Mill partner: Fuel tax repeal would kill jobs

Posted May 11, 2009, at 11:02 p.m.
Last modified Jan. 30, 2011, at 12:19 p.m.

LINCOLN, Maine — Repealing the alternative fuel tax credit for paper mills would force most state mills to close and severely curtail Lincoln Paper and Tissue Co. LLC, a company co-owner said Monday.

With business partner Keith Van Scotter lobbying against the repeal in Washington, D.C., company Chief Financial Officer John Wissmann pressed the Town Council and residents to support the Maine federal delegation’s efforts to preserve the tax credit for the paper mill industry.

“This is the worst period our industry has ever seen,” Wissmann told councilors during a meeting Monday. “It’s a global depression. It’s the first time in the industry’s history that every [paper industry] product has seen a decline in demand. Absent these credits, I am not sure that we would be here today.”

Buried about 800 pages within a massive 2005 federal highway bill, the tax credit was aimed at increasing the use of ethanol and other biofuels in cars and trucks, congressional sources have said, but paper mills have successfully adapted it to their decades-old practice of creating “black liquor,” mixing diesel fuel into the bio-mass they were already burning to power their operations.

Hundreds of millions in tax refunds have been granted to paper mills as a result, moving some U.S. senators to press for the repeal. The state’s delegation — particularly U.S. Sen. Olympia Snowe, R-Maine — has opposed this, Wissmann said.

Snowe has compared the payments to an economic stimulus package for paper companies, saving jobs, and said that they are in line with the law’s intent, the encouragement of alternative fuel usage. Black liquor is clean, inexpensive and renewable, but only one of several alternative fuels mills use, she has said.

Snowe “has been a champion,” Wissmann said.

Without the credits, mills in Palmyra, Rumford and Jay likely would be forced to fold, and LP&T, which employs about 400 people and nets Lincoln about $1 million in taxes annually, would have layoffs, he said.

“There would be job reductions,” Wissmann said. “It would really hurt the town.”

Councilors were sympathetic to his request. Wissmann also discussed the company’s decision Friday to idle its No. 5 paper machine for at least a week because of a lack of orders. The company needs its five production lines — three tissue machines, two papermaking machines and one pulp drier — operational to be profitable, he said.

Much of Lincoln Paper’s difficulties come from its being hundreds of miles from its markets and having insufficient railroad service, which makes the company suffer rising diesel fuel prices.

“Aside from its proximity to fiber and water, being in northern Maine is difficult,” Wissmann said.

To remain competitive, LP&T is developing six to eight new products. The company has confidence that at least one — which Wissmann declined to identify, not wanting to alert competitors — will break into its markets this year, though it might not yet be profitable.

Lincoln Paper holds about 1 percent of the tissue market, with its tissue dominating party store offerings and several products made by American Greetings and Hallmark, he said. LP&T tissue is the raw material for dental bibs and medical masks, among other products.

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