The mill — planned by the Myllykoski Corporation, a Finnish paper company with operations in Europe and North America — would have created 250 jobs and brought 13 billion Kč ($577 million) of investment to the town. It would have been the second-largest foreign investment in the country this year.

But before jobs and gross domestic product, the first concern for Kohout and many of his residents was the well-being and aesthetics of their town.

"I imagined a traditional stinking paper mill," he said.

As of Oct. 30, the residents of Opatovice nad Labem no longer had to worry about the smell or the work.

Citing repeated delays in the permit process and the rising cost of energy prices, Myllykoski announced that it would move construction of its new mill to Plattling, Germany, 50 kilometers (31 miles) from the Czech border. The company broke ground on the new site three days later.

"We expected to have some delays" in the Czech Republic, said Heikki Räty, vice president of Myllykoski. "But nothing like this."

A prolonged arrival

Myllykoski expects the demand for uncoated publication paper — the stuff of magazines and brochures — to increase at a rate exceeding 10 percent in Central and Eastern Europe over the next decade, said Tomáš Šabatka, an adviser to the company. He is set to become president of its operations in Central and Eastern Europe in January.

To take advantage of this new market, the company settled on plans to construct an advanced mill in Opatovice nad Labem. In its analysis, the Czech Republic's low wages and timber prices and the mill's projected location — perched on the Labe (Elbe) River and close to a power plant — made development in the country ideal, over Poland or Slovakia.

The company's original plans for the plant, developed several years ago, called for an extensive reliance on outsourcing, notably in its dependence on the nearby power plant for energy, one of a mill's primary expenses after timber.

Myllykoski started the permit process Aug. 3, 2005, said Räty, and encountered immediate resistance.

A group of locals, the Association of Opatovice nad Labem and Pohřebačka, opposed the mill. The association lodged objections with the government over its concerns about noise and air pollution and the mill's timber sources, which were to come from within the country.

The group filed these objections in harmony with construction law, said Alžběta Honsová, spokesperson for CzechInvest.

"Obtaining a construction permit takes a lot of time in the Czech Republic, and not only for foreign investors," she said. "Still, Czech laws in this field are similar to those in the other EU member states."

Due consideration given to the objections meant that the mill's Environmental Impact Assessment (EIA), necessary for further building permits, was not approved until the end of April this year. As the company waited for environmental approval, said Räty, "We realized the permitting process was not running as smoothly as we thought. We wanted to safeguard our situation."

To do so, Myllykoski began the permit process to secure potential development in Plattling, where the company already had another plant. Because of Bavaria's business-friendly laws, the permit process, started in March, was finished by the beginning of June, with Myllykoski free to begin construction.

Still, the company hoped to follow through with its plans in the Czech Republic. It hired a Czech management team for the mill in April and waited for permission to build, and residents of the area continued to oppose each permit. Ultimately, said Räty, it became clear that construction would not start until several months into 2007 at the earliest.

While in this holding pattern, Myllykoski noticed that the business plan it had sketched out for its new mill was becoming obsolete: Energy prices were rising across Europe, and fast. The decision to outsource energy production now looked like a mistake.

Production priorities

Constructing a power and heating plant in Opatovice nad Labem, said Šabatka, would cost the company more than 3.4 billion Kč while only serving to produce 380,000 metric tons (420,000 short tons) of paper per year. Securing a "new EIA and building permit could take another year and a half," he said. At Plattling, the company would need to only construct a power plant, at a price between 2 billion and 2.5 billion Kč, which would power the production of 760,000 metric tons of paper a year.

Recognizing the changed energy market and the reality that the "public atmosphere for our project was not too friendly," said Šabatka, the company changed course.

Mayor Kohout was not surprised when Myllykoski went.

"The negotiations went on for too long because of our legislation and it was becoming expensive," he said. "Nobody was able to imagine what would really have happened if the paper mill had been built in the town."

Räty said he was disappointed in the change, but that it was a wise decision.

"Investors need to be able to make quick decisions," he said. The length of the permit process made this impossible for his company.

"If there are a lot of hurdles that the investor needs to go over," he said, "as Europeans, it will be a missed opportunity to compete against the rest of the world."