PORTLAND, Maine — UPM-Madison’s paper mill plans to reduce production of paper for catalogs and brochures for two weeks, laying off hourly workers during the cutback a spokesman for the mill attributed to international competition, market conditions and energy costs.

Russ Drechsel, manager of the mill and president of Madison Paper Industries, notified members of Maine’s congressional delegation about the shutdown starting Jan. 24 to “on or about” the week of Feb. 9. in a letter dated Tuesday.

Drechsel told the Bangor Daily News on Tuesday evening that the company is still planning the temporary cutback and layoffs that could extend beyond two weeks.

“We’re still going through the planning process to say what positions we want to staff and what work we want to complete during the production curtailment,” Drechsel said.

The mill employs about 220 employees, of which Drechsel declined to disclose how many are hourly and how many salaried. He said not all hourly workers will be affected.

“We regret having to take this downtime, but conditions in the U.S. market for supercalendered paper, combined with the increased energy costs we incur during the cold winter months, require us to reduce production,” Drechsel wrote.

In the letter, Drechsel complains to Maine’s congressional delegation about Canadian officials giving subsidies Drechsel estimated at more than $125 million to a competing mill in Port Hawkesbury, Nova Scotia. Drechsel wrote the mill has since applied for another $40 million from a national Forest Industry Transformation Fund.

Members of the congressional delegation said they will confer with federal trade officials and the White House about those subsidies.

“We have raised concerns regarding the unfair subsidies received by the Port Hawkesbury paper mill directly with the [U.S. trade representative], and we will continue to press the [Obama] administration to investigate this subsidy and pursue remedies,” U.S. Sens. Susan Collins and Angus King said in a joint statement. “We will continue to fight unfair trade practices that threaten Maine jobs.”

Drechsel said that subsidized competition from the Nova Scotia mill makes it difficult for the Madison mill to offer a competitive price as it faces rising power costs during the winter.

Gov. Paul LePage issued a statement late Tuesday saying the temporary layoffs is one example of “why the Legislature must act to do something about Maine’s high energy costs.”

U.S. Rep. Bruce Poliquin, a Republican representing Maine’s 2nd District, said he would contact LePage to collaborate on energy changes the governor has sought at the federal level, including expedited permitting for natural gas pipeline projects.

“Next week from the House floor, I will urge my colleagues to support new legislation, of which I am a co-sponsor, to expedite the construction of natural gas pipelines,” Poliquin said in the written statement.

Drechsel said power costs combined with what the company sees as unfair trade competition from Port Hawkesbury fueled the decision to shut the Madison mill temporarily.

“You take the combination of cost side pressures and revenue decreases because of the subsidies to the Canadian mill in Port Hawkesbury and that puts tremendous pressure on us,” Drechsel said.

The mill’s annual output is about 200,000 tons of supercalendered paper.

In his letter, Drechsel called the trade dispute a “battle for survival” for the mill. He said if federal officials pursue the trade complaint, he expects it would take about a year to resolve.

U.S. Rep. Chellie Pingree, a Democrat representing Maine’s 1st District, said in a written statement that she plans to contact the White House.

“I intend to contact the Obama administration about this and urge them to see if these Canadian subsidies are, in fact, illegal,” Pingree said.


Darren Fishell

Darren is a Portland-based reporter for the Bangor Daily News writing about the Maine economy and business. He's interested in putting economic data in context and finding the stories behind the numbers.