Maine paper mills fight to survive

By Nick Sambides Jr., BDN Staff
Posted July 10, 2009, at 8:38 p.m.

LINCOLN, Maine — Keith Van Scotter is an industry veteran and architect of one of the Maine paper industry’s success stories.

He and business partner John Wissman raised $23.7 million and bought the former Eastern Pulp and Paper Corp. in 2004, then raised $36 million to double Lincoln Paper and Tissue LLC’s tissue-making capacity in 2006.

His picks for the industries’ best recession survivors come with a caveat.

“The industry that is left will be relatively well,” Van Scotter said, “provided there are no external policy changes [with the state or federal government] that cause real problems. People still use paper. They will change how they use it, but it’s not going away.”

His picks:

· Verso Paper of Jay and Bucksport, which make coated supercalender and catalog papers. “They have got good-sized equipment, they are relatively efficient from a staffing perspective, and they make a relatively good-quality product,” Van Scotter said.

For 2008, the company reported an overall increase in net sales of 8.5 percent on the strength of an average increase of price per ton of about 16.5 percent.

· Sappi Fine Paper North America of Skowhegan and Westbrook, which makes coated wood-free paper and specialty and technical papers, such as the peel-and-stick labels that airlines use to tag luggage. “They are probably the largest pulp and paper mill in North America,” Van Scotter said.

“There are a whole lot of specialty products out there that are not big-volume products but are still good products to market. This company makes them,” he added. “There’s not a lot of products here that risk being displaced by electronics.”

· NewPage Corp. of Rumford. The largest coated paper manufacturer in North America based on production capacity claimed $4.4 billion in net sales for 2008, despite cutbacks. “What is left of that mill is a good and efficient mill,” Van Scotter said.

· Lincoln Paper and Tissue LLC of Lincoln. You can forgive Van Scotter any immodesty. “We make a good product, we have a good percentage of the market, and we’re not so large that the bigger manufacturers will come after us,” he said.

· Fraser Papers, which has filed for bankruptcy protection in Canada and operates a mill in Madawaska. “They are a specialty producer, but some of their products [sales] are declining rather quickly,” Van Scotter said. “The key to their survival is for them to get their size and cost structure in line with the volume of their business. That, overall, is the entire industry’s challenge as we are a high fixed-cost industry and a certain volume [of production] is required to make money.”

http://bangordailynews.com/2009/07/10/business/maine-paper-mills-fight-to-survive/ printed on July 22, 2014