MILLINOCKET, Maine — Multibillion dollar conglomerate Brookfield Asset Management lied about its plans for the Katahdin Avenue paper mill it will close indefinitely, a union president said Wednesday.
United Steel Workers Local 152 boss Louis Ouellette and other union officials minced no words when asked how Toronto-based Brookfield, an asset management firm, had handled its decision to indefinitely shut down the Katahdin Paper Co. mill on Sept. 2. The decision was announced Tuesday.
“I am just so tired of being lied to,” Ouellette said Wednesday. “For the last week, they have been telling us they are going to run all winter on one boiler and that things were just so positive. Then they slammed us yesterday.”
“People are bitter and I don’t blame them for it. This was done in a less than optimum way, no question,” said Duane Lugdon, a representative for three United Steelworkers International unions at the Millinocket and East Millinocket paper mills.
Denis Couture, Brookfield’s head of communications, denied that the company had lied. He said the mill would reopen, but could not estimate when.
“Nothing has been abrupt in that the employees have known it [the mill] was not making money and we have been working for months to improve the financial performance of the plant, unsuccessfully,” Couture said.
“In our view, this is simply a business story,” he added. “We have done the only thing we can do to protect the interests of all of our shareholders and that’s the indefinite shutdown.”
Couture was not directly involved in the shutdown decision and didn’t know who made it. He referred comment to Peter Gordon, a managing partner at Brookfield and chief executive officer of Fraser Papers, a Brookfield subsidiary that manages the mill. Gordon was out of the office on Wednesday.
Ouellette and other millworkers said that the on-the-ground managers of Katahdin Paper Co. were pawns to the company’s distant and indifferent parent corporation — Brookfield.
Brookfield is a wealthy conglomerate that owns $95 billion in assets. It netted $110 million in income in the second quarter of 2008, down from the $153 million net income recorded in last year’s second quarter, according to brookfield.com.
And like Gov. John Baldacci, mill Manager Serge Sorokin didn’t learn of the shutdown until just before it was announced.
“The local management did get blindsided with the timing of it,” Lugdon said.
Katahdin Paper first announced on May 29 that oil prices would force an indefinite shutdown on July 28, laying off about 208 workers, unless an alternative energy source was found.
Lugdon said the Brookfield-propelled announcement in May was a major setback for the mill and he criticized Brookfield for failing to back a Katahdin plan to install a biomass boiler at the mill a year ago.
The announcement, he said, forced satisfied customers to look elsewhere. Also Brookfield should much earlier have seen the danger of having only oil as the mill’s sole heat source for steam vital to papermaking.
Yet the workers, management and local sales teams overcame the setback.
“Everyone was pulling together to make it work and it started to seem to work,” said Ouellette, whose union represents about 75 workers. “The good news all started rolling in about them finding different things that were working.”
Ouellette described three meetings held between June and Aug. 22 in which managers stressed that the mill was meeting sales, production and energy-saving goals and that talks were going well between mill officials and alternative energy providers who seek to install biomass boilers at the mill.
But then this week’s shutdown notice came.
Baldacci expressed disappointment Tuesday in the decision’s abruptness and stressed that Brookfield Chief Executive Officer Peter Gordon had committed to reopen the mill in 2009 if the biomass talks went well.
But Brookfield hasn’t said anything publicly or announced a timeline for the mill’s restart, Ouellette said.
“What is missing from the picture is Brookfield management,” Ouellette said. “They have to make a commitment to employ people and make paper.”
Couture stressed Wednesday that Brookfield’s commitment to the mill has been shown in its acceptance of millions of dollars in losses in running the facility over the last few years. He refuted Millinocket town councilor Scott Gonya’s claim that the mill had been making millions of dollars recently.
Fraser suffered a net loss of $15.6 million in the second quarter, an improvement from the net loss of $19.1 million in the first, according to the Web site www.fraserpapers.com.
“The mill cannot be making money at the current energy prices in the very depressed paper market. These are false allegations,” Couture said.
Lugdon and Ouellette agreed with Gonya that the mill has made money in recent months.
Only Brookfield’s fear of losing money in winter, when the cold forces the mill to burn more oil, creates in the parent company’s view the need for the shutdown, Lugdon said.
Couture, Ouellette and Lugdon agree on one point. They hope the biomass negotiations succeed and the mill can reopen soon.
“We can do it,” Ouellette said. “We have handled everything that has been thrown at us. But you get tired of dealing with it.”