LINCOLN, Maine — Decreased orders will force Lincoln Paper and Tissue LLC to idle a paper machine Friday for at least a week, furloughing two to four workers, officials said Thursday.
As many as 16 workers might have been laid off temporarily this weekend, but Lincoln Paper and the workers’ unions agreed to have some water filtration system cleanup work done by those who would have been cut. The company will forgo hiring a contractor for the cleanup.
“We are a very lean organization and we have a great work force that agrees it is in their interest to be very flexible,” mill President and Chief Executive Officer Keith Van Scotter said Thursday. “We don’t have barriers when it comes to assigning people new duties, and that is a great help.”
The furloughs reflect the deflated nationwide paper market, which according to U.S. Sen. Olympia Snowe lost $2.1 billion just in the fourth quarter of 2008,
The No. 5 paper machine that will be idled Friday at Lincoln Paper has been shut down intermittently for 151 days since October 2008.
In response to the weak demand for paper, Lincoln Paper on March 16 placed 17 production workers on a three-month furlough; put most hourly maintenance workers on temporary layoff each Friday for three months; and cut salaried pay by 15 percent for three months, company officials have said.
More severe cuts would have occurred had not all sides worked to avoid them, Van Scotter said.
“The last thing we want to do is lay somebody off. It’s personally very hurtful,” he said. “Most of the time we have been able to find other work for people to do, but we kind of reached the end of the rope with that.”
Company officials “will evaluate the order situation … on a day-to-day basis and will restart the machine when it makes sense to do so,” Douglas Walsh, the company’s executive vice president of operations, said in a statement Thursday.
Mill managers might be forced to furlough as many as 16 workers if more orders don’t come in next week. As compared to the first quarter of 2008, demand for printing paper grades, which the company’s No. 5 machine makes, dropped nearly 30 percent in this year’s first quarter, Van Scotter said.
He agreed with Snowe’s statements in a May 1 commentary in the Bangor Daily News that it is the weak demand for paper and subsequent product oversupply — not overproduction caused by funding generated by the federal Alternative Fuel Mixture Tax Credit, as Canadian paper manufacturers have claimed — that forced the latest market downturn.
Forty-four paper mills across the U.S. already have announced temporary closings in 2009, partially due to efforts to balance market demand with supply, Snowe and Van Scotter said. Maine has 13 paper mills employing almost 8,000 workers. Many state mills have taken to operating only with orders in hand to balance supply with demand and build cash reserves.
Meanwhile, most Canadian paper manufacturers have run full-bore while enjoying “access to low-cost [Canadian] government loans, low-cost government timber, and generally favorable access to low-cost energy,” Van Scotter said in a statement supporting the tax credit.
U.S. paper manufacturers, he said, get the opposite — “high energy costs, very unfavorable credit markets, and competition for raw materials that in 2008 drove prices recently to previously unimagined [high] levels,” he said.
Van Scotter doesn’t see much help coming from Augusta, at least not soon.
“I am starting to see a little more realization of the problems, but even those that see the problems don’t know how to address them, policywise,” he said. “Knowing what you have to do and how to do it is two different things.”