In the era of corporate bailouts, it may come as a surprise that Maine’s old-line manufacturing industry, pulp and paper, doesn’t need a check from the government. But it does need attention to its new challenges, which state policymakers would do well to consider.
Verso, the company that purchased mills in Bucksport and Jay, issued a report to the Legislature last week, a kind of state of the state of the industry.
Despite layoffs and shutdowns, mostly tied to diminished demand from a weak economy, the report asserts that paper has a bright future in the state, albeit a less labor-intensive future. In fact, more paper is being made in Maine now than ever before.
The challenges the industry faces are related to energy, environmental regulation, transportation and work force development. On each front, state government can help.
Paper mills spend $898 million each year on goods and services, according to the Verso report, and $292 million of that is spent within 60 miles of each mill. In addition to Bucksport and Jay, there are mills in Baileyville, Madawaska, Madison, Millinocket, East Millinocket, Lincoln, Rumford and Skowhegan, so those dollars radiate out in important areas of the state.
“If you take the paper industry out of Maine, you leave a gaping hole in the economic and social fabric of the state,” the Verso report asserts. It’s hard to disagree.
On energy, the report advocates for an LNG terminal in Maine because natural gas is the predominant fuel for mills. It also urges state utility regulators to consider proposals to upgrade the electric grid based on how they would affect mills.
The report also argues for the state to “assume a more active leadership role in encouraging the third-party certification of Maine forests.” Customers “are demanding the use of fiber from certified forests and if the state does not increase the number of certified acres, Maine-based companies will suffer,” the report states.
More “predictability in the permitting and enforcement process,” and reliance on “a system of science-based regulations that can be implemented in the most cost-effective manner” also would help.
The paper and pulp industry relies heavily on transportation, and Verso is candid about the shortcomings of rail in Maine. “We have only one choice when it comes to rail service. We have a critical need for more modern equipment and more reliable service from this carrier,” the report states, a reference to Pam Am Systems (formerly Guilford Transportation Industries).
The report suggests the state help Pan Am with a revolving loan fund to help it improve its service. Verso also argues for raising the truck weight limit on I-95.
And last, there is a perception problem hampering the industry in recruiting the technically educated work force it needs. “An entire generation of young people has grown up knowing little about the paper industry except cutbacks, layoffs and mill closings,” even though “today’s papermakers are more likely to work in a computerized control room than they are on the mill floor.”
The recommendations serve the paper industry but also would serve other sectors of the Maine economy.