Verso report unveils ideas to save paper industry

Posted March 17, 2009, at 6:43 p.m.

AUGUSTA, Maine — The head of Maine’s largest paper company sought Tuesday to both “sound the alarm” about challenges facing his industry and to build support for state-level changes he predicted would put mills on a more competitive footing.

Mike Jackson, president and CEO of Verso Paper, acknowledged that the recession and global competition are creating unprecedented challenges for Maine’s pulp and paper industry. In recent weeks, several large mills in the state have announced plans to shut down temporarily or indefinitely, affecting hundreds of workers.

But Jackson said Verso has been investing heavily in its two mills in Bucksport and Jay to the point where the company now spends 70 percent of its capital in Maine.

“Clearly, Maine has our attention,” Jackson said at a news conference with Gov. John Baldacci. “We came to Maine and we are investing in Maine because of the strength and ingenuity of the papermakers in this state.”

The purpose of Tuesday’s event was to present Baldacci with a report by Verso outlining ways the company says the state can help ensure the long-term health of the industry.

To reduce energy costs, the state should support development of liquefied natural gas terminals and ensure ratepayers will benefit from infrastructure improvements to the electricity grid, according to the report.

The report, titled “Maine on Paper: An Industry We Can’t Afford to Lose,” says the state should also expand the amount of timberland that has been certified by a third party as being managed sustainably.

Other recommendations include expanding paper industry training programs at community colleges, creating a loan fund to improve Maine’s railroads and lowering the tax burden on the industry.

In the area of environmental regulation, the report recommends updating a “costly and adversarial” permitting system to provide companies with more consistency and predictability.

Jackson said he believes most of the steps outlined in the report will go a long way toward improving paper companies’ competitiveness without costing taxpayers money. But Jackson said another key is overcoming perceptions about the long-term viability of the industry.

“The future of Maine in the paper industry can be significant,” Jackson said. “I have concerns — and I have discussed this with the governor — that people think we are going away as textiles did. And if you wish for something, you’ll get it.”

Jackson’s comments come after months of grim news regarding the industry.

Two weeks ago, Domtar announced plans to shut down indefinitely its plant in Baileyville, affecting more than 300 workers. Sappi, New Page and Lincoln Paper and Tissue Co. have all announced layoffs or shutdowns at their Maine mills in recent weeks as well.

And one of Katahdin Paper’s two mills in the Millinocket area has been mothballed for months while the company explores alternative energy sources.

But Jackson said previous recessions have shown that consumption of the catalog and magazine paper his mills produce typically rebounds quickly.

Baldacci credited Verso officials for their willingness to work with his administration on their concerns. He said the state had often been at loggerheads with the previous owner of the two mills, International Paper, although the governor did not mention the company by name.

“I think there are a lot of opportunities and I want to continue to work with Mike and the industry to take advantage of those,” Baldacci said.

Sen. Richard Rosen, R-Bucksport, said he liked Jackson’s message of needing to change Mainers’ attitudes about the industry’s future. He also echoed Baldacci’s comments crediting the company for trying to start a dialogue.

“I think it’s very refreshing to see the leadership of a major papermaker like Verso reach out like this to initiate a conversation and a partnership,” Rosen said.

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