June 20, 2018
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Mill boosters must understand new nature of industry

John Clarke Russ | BDN
John Clarke Russ | BDN
Steam rises from a stack at the East Millinocket paper mill early Wednesday afternoon, Feb. 16, 2011. Meriturn Partners, a San Francisco investment group, recently signed a tentative agreement to buy the Millinocket and East Millinocket paper mills.


If Gov. Paul LePage could marshal all the powers of the state to usher in a new owner for the paper mills in Millinocket and East Millinocket, he surely would, as he’s shown in his personal — as well as his administration’s — involvement in seeking a deal. But increasingly the decisions that matter most in the papermaking world are happening on a global scale. And decisions made decades ago by past owners will loom large over any plans to revitalize these mills.

Prosperous paper mills would be unequivocally good news for the Katahdin region. But as community and state leaders work to bring that about, all must be cognizant of the industry’s new realities.

For one, mills are increasingly automated and rely on far fewer but more highly educated workers. Setting aside the market dampening effect of the recession, Maine mills are producing more paper than ever before, but doing so with far fewer workers.

Second, mills face the same energy cost pressures that other businesses and homeowners face except far more dramatically. The Verso mill in Bucksport, for example, has remained strong through recent ups and downs in the market in part because 10 years ago it secured a natural gas spur to help power operations. The mill in Millinocket, by contrast, relies on No. 2 heating oil, whose cost is spiking and will likely remain unstable. Meriturn Partners, the prospective new owner, wants assurances that it will build a biomass boiler to ease energy costs.

Verso in Bucksport has planned a $40 million upgrade to its biomass boiler for mill operations and plans to use it as a new source of revenue, selling electricity it generates to the grid. Ironically, the hydro-electric power that helped launch the first Great Northern mill is now a separate corporate entity.

The market for purchasing fiber and selling products remains competitive, so mills must be nimble and proactive. Verso specializes in lightweight coated paper for magazine and catalog  publishers and specialty papers for office forms and food wraps. The Katahdin mill produces newsprint and directory paper.

The mills that emerge on the other side of the crisis may not resemble the ones that people remember from their heyday. One of Gov. John Baldacci’s most dramatic white-knight efforts was on behalf of the Georgia-Pacific Corp. mill in Old Town, which five years ago employed 400. It now employs 190 as Old Town Fuel & Fiber.

Pulp and paper jobs make up less than 3 percent of the state’s jobs. Still, with 7,500 jobs statewide, annual salaries in the $50,000-plus range, sizable physical plant investments and a resource base that is peerless in the lower 48 states, attention must be paid to the industry.

Katahdin region leaders, with help from the state, must make every effort to facilitate a sale, but it should not resemble a fire sale. And they must recognize the region’s potential for a more diversified economy. One place to start exploring that diversification would capitalize on branding the region as the gateway to Baxter State Park.

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