EAST MILLINOCKET, Maine — Katahdin Paper Co. LLC announced Thursday that about 140 hourly and an undetermined number of salaried workers will be furloughed for up to 28 days starting next week as part of efforts to build cash flow by running paper machines only with orders in hand.
Effective Monday, Katahdin will shut down its No. 5 paper machine temporarily and begin weekly reviews of orders for its two paper machines, said Rick Grunthaler, the company’s human resources manager.
“We are aggressively looking at options to utilize the [No. 5] machine and we are optimistic that we will land some business or orders soon,” Grunthaler said Thursday. “If we get enough orders to effectively restart the machine [before 28 days lapse], we will do that.”
The company’s No. 6 machine will remain operational, Grunthaler said. He declined to comment on the orders backlog on that machine or whether shutdowns and furloughs are planned for it.
Managed by Fraser Papers Inc. and owned by parent company Brookfield Asset Management, the Main Street mill employs 491 hourly workers making directory-grade papers.
Thursday’s announcement reflects a Fraser policy to manage cash flow by avoiding the creation of speculative inventory. Citing stiffening worldwide competition in the paper market, the recessed national economy and a lack of confirmed orders, Fraser began idling some of its six machines and furloughing workers at its Madawaska mill in January.
Fraser also shut down two Madawaska machines from Dec. 24 to about Jan. 5 to balance inventory levels with customer demand. That mill employs about 712 workers producing technical specialty, fine printing and writing papers and groundwood papers
Jeff Dutton, Fraser’s South Portland-based chief operating officer, did not immediately return a telephone message seeking comment on Thursday. He was attending a meeting in Toronto, officials said.
Katahdin Paper Co.’s other Katahdin region mill, in Millinocket, temporarily shut down in early September as part of efforts to convert its oil burners to biomass, idling as many as 207 workers. Company officials have said they would announce the status of that conversion project this month.
East Millinocket union officials and members were briefed early Thursday of the furloughs, Grunthaler said. It is the first time in years a machine has been idled for that long at the Main Street mill.
Katahdin will do everything it can to limit the number of furloughed workers, Grunthaler said. Workers are being encouraged to use vacation time now and to fill in wherever possible in overtime situations with workers who have been idled.