Wood supply to cause brief shutdown at Katahdin mill

Posted March 22, 2011, at 10:26 p.m.

EAST MILLINOCKET, Maine — A wood shortage caused partly by an unusually wet and mild fall will compel the Main Street paper mill to shut down for 10 to 14 days starting next week, mill officials said Tuesday.

Supplies for customers of the Katahdin Paper Co. mill will be unaffected. Instead, the shutdown will allow the mill to supply its customers with the “considerable finished goods inventory” workers have assembled since the fall, mill General Manager Mike Reider said.

“We felt this was the most opportune time to equalize our inventory of wood and demand for [the] 2nd quarter,” Reider said in a letter to customers dated Monday. “The downtime is in no way related to the pending [mill] sale or availability of customer orders, but purely caused by the lack of adequate wood available.”

Meriturn Partners of San Francisco signed a letter of intent to purchase the paper mills in East Millinocket and Millinocket from Brookfield Asset Management of Toronto by April 29 for $1 if several conditions were met.

If the deal collapses, Brookfield has said it would close the East Millinocket mill on April 22, eliminating about 450 jobs. Restarting the Millinocket mill, which had closed in 2008, would create about 200 jobs.

Lee C. Hansen of Meriturn was in Maine on Tuesday conducting negotiations to complete the deal. In the letter, Reider said Meriturn expects to secure a property tax deal with East Millinocket and Millinocket “in the next week” and that Gov. Paul LePage’s administration has a solution that would relieve Meriturn of responsibility for any potential contaminants in an East Millinocket landfill once used by the mills.

Pending a membership vote, the mills’ unions have tentatively accepted a Meriturn proposal and the company is interviewing potential operators of a biomass boiler that would replace oil burners at the Millinocket mill, Hansen said.

“Our interest in owning and restoring Katahdin to greatness has not diminished,” Hansen said.

The East Millinocket mill relies on softwoods to make newsprint and directory-grade papers. Besides the unusually warm and wet fall, which made forests too muddy for loggers to work in, a local pulp mill’s switch from hardwood to softwood depleted the area supply, said Rick Grunthaler, the mill’s Personnel Department director and spokesman.

“We need about two weeks to build inventory to get us through to June 1,” Grunthaler said Tuesday.

Loggers and workers at other mills around the state also said less wood is available because of the fall weather but doubt they will see mill shutdowns because of it. Lincoln Paper and Tissue LLC, for example, uses mostly hardwood for its products, co-owner Keith Van Scotter said, and isn’t competing with Katahdin Paper for the same supply.

Mike Beardsley, executive director of Professional Logging Contractors of Maine, said new landowner restrictions reducing the logging season from 42 to 26 weeks have pinched supply.

“The model is changing a little bit in that they [landowners] want to harvest in a shorter period of time, for whatever reason,” Beardsley said. “At least when I talk to the members [of PLC], that is what I hear.”

Among the state forest products industry’s great strengths are the versatility and volume of hardwoods and softwoods found in Maine forests, yet that market is very sensitive to changing demands, Van Scotter said.

The market, Beardsley said, needs time to absorb the pulp mill in Woodland’s switch from hardwood to softwood pulping operations.

“Weather conditions are always an issue. Soft ground causes a problem,” Van Scotter said. “We have had a number of these issues over the years. The supply chain is tight enough right now that when there’s any significant change, supply costs go up and down. You can’t always expect the wood to be there.”

Katahdin Paper officials usually get wood from New Brunswick when local supply falters, but Canadian suppliers are similarly tapped out of softwoods, Grunthaler said.

“They have nothing to offer,” he said.

The Katahdin mill usually shuts down for two weeks in April for maintenance. That shutdown will likely occur, Grunthaler said.

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