May 20, 2018
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Meriturn, unions reach tentative labor agreement to speed sale of Katahdin mills

By Nick Sambides Jr., BDN Staff

MILLINOCKET, Maine — The investment firm trying to buy two Katahdin region paper mills for $1 reached a tentative labor agreement Thursday with the mills’ unions and offered East Millinocket and Millinocket a way to help the towns increase their tax revenue if the sale occurs.

Details of the agreement between Meriturn Partners LLC and the unions were not released.

Meriturn signed a letter of intent to purchase the former Great Northern mills in East Millinocket and Millinocket from Brookfield Asset Management of Toronto by April 29 provided several conditions were met, including reaching a labor agreement.

“We met with the unions for 14 hours yesterday, and we hammered out an agreement that we all feel very comfortable with, and that seems to be moving forward, subject to their [union members’] ratification,” Lee C. Hansen, principal partner at Meriturn, said after a 2½-hour meeting Thursday with East Millinocket and Millinocket school and town officials at the former Great Northern Paper Co. guesthouse.  

“We [also] made a proposal to the towns today of a way that they can work together and increase their revenue, [but] at the end of the day it is up to them to resolve how they end up doing that,” Hansen added.

The municipal proposal, described by Millinocket Town Councilor Michael Madore as a “variation” of an earlier Meriturn proposition to get $48 million in tax breaks over 10 years from both towns, would cushion the towns somewhat against the expected loss of tax revenue, Hansen said.

“Absolutely, it would,” Hansen said. “I would really rather not go into the specifics as their [legal] counsel and our counsel are exploring the legalities of it and, frankly, whether or not the mechanism can work. But it is a mechanism that can work very well for the two towns and help them maintain services. I think it would provide a significant cushion to the initial proposal we made.”

Madore and Mark Scally, chairman of East Millinocket’s Board of Selectmen, declined to divulge details of the municipal proposal, citing an agreement to keep it confidential at least until the legal review occurs.

“If it works, then it will be a good deal,” Scally said. “We’ve got to see if it can work. That’s all I can say about it.”

Selectmen and councilors will meet with Meriturn at 6 p.m. Monday at the guesthouse to discuss the latest proposal and possibly say whether they will tentatively agree to it, Scally said. East Millinocket and Millinocket officials said they hope to have public hearings before anything is made final.

The ratification of the labor contracts, meanwhile, would not occur until union members vote on the proposal.

“The parties continue to work through the details of the health insurance plan, which has not been finalized,” Duane Lugdon, staff representative for the United Steelworkers union, said in a statement Thursday. “The competitive quotes for the business have not been fully achieved from the various insurance providers.”

The dates for union membership votes have not been set due to the unfinished health insurance negotiations. Union heads expect to meet with members over the next few days, Lugdon said.

According to an initial bargaining agenda obtained by the Bangor Daily News last weekend, Meriturn was seeking a $2 per hour wage cut from the union workers, and some starting positions at the East Millinocket and Millinocket mills would pay $11 per hour. Maine’s minimum hourly wage is $7.50.

Paper room wages would be $11 an hour for a starting spare pool worker and $13 per hour for a starting assistant clothing and chemical cleaner. Machine tenders would get $19.63 an hour, the highest-paid position, with most other jobs in the range of $14 to $17 per hour. Machine tenders get $21.63 per hour now, with lesser jobs paying between $16 and $19 per hour.

If the half-dozen unions at the mills accepted Hansen’s initial offer, they would be solidifying their position as the lowest-paid paper mill workers in Maine, according to Louis Ouellette, president of United Steelworkers Local 152, which serves East Millinocket mill workers.

It was unclear whether this was the offer the unions accepted Thursday. However, Katahdin Paper Co. LLC mill manager Michael Reider hinted that it wasn’t. He said both sides made many concessions during Wednesday’s session.

“In the end we have something both of us can work with, and that’s the important part because it is critical to the process that we get this behind us,” Reider said.

Millinocket councilors discussed the earlier session at the guesthouse only generally when they met at 4:30 p.m. Thursday. They then retired into an executive session to discuss the proposal.

Brookfield has announced it will close the East Millinocket mill, which employs about 450 workers,  on April 22 if the sale falls through. The Millinocket mill has been closed since 2008 due to its need for oil to make steam as part of its papermaking processes, Brookfield officials said.

As the towns and unions mull the proposals made, Meriturn will continue working with the four or five potential providers of a biomass boiler that would be installed at the Millinocket mill as a replacement for the mill’s oil burners, Hansen said.

State officials will also meet with Meriturn to discuss cleaning up a mill dump in the Dolby section of East Millinocket, Hansen said. Preliminary estimates for the cleanup cost, with money possibly contributed by the state of Maine, have been set at $10 million, though Gov. Paul LePage hasn’t agreed that the state would help with the cleanup.

Reider said he was pleased that government and union members from both towns and mills were working well together to make the deal happen despite the towns’ traditional rivalries.

“The fact is that the Millinocket mill cannot run without the East Millinocket mill and the East Millinocket mill cannot be profitable without Millinocket’s mill,” Reider said. “It’s just a matter of them [having to share] certain fixed costs.”

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