January 08, 2020
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Verso to lay off 300 at Jay paper mill

Amber Waterman | Sun Journal
Amber Waterman | Sun Journal
Piles of logs await the chipper in the wood yard of the Verso paper mill in Jay in this Nov. 5, 2006, file photo.

PORTLAND, Maine — Verso Paper Corp. announced Thursday it plans to lay off 300 people at its mill in Jay and another 310 at a mill in Kentucky at the end of this year or in early 2016.

Verso CEO David Paterson said the decision comes in response to declining demand for its products and a “comprehensive review” of the company’s assets, inventory and demand forecasts.

The company plans to shut down the No. 1 pulp dryer and No. 2 paper machine at its Androscoggin mill in Jay, reducing its coated paper capacity by about 23 percent.

That reduction will decrease total employment at the mill from 865 to about 565 people. The shutdowns will cut the mill’s annual coated paper production by 150,000 tons and its market pulp capacity by another 100,000 tons.

The layoffs come less than a year after more than 500 Verso employees lost their jobs with the closure of the company’s Bucksport mill last December.

“Decisions to reduce production capacity are never easy,” Paterson said in a prepared statement. “They are especially difficult for the employees and their families who are directly affected by these actions. Verso is committed to treating all of our impacted employees with fairness, dignity and respect and to communicating openly and honestly with each individual about how this decision will affect him or her.”

Paterson said Thursday the company’s human resources team will begin meeting immediately with affected employees.

Emery Deabay, who was the president of United Steelworkers Local 1188 at the Verso mill in Bucksport, said Thursday it is difficult to watch the once-proud Maine industry keep losing its workers.

“We feel bad for the people who are going to be affected down in Jay. We wish them the best going forward,” he said. “I think it’s just too bad that we’re seeing the paper industry get decimated.”

U.S. Sens. Susan Collins and Angus King and U.S. Rep. Bruce Poliquin issued a joint statement Thursday urging the company to file for federal trade adjustment assistance on behalf of the workers. The program provides funds for employment training, income support and job search help to workers who lost their jobs because of foreign competition.

“Far too many Mainers have lost their livelihoods as a result of increased foreign competition and a decline in demand for paper,” Collins, King and Poliquin said in a joint statement.

The Maine Department of Labor said it planned to have representatives who respond to mass layoff notices meet with company officials soon.

“The Rapid Response team will be meeting with company officials as soon as possible to set up a plan of action including filing for trade assistance and working with all partners in the area,” the statement said.

The department said affected workers at the Jay mill are served by its CareerCenter in Wilton at 865 U.S. Route 2E, in Skowhegan at 98 North Ave. and in Lewiston at 5 Mollison Way.

“Our team can answer questions families will have over the coming months and help them plan for this transition,” Maine Labor Commissioner Jeanne Paquette said in a prepared statement. “Our assistance is not limited to unemployment benefits but includes information about health insurance options, career planning, training support and job search guidance.”

Reasons cited

The company attributed the layoffs to ongoing steady declines in demand for coated paper and pulp in its market.

Coated paper demand was down 4.7 percent in the first half of the year after steady declines in 2014 and 2013, the company said, citing statistics from the Pulp and Paper Products Council.

The company also attributed the move to a rising U.S. dollar value for giving a boost to imports from Asia, Europe and Canada.

Specific to Maine, the company said high energy costs and local property taxes contributed to the decision.

Local officials denied a second property tax abatement request from Verso in April, saying the mill failed to prove it deserved a $193.8 million reduction in the value of its mill, according to the Sun Journal. In May, Verso appealed that decision on the company’s 2014 taxes.

Bill Cohen, Verso’s spokesman in Maine, said Thursday the company’s 2013 abatement request still is pending review at the state level, and the 2014 appeal remains pending with local officials.

Kathie Rowzie, a spokeswoman for Verso based at its headquarters in Memphis, Tennessee, said the layoffs seek to keep the company competitive.

“Although it’s difficult, we’re trying to position the Androscoggin mill to be as competitive as it can be going forward,” Rowzie said in a telephone interview Thursday.

The company also plans to lay off about 310 employees at its mill in Wickliffe, Kentucky. The moves together will cut its production capacity for coated paper by 430,000 tons annually and 130,000 tons of dried market pulp.

Repositioning

The layoffs come eight months after Verso acquired its larger rival NewPage in January for $1.4 billion.

Before completion of the merger, Verso shuttered its Bucksport mill, reducing its capacity for coated groundwood paper and laying off about 500 employees.

In its most recent earnings report, the company’s management said its ability to continue operating depends on how well it integrates with the former NewPage mills and cuts costs.

“Our ability to continue as a going concern is dependent on management’s plans, which are primarily centered on the synergies, operational cost reductions and earnings enhancement initiatives expected to be achieved from the NewPage acquisition,” the statement said.

The company estimated during the merger that it would save about $175 million in operational costs in the first 18 months.

On Wednesday, the New York Stock Exchange notified the company that the value of all its outstanding shares, or market capitalization, was below the required level of $50 million for the past 30 trading days. That means the company within 45 days has to provide a business plan to the stock exchange for boosting its market capitalization.

In June, the company received a similar notice under another standard, facing threat of delisting after the average price of its stock fell below $1 for 30 days of trading.

The merged company’s stock Thursday was 10 percent of its value one year ago, trading at 32 cents per share Thursday morning.

If stock exchange officials do not approve of the business plan Verso puts forward, its stock could be subject to suspension and delisting by the U.S. Securities and Exchange Commission.

BDN staff writer Abigail Curtis contributed to this report.

 

Correction: A previous version of this story misstated the location of the layoffs outside Maine.


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