Twin Rivers to truck paper to Canadian rail

Posted Dec. 06, 2010, at 8:36 p.m.

MADAWASKA, Maine — Twin Rivers Paper Co. has opted to truck its paper into Canada to be loaded onto freight cars there rather than use Montreal, Maine & Atlantic Railway trains, the latest escalation in a northern Maine track battle.

The paper mill, formerly known as Fraser Papers, stopped using MM&A’s trains last Thursday. MM&A owns the 24-mile rail spur on which the mill sits. Twin Rivers, citing a long dissatisfaction with both the quality of MM&A’s service and its escalating costs, has sought to deal solely with Canadian National Railway Co., a rail line that believed it had rights to operate right up to the mill thanks to a 2001 agreement.

MM&A argues that Canadian National does not have rights up to the mill, and that disagreement is the basis of a lawsuit between the railways. Twin Rivers has intervened in the suit. The next court hearing in the case is Dec. 20.

The companies continue to talk outside of court, most recently last week at a meeting convened by Gov. John Baldacci. After the meeting, the mill had hoped for a new, less expensive agreement to have MM&A haul trains 24 miles from the mill to Van Buren and across the border to St. Leonard, New Brunswick, where they would be picked up by Canadian National trains, according to Twin Rivers President and CEO Jeffrey Dutton.

Instead, said Dutton, MM&A said it would haul the cars for $1,586 apiece, which was the same increased price the mill had been operating with since Nov. 1.

“We’re dealing with a group that is behaving like a utility; they have a monopoly,” said Dutton. “It gets to be untenable.”

MM&A CEO Robert Grindrod was out of the country on business and could not be reached for comment Monday. In a recent interview, Grindrod told the Bangor Daily News that losing Twin Rivers’ business likely would cost the railroad about $3 million in revenue annually. About 10 percent of MM&A’s traffic comes from Twin Rivers, its largest single customer.

Grindrod also had questioned the mill’s claims that the increased costs were threatening Twin Rivers’ profitability and defended his railroad’s service to the papermaker as “consistent.”

On Monday, rail lines running into the mill that normally are packed with 18 freight cars were empty. Forklifts zipped around the loading docks stacking massive rolls of paper into trucks, some bound across the border for Twin Rivers’ pulp mill.

According to Dutton, it costs Twin Rivers $100 per truck to haul paper into Edmundston, New Brunswick.; three trucks per freight car equals $300, compared with MM&A’s $1,586. Dutton said Twin Rivers never had insight into what part of its overall transportation costs went to MM&A for switching and the 24-mile haul to meet up with Canadian National trains. It now estimates that before Nov. 1, it had been paying roughly $1,100 for MM&A’s services, Dutton said, about 40 percent of its overall shipping costs per freight car.

Using MM&A to ship paper all the way south to Montreal would take five to six days, if all went well, said Dutton. Using MM&A to connect with Canadian National in St. Leonard would get shipments to Montreal in three to five days, he said.

Using the new system — trucking into Edmundston, then loading onto freight cars — means Twin Rivers’ paper gets from the mill to Montreal in two days, Dutton said.

Dutton said that ideally the mill would return to shipping 80 percent of its product out of the mill directly on rails. Having to load, unload and reload paper increases the chances that product is damaged, he said, and the mill is set up to work with rail.

The unions also see the need to get product out of the mill in an economical way, said Steve St. Jarre, president of Local 365.

“Twin Rivers is not out of the woods yet; we’re still very fragile,” said Dan Bechard, president of Local 1247, referring to the mill’s recent emergence from bankruptcy.

Dutton said Twin Rivers would be happy to work with MM&A if the railway could seamless integrate itself into the mill’s operations with Canadian National at an economical level. That would include guarantees to get product to Montreal in two or three days, he said. Dutton said he raised these and other conditions at the meeting last week.

“We didn’t make any outlandish demands,” he said. “We made it clear to the MM&A that we are, in fact, a customer.”

Twin Rivers’ labor unions have agreed to aid the company with the new shipping arrangement, though they are concerned about possible loss of jobs in the Madawaska mill. The locals have encouraged their international union to intervene in the lawsuit on behalf of the mill and Canadian National, which the union has. And they’ve also agreed to train packers in Canada to do the work that had been done in the United States.

In Edmundston, Twin Rivers has pressed an abandoned rail siding into service, revamping part of the pulp mill that used to house a paperboard operation. James Guerrette of Frenchville volunteered to train Canadians how to properly load freight cars. It’s a job Guerrette has been doing in Madawaska for 21 years.

Guerrette said he saw what he was doing as a way to keep the mill going.

“I’m 57 years old. Where the hell am I going to find a job at the wages I have here?” said Guerrette. “We have to find a way to keep them going as long as we can.”

Guerrette noted that in recent contract negotiations, he and other union workers lost 8.5 percent of their wages, and the company no longer contributes to their pensions. While leery, Guerrette said, he tentatively trusts the company to do what it can to save jobs in Madawaska if he and others cooperate on this.

“We’re going to help them out one more time,” he said. “We’re going to see what happens.”

The hope is to keep Twin Rivers going until an agreement can be worked out, either in courts or elsewhere, to allow rail traffic out of the mill again. If there are job losses, the locals will have to act, the union heads said.

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