Domtar to restart pulp mill

Posted June 10, 2009, at 10:51 a.m.

BAILEYVILLE, Maine — Montreal-based Domtar Corporation announced Wednesday that it plans to reopen its Maine-based pulp mill in this Washington County town, putting 300 people back to work.

The employees were laid off May 5. The shutdown was blamed on weak global pulp demand, historically high inventory levels and depressed prices. Production is expected to resume the week of June 22.

Domtar, which produces paper, pulp and wood products at several sites in North America, said Wednesday that it is reopening the mill because of stronger global demand, tax credits for its use of alternative fuel mixtures, favorable currency exchange rates and improving prices. The mill is Washington County’s largest employer. It has an annual hardwood pulp production capacity of 398,000 air dry metric tons.

Wednesday’s announcement led to a collective sigh of relief among local officials and business owners who see the restart as a return to economic stability for the area. For a time, it appeared that eastern Washington County faced a grim future.

The restart also means that employees at Fulghum Fibres Inc., which supplies the majority of wood chips to the mill, along with longshoremen and others who load pulp onto ships bound for overseas markets also will return to work.

“This is tremendous news for the men and women of Domtar, Baileyville and the entire community of Washington County,” Eastport Port Authority Manager Chris Gardner said Wednesday. “We at the port of Eastport, including the Northeast Long Shoremen’s Association, Federal Marine Terminals and local area independent truckers all look forward to our continued partnership with Domtar.”

People also were happy in Calais. The city is the service center for area towns including Baileyville.

“The announcement this morning from Domtar officials … is very good news for the Calais area,” Calais City Manager Diane Barnes said Wednesday. “This not only affects the unemployed millworkers, but it will help the businesses in our area that are suffering from a poor economy.”

Baileyville interim Town Manager Dottie Johnson was all smiles. She said she learned about the start-up Wednesday morning from company spokesman Scott Beal who called her at home.

“He woke me up with wonderful news,” she said.

Johnson said the start-up would help the town get back on its feet financially because property and sewer taxes were not being paid in a timely fashion as laid-off workers struggled to make ends meet.

“I think this will mean that people who can see that their jobs are back … will come in and pay their bills, and we will have more money to work with,” she said.

Johnson said she anticipates that Domtar will stay up and running for a period of time. “I don’t think Domtar would start up just to go down again in a short time. It costs too much money,” she said.

The interim town manager said she spoke with some of the laid-off employees after the announcement Wednesday morning, and they were excited about returning to work.

The mill was quiet on Wednesday.

A trip to Beal’s third-floor office was like walking through a tomb. Lights were out on most of the floors at the company’s administration building in Baileyville. Computers and machines were quiet, cubicles were empty. That will change once the mill restarts, Beal said.

Workers were notified either by mail or by telephone that they were returning to work.

In a memo to Domtar employees, General Manager Tim Lowe said that the mill would reopen and reiterated that reduced inventories and improved market conditions was the reason.

“These factors, coupled with the benefits of the federal alternative fuel tax credit which was strongly supported by [U.S.] Sen. Olympia Snowe have contributed such that the mill is expected to be in a cash positive position making the reopening possible,” the memo said. “It is paramount that the mill remains cash positive to en-sure continuing operations.”

Snowe’s office noted in a press release issued Wednesday that as a senior member of the Senate Finance Committee, Snowe had successfully fought to preserve the “black liquor tax credit,” which has served as a critical lifeline to paper mills across the country during the economic slowdown. The credit is expected to remain in effect through 2009.

Snowe praised the company.

“The Woodland Pulp Facility in Baileyville has long served as the economic cornerstone for many families and businesses in the community and throughout the surrounding region, and I could not be more pleased to learn this critical pulp mill will soon reopen its doors and put displaced workers back on payroll,” Snowe said in the release. “This is extremely welcome news for Washington County, and I stand ready to continue to work with Domtar officials and other local stakeholders to ensure the future viability of the mill.”

In his memo, Lowe also praised Gov. John Baldacci, U.S. Sen. Susan Collins and Rep. Mike Michaud for their help.

In a telephone interview with the Bangor Daily News, Baldacci said Wednesday that it was important to position the mill for the future.

“This is good news, but it is more than that. It is a real shot in the arm, and it is about people coming together, and it is about everybody working together,” he said. “And Washington County is bucking a trend. We get 300 people back to work. It is going to have an impact on the port — probably 35 to 75 jobs because they are going to ship out to Asia. You are going to have to get the woodworkers, the loggers and truckers working again because they’ve [Domtar] depleted their inventory. So there is a lot of good coming from this, and at the same time we are working on the long term.”

Baldacci did not elaborate on the company’s long-term goals.

There also was praise for the county’s legislative delegation. “I certainly don’t want to forget or overlook that Washington County Legislative delegation led by Sen. Kevin Raye that has unwaveringly stood by us and repeatedly asked whatever it is that they could do to assist us, assist our employees,” Beal said.

There is a timeline for the callback.

Lowe said that the company planned to call back laid-off employees to perform maintenance and to restart the mill on an as-needed basis beginning Wednesday, June 10. The rest of the employees will be called back to work sometime on or before June 23 for full production.

It was not known Wednesday if all the laid-off employees will choose to return to work when production resumes.

Shortly after the layoff, some employees found other jobs or decided to take advantage of federal and state education programs that would lead to retraining.

Interim Town Manager Johnson said she did not know how the mill restart would impact Washington County Community College who has been gearing up to help employees looking to be retrained.

WCCC President Bill Cassidy said Wednesday that the college was aware of the announcement. “We are elated and excited for the community,” he said.

Cassidy said the college would work with those employees who already have started class work by restructuring the classroom experience to allow the employee to complete their work. “Those who would like to complete the work we are going to encourage them to do so,” he said. “[It] may be independent study or it may be a hybrid approach.”

For those who planned to start classes in the fall, he said, they can continue to do so or others will fill their slots. He said the college had a waiting list.

Lowe also addressed the issue of those employees who have found new jobs.

“It is also our understanding that some of you may have been fortunate enough to be gainfully employed during the layoff period,” he wrote. “However, to enable a successful restart and meet our obligations to customers, it will require that all laid-off employees will need to return to work no later than two weeks after they have been contacted either by phone or by the date of this memo. Anyone who does not return within the appropriate time limit will be considered to have left Domtar’s employment.”

How long the mill will operate is anybody’s guess, but the mill’s management team will continue to monitor the market.

“Nothing has changed in terms of being vigilant and closely monitoring the markets that we participate in,” Beal said. “The future of the mill, as it has been historically, will be tied to how the markets behave.”

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