced paper along the Escanaba River since 1911, serving as one of the county’s largest employers with an estimated annual economic impact of $360 million, MLive reports.

Gerald Kell, president of the plant’s United Steelworkers Local 21, described the May announcement as “devastating news,” noting the mill was forced to shut down twice last year – once for a fungal outbreak and again for a maintenance outage and low demand for paper.

“I feel like everybody is rightfully disappointed,” Kell told MLive. “It’s a lot of uneasiness. The same kind of uneasiness we’ve had to struggle with for a lot of years.”

Without the planned upgrade, “it’s just a little bit more uncertain,” said Marty Fitantte, CEO of InvestUP. “But I think we remain hopeful and confident in light of those investments Billerud is making in the mill as it exists and it will be business as usual moving forward.”

Vante said at a May press conference that Billerud remains committed to its North American mills, and described the long-term paper and packing market as “promising.”

“We are confident that we can start shifting gradually our portfolio mix towards other packaging material grades and that job to some extent has already started,” Vante said.

The move to cancel Billerud’s taxpayer subsidies came the same day the MEDC’s Strategic Fund Board voted unanimously to cut over $1 billion in subsidies for a Ford-CATL electric vehicle battery plan in Marshall to between $384 and $409 million.

The 60% reduction followed Ford’s plans to scale down its planned $3.5 billion BlueOval Battery Park by $1 billion, slashing promised jobs from 2,500 to 1,700, according to Bridge Michigan.

“The state was disappointed and, frankly, so was Ford,” Tim Nash, auto expert director of McNair Center, told WWMT. “The fact of the matter is, customers are just not buying EVs the way that they thought they would.”