LePage: Cate Street closes deal on Katahdin paper mills

The East Millinocket Paper Mill.
Kate Collins | BDN
The East Millinocket Paper Mill.
By Nick Sambides Jr., BDN Staff
Posted Sept. 28, 2011, at 2:12 p.m.

EAST MILLINOCKET, Maine — New Hampshire-based investor Cate Street Capital is the full owner of the two Katahdin region paper mills and has plans to return hundreds of people to work, Gov. Paul LePage said Wednesday.

LePage announced the final sale transaction between Cate Street Capital and the previous owner, Brookfield Asset Management, in a brief statement lauding his administration’s perseverance in restoring the East Millinocket and Millinocket mills.

“With hundreds of people starting to get back to work, it’s a great day for Maine,” LePage said.

“I appreciate all the hard work and perseverance of Cate Street Capital, Brookfield Asset Management and members of my administration to make this happen. This was a very long and complicated process, but everyone involved was focused on putting Mainers back to work,” he added. “With the soaring unemployment rate in the Millinocket area, we’re excited to restore these jobs and explore new areas for economic growth.”

With its new subsidiary, Great Northern Paper Co. LLC., Cate Street plans to have 215 paper workers employed at the East Millinocket mill by Oct. 10 to help make its first shipment of newsprint due by Oct. 30. Hiring began last week. Another 50 to 75 workers could be hired when other parts of the mill come on line.

“The people we have to be happy for are the ones that are going to be able to sleep at night and not have to lay awake wondering how they are going to take care of their families,” said Duane Lugdon, a United Steelworkers international representative who helped negotiate GNP’s contract with the mills’ workers.

“It is encouraging to think that we are at the end of the process and can put some people back to work,” Lugdon added. “It’s been a long summer for a lot of folks and they are excited and hoping for the best.”

East Millinocket Administrative Assistant Shirley Tapley called the sale’s completion “a confidence booster” for the Katahdin region.

“We’re relieved, very happy,” Tapley said. “They seem to be a very good company and we look forward to working with them.”

“We are hopeful that perhaps the jobs promised would actually happen. I am hearing that people are getting called back and there are some people, I have heard, that are down in the mill setting up computers and going about restarting it,” Tapley added. “That’s great. I look forward to seeing the steam coming out of those stacks again.”

The revitalization is expected to cut into the 21 percent unemployment rate the Katahdin region has endured since the East Millinocket mill closed in April, idling 415 workers. More than 100 workers are expected to be hired when the Millinocket mill restarts, but market conditions and orders from customers will dictate when that happens. The mill is not expected to restart for several months.

The East Millinocket mill makes newsprint and telephone directory paper; the Millinocket mill makes calendar paper and magazine stocks.

Cate Street closed in escrow on the sale of the two mills on Sept. 16 rather than committing to the full sale of the mills to allow state environmental officials to hold a 20-day public comment period on the transfer of a landfill in Dolby from Brookfield to the state. State law required the comment period, and closing in escrow allowed Cate Street to start preparing the East Millinocket mill in September to fulfill its first order.

U.S. Sen. Olympia Snowe, R-Maine, said the mill’s imminent restart reflects Mainers’ rugged determination and problem-solving ability. Snowe pledged to help improve business conditions and make paper mills and other American industries profitable.

“I am committed to combating the federal government’s apparent inability to enforce trade laws and ensure [that] illegal foreign subsidies, like China’s ongoing currency manipulation, [do] not undercut the competitiveness of our domestic industries,” Snowe said in a statement.

Millinocket residents are also pleased with the East Millinocket mill’s restart, Millinocket Town Manager Eugene Conlogue said.

“I hear various things, but the most important and common one is that people are very happy that they are sold,” Conlogue said of the two mills. “They are wondering how soon No. 11 [Millinocket’s paper machine] will start back up. We don’t have a specific answer to that, obviously.”

Though grateful to have jobs, workers were generally displeased with their contract, which solidifies their position as the state’s lowest-paid papermakers despite their highly regarded work, the region’s history as a world capital of papermaking for about a century, and their being an older and experienced work force.

Cate Street Capital will pay returning workers the same wages — $14.98 to $21.63 per hour — they were paid when the newsprint mill closed in April. However, new workers will get an 8,000-hour probation period at $11 per hour and the mills’ two USW unions will merge.

The state’s minimum wage is $7.50 per hour, with unskilled laborers often getting paid $10 per hour and top-paid papermakers earning close to $35 per hour.

Under the five-year contract, no wage increases are likely until 2016 except undefined, unscheduled bonuses if Cate Street — an investment company specializing in developing alternative-energy resources — finds its first foray into papermaking profitable.

Katahdin papermakers also have suffered decades of mill shrinkage, declining wages and benefits and job insecurity while shouldering heavy workloads. Their psychological and economic baggage is heavy, Lugdon said.

“Recovery from a lengthy period of unemployment is a terribly rough thing. It’s months and months if not years to recover from that terrible burden,” Lugdon said. “Your sense of values is different.”

“When you don’t have work, you worry about your future and your self-worth gets challenged,” he added. “For those who are going to work, it’s a start. For those that won’t be going back, at least there’s hope that they might be able to.”

http://bangordailynews.com/2011/09/28/business/lepage-cate-street-closes-deal-on-katahdin-region-paper-mills/ printed on April 25, 2014