OLD TOWN, Maine — When Old Town Fuel & Fiber closed its pulp mill in mid-August and laid off about 180 workers, the company blamed foreign competition and increasing wood and energy costs for the shutdown.
The state’s Department of Labor, Maine AFL-CIO and United Steelworkers Union for Maine applied for federal Trade Adjustment Assistance for the furloughed Old Town workers and learned late Wednesday that the application was denied.
“It is a bit of a surprise,” Duane Lugdon, United Steelworkers Union international representative for Maine, said Thursday. “We are firmly convinced foreign trade is a piece of the problem here. There is an influx of eucalyptus pulp arriving in America from places like Brazil and Venezuela. … It’s replacing our pulp, because they can bring it in here and sell it cheaper than we can.”
Lugdon said the three groups are going to appeal the U.S. Department of Labor’s decision.
“I reject the idea that increased foreign competition and a playing field that puts our own workers at a disadvantage did not play a role in the situation at Old Town — it did,” U.S. Rep. Mike Michaud said Thursday morning in a press release.
Michaud, who is running for governor, has made fighting what he calls unfair international trade practices a focus of his time in Congress. He was an employee for 29 years at the now-closed Great Northern Paper mill in East Millinocket
“The unfortunate result is that hardworking American manufacturers — who are among the finest in the world — have their livelihoods impacted,” he said. “We have seen it play out in a number of our mill communities, including Old Town.”
Trade Adjustment Assistance is a program of the U.S. Department of Labor that helps workers who have lost their jobs because of increased imports or a shift of production outside of the United States. Trade Adjustment Assistance provides trade-affected workers with a variety of re-employment services and benefits to help them find new jobs and get back to work.
“The petition alleges that the worker separations were caused by increased global competition in the pulp industry,” states the denial letter from the U.S. Department of Labor, provided by Ted Fitzgerald, regional spokesman.
The labor department investigation states that the Old Town mill didn’t shift production to a foreign company, which is one way to qualify for the fund, and “that imports of articles like or directly competitive with the bleached hardwood kraft pulp did not contribute importantly to the declines in sales or product.”
Dan Bird, the human resources director at the mill, said the day after the mill closed on Aug. 14 that a flood of wood pulp produced in South America was one of the “primary issues” that led to the pulp mill’s closure.
“The trees grow overnight,” Bird said of eucalyptus plants that are made into pulp. “The fiber is inexpensive, and it produces a quality product. It’s replacing what we produce.”
Lugdon said trees that take 25-30 years to grow in Maine are being replaced by eucalyptus, which reaches maturity in South America in just three years. Michaud was on the phone with the secretary of the U.S. Department of Labor within three hours of hearing the announcement, Lugdon said.
“I fully intend to contact the secretary again regarding this decision,” Michaud said Thursday. “And I will continue doing everything I can to support the hardworking people in Old Town and across our state whose economic livelihoods are disrupted by bad trade policies.”
Messages left Thursday for Richard White, director of communications for owners of New York-based private equity firm Patriarch Partners, regarding the denial of Trade Adjustment Assistance funds were not immediately returned.
Old Town Fuel & Fiber is behind on its taxes and owes the city more than $1 million, and the company recently received another $1 million bill for this year’s taxes, city officials confirmed earlier this month.
Old Town municipal leaders and union officials are still hopeful the mill’s owner can rearrange operations or sell the plant in order to get displaced workers back on the job.
“Obviously, our keenest interest here is finding new owners and putting it back online,” Lugdon said. “I’m fairly optimistic.”
Lugdon and city officials said they could not release any details about possible buyers or negotiations but added they expect to know more by the end of October.