Lewiston Sun Journal
Old Town losing mill
By David Sharp, Associated Press Writer
Friday, March 17,2006
PORTLAND - Georgia-Pacific Corp. announced Thursday that it is shutting down its Old Town pulp and paper mill that employs 400 people, delivering another blow to the state's paper industry and sending the governor scrambling to find a buyer.
The mill will begin shutting down over the next few days but Georgia-Pacific will maintain the facility for 60 days while the state seeks a buyer.
Gov. John Baldacci didn't retreat from the deadline, saying there were interested buyers, and that several of them would tour the facility next week.
"I intend to get it done," Baldacci said at a news conference in Old Town.
Economic and Community Development Commissioner Jack Cashman was optimistic as well. "I am confident we can sell this mill. I have already talked with interested parties. There are a number of business owners who see this facility as a real opportunity," he said.
Georgia-Pacific pledged that workers would receive regular pay and benefits over the next 60 days, regardless of whether they leave their jobs sooner than that.
Production will begin winding down immediately and the process could take a week, said Ted Sapoznik, Georgia-Pacific's vice president of consumer products manufacturing.
Also, it'll take a week or so to ship remaining inventory from the mill, he said.
Four wood chip mills in Costigan, Milo, Portage and Houlton that supplied raw material to the Georgia-Pacific mill also will cease operations. The chip mills, which employ 30 people, ceased operations on Thursday.
The announcement did not come as a complete surprise to workers. Rumors that the mill might close had been circulating for weeks.
"These cuts will hurt many, many households, and the effects could ripple through the economy of Penobscot County and our entire state," said U.S. Rep. Michael Michaud, D-Maine, himself a former paper mill worker.
Nonetheless, workers remained cautiously optimistic that the governor would come through with a buyer willing to invest in the mill to make it viable for the long haul, said Dan Bird, vice president of United Steelworkers Local 80 in Old Town.
"We believe the governor will leave no stone unturned," Bird said.
Georgia-Pacific announced in October that it was cutting 850 jobs in North America as part of a global restructuring aimed at saving $100 million a year.
That same month, the company announced it was shutting down two tissue-converting lines and four napkin lines, eliminating about 50 workers in Old Town. The mill continued to produce paper pulp and large "parent" rolls of tissue.
In November, Kansas-based conglomerate Koch Industries Inc. agreed to pay $12.6 billion for Georgia-Pacific. The deal was completed in December.
Sapoznik said that the Old Town facility, which is costlier to operate than its other mills, was no longer needed because of production efficiencies elsewhere. "We no longer need this asset to serve our customers," he said by phone from Old Town.
The plant closing marks the latest difficulty for Maine's paper industry, which today employs about 10,000 workers - roughly half of the level 10 years ago.
Eastern Fine Paper Co. closed mills in Brewer and Lincoln, displacing 750 workers in 2004. The Brewer mill remains closed but the Lincoln mill later reopened under new ownership.
Great Northern Paper's mills in Millinocket and East Millinocket, which together employed 1,110 workers, filed for bankruptcy protection in 2003. Both mills later reopened under new ownership with a smaller work force.
American Tissue Co., which had a mill in Augusta, collapsed in 2001. And Kimberly-Clark closed its Winslow mill in 1999, leaving 264 without jobs.
Across the border, the Fraser Papers mill in Berlin, N.H., will close on May 6. That mill closing comes on the heels of the shutdown of Groveton Paper Board Co. of Northumberland, N.H., which led to the elimination of 220 jobs.
"We have seen a lot of downsizing all across the nation, but Maine has taken proportionally a big hit. And I'm not sure that process is done," said Mark Wilde, a managing director for Deutsche Bank, who tracks paper, forest products and packaging industries.
Mills like the one in Old Town, which is small compared to modern pulp and paper mills around the world, face a challenge to compete, Wilde said.
It's possible that the state can find a buyer to run the mill's tissue operations, Wilde said. Despite growing pulp prices, the pulp operation could be a harder sale because there's so much global capacity coming online, he said.
Daniel Innis, dean of the business school at the University of Maine, said the state needs to look at the economic factors affecting the industry. Those include high energy and transportation costs, among others, he said.
"If we need policy changes, and I suspect we probably need a few, then we want to ask ourselves: Is this an industry that we want to keep in the state? My personal feeling is that many people will say, 'Yes, it's important."'https://www.sunjournal.com