MADAWASKA, Maine — Citing a lack of confirmed orders, Fraser Papers Inc. temporarily shut down its No. 7 machine this week as part of a companywide effort to build and manage cash flow by running its machines only when orders are in hand, officials said Wednesday.
“We find ourselves in some pretty tough economic times, and we don’t have a lot of visibility into some pieces of our businesses,” Jeff Dutton, Fraser’s chief operating officer, said Wednesday. “We are not going to be building speculative inventory.”
The No. 4, 6 and 7 machines are low on back orders, but all six papermaking machines will be monitored weekly to see if workloads merit their remaining operational, he said.
The new policy will help the specialty packaging and printing paper manufacturer gird against the recession and fluctuating paper demand, Dutton said.
“We’ve never been in an economic climate like this,” said the South Portland-based Dutton. “We talk to our customers and they are having trouble really seeing how it’s going to go. It’s a murky future and we are trying to be responsible with shareholders’ equity and certainly, in this case, their cash.”
On Monday, Jan. 26, Fraser’s No. 7 machine will finish the shutdown that has furloughed about 25 workers, said Bill Peterson, the company’s director of human resources. That same day, though, as many as 30 workers will take temporary layoffs when the No. 6 papermaking machine is shut down for seven to 10 days.
As many as 75 workers could be furloughed if two of the six papermaking machines shut down simultaneously, Peterson said.
Dutton doubted that would happen.
“There is nothing we are seeing today that would indicate that will happen,” Dutton said. “In all likelihood, you will see only one down. There is a couple of times where it looks like there could be a couple machines down, but those are rare circumstances.”
Unions are working well with management to keep as many workers employed as possible, Dutton said. Their efforts include allowing workers to temporarily switch jobs, take vacation time and fill in during overtime situations.
“We have had some of them [union presidents] come back and say, ‘We need to do everything we can to keep people working 40 hours.’ They have been excellent,” Peterson said. “I don’t see anybody overreacting, which is a good thing.”
Fraser’s announcement Wednesday followed the company’s shutting down two paper machines from Dec. 24 to about Jan. 5 to balance inventory levels of specialty and commodity groundwood papers with customer demand.
The mill employs about 712 workers, Peterson said. The company produces a wide variety of technical specialty, fine printing and writing papers and groundwood papers on the six paper machines. The mill has a production capacity of 460,000 tons per year.
After a typically slow Christmas, Fraser is beginning to see signs that its customers are coming back, Dutton said. Peterson hoped that the weekly reviews would not be necessary in several weeks.
Fraser Papers Inc. owns sawmills in Ashland and Masardis, the paper mill in Madawaska and a temporarily shut down mill in Millinocket.
Stiffening worldwide competition in the paper market has taken a dramatic toll on the company.
Just 11 years ago, Fraser employed 1,245 workers at the Madawaska plant.