June 19, 2018
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Mill’s restart shows papermaking still pays

By Nick Sambides Jr., BDN Staff

LINCOLN, Maine — A roll of paper taller than a man, about 7 feet across and weighing about 4 tons rolled onto a huge spool at the Lincoln Paper and Tissue LLC on Friday as two workers cut it from the giant machine that made it .

A worker manning the control box hanging from the ceiling crane carefully walked the giant roll to another paper processing machine. Sometime soon the paper on the roll will become thousands of business envelopes.

“These are small, old and slow paper machines,” LP and T co-owner Keith Van Scotter said as he watched the spool get pulled away, “and the only reason that they are in operation is that we have the pulp, the cost structure and the product quality so that we can be competitive in the marketplace.”

But like the Millinocket mill that a San Francisco investor hopes to buy for $1, the Lincoln mill once sat empty and unused. And as Van Scotter did with the former Eastern Pulp and Paper Corp. site,  Lee C. Hansen of Meriturn Partners LLC says that he hopes to revitalize the Millinocket mill and its East Millinocket counterpart.

Van Scotter, town officials and union workers say the seven years that Van Scotter and his business partner, John Wissman, spent rebuilding Lincoln’s mill show that the sacrifices made and tax breaks given to restart the Lincoln plant have paid off.

As of last June, LP and T refinanced to pay the last of the approximately $4 million in aid it took from state and federal economic development and regulatory agencies in launching the company in 2004, Van Scotter said.

That includes a $1 million loan from the Finance Authority of Maine; a $1.5 million loan from the U.S. Small Business Administration; a $1 million note from the Maine Department of Environmental Protection for work it did preserving the site before the mill restarted; and $500,000 from Eastern Maine Development Corp., Van Scotter said.

Additional financing and private capital raised by Van Scotter and Wissman’s Connecticut-based First Paper Holding LLC allowed it to complete its $23.7 million purchase of abandoned Eastern Pulp and Paper Corp. in May 2004.

To help the deal work, the Town Council opted not to file a $1.3 million lien on the property from taxes owed by LP and T’s predecessor, Eastern Pulp subsidiary Lincoln Pulp and Paper Corp., in the early 2000s.

Councilors also agreed to lower the Lincoln mill’s valuation from $88 million to $22 million, producing a substantial loss in property tax revenue, said Ruth Birtz, Lincoln’s economic development coordinator.

The idea that the tax breaks and loans could come to naught if Lincoln Paper folded “was, I am sure, in the back of everybody’s minds,” Birtz said.

“It wasn’t difficult to say yes because the Town Council had the attitude that a lot of jobs were more important than having a year where your taxes were higher than normal,” Birtz said. “They felt it was a necessary evil to sustain jobs in the area. They really felt it was the responsible thing to do to get people back to their jobs in Lincoln.”

Some jobs lost when Lincoln Pulp folded never returned. That mill employed about 500 people in Lincoln, Birtz said, while Lincoln Paper and Tissue employs about 400 today. Although no exact hourly wage figures were available Friday, Lincoln Paper and Tissue workers rank at almost the bottom of the list in average hourly wages among state paper mill workers.

And the Lincoln Pulp workers hired by Van Scotter and Wissman get far less money than they got from Lincoln Pulp, said Roger Zelkan, president of Local 396 of the United Steelworkers Union, which represents all of the 300 union workers at Lincoln’s mill.

Even with the 7 to 11 percent wage hike they received in 2008 when their contract was extended to 2013, the union workers haven’t recovered the wages they earned from Eastern, Zelkan said.

It also took several years before staffing reached 400 people, Van Scotter said.

“But everybody’s still working. We still have a community, and without a mill we would not have a community,” Zelkan said. “If the mill wasn’t here it would have a bad effect on all the other businesses in town.”

“We did good. We had a great work force that wanted to accept the cuts that they took,” Zelkan added, “and they [Van Scotter and Wissman] are smart guys. They know the industry. They made some good decisions over the years.

“You can write in there that I hated to say it, too,” he added wryly, “but it’s true.”

Van Scotter said he is proud of how the company has survived several national and international disasters — including Hurricane Katrina, which caused an enormous spike in oil prices and the recession of 2008 and 2009 — and the enormous downturn in national demand for paper while reinvesting in itself.

The reinvestments include $10 million in a 10-megawatt generator that provides the mill with half its electricity and a $36 million tissue machine that doubled the plant’s capacity and increased its work force by 40 jobs.

“There has not been anything that I have seen in the last 25 years of my career, except for 9-11, that was as difficult to contend with as these things, particularly since we don’t have deep pockets,” Van Scotter said. “Now we’re making a little money, and for the next few years, that’s where our focus is going to be.”

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