OLD TOWN, Maine — A Wisconsin-based company announced Tuesday that it will close the local pulp mill it purchased in 2014 by the end of the year, continuing the downward spiral of Maine’s paper industry.
Officials with Expera Specialty Solutions blamed the closure on the declining value of the Canadian dollar, excess pulp supply in the marketplace and relatively expensive wood costs in Maine, according to an email from Expera spokeswoman Addie Teeters.
The closure affects 195 workers at the Expera Old Town LLC facility, which has provided pulp for the parent company’s four mills in Wisconsin. Expera hopes to sell the local mill, according to Teeters.
Expera Specialty Solutions of Kaukauna, Wisconsin, acquired the assets of the former Old Town Fuel and Fiber pulp mill for $10.5 million on Dec. 5, 2014, during bankruptcy proceedings in U.S. District Court in Bangor.
“Expera successfully restarted the mill,” Russ Wanke, Expera Specialty Solutions president and CEO, said in a news release. “However, since the restart, the decline of the Canadian dollar exchange rate combined with a significant increase of new pulp capacity has led to a material drop in market pulp prices.
“In addition, wood costs have not moderated in Maine commensurate with demand decline,” he added. “The combination of these forces does not allow sustainable operations even with a dedicated and talented team of employees.”
Expera’s announcement came less than a day after Lincoln Paper and Tissue LLC announced it had filed for bankruptcy and would be sold at auction, affecting 179 workers. Verso paper announced last month it plans to lay off 300 employees at its Jay paper mill by the end of the year or early in 2016. Less than a year ago, Verso paper closed and sold its Bucksport mill, putting 570 employees out of work.
Maine Pulp and Paper Association spokeswoman Kelsey Goldsmith issued a statement in a conference call Tuesday, saying the bankruptcy and closure announced this week should prompt policymakers and others to focus on lowering wood fiber, energy and transportation costs; preventing unfair foreign trade practices; and reassessing taxes on mill property.
The Maine Pulp and Paper Association will host a conference Nov. 17 in Bangor on these and other topics, she said.
Expera’s Old Town mill has a production capacity of 180,000 tons per year for bleached, unbleached, hardwood and softwood pulp, which it used at its Wisconsin mills or sold to other papermakers, according to a presentation during the Maine Pulp and Paper Association’s annual Paper Days conference in April.
Expera said in 2014 the purchase would reduce the Old Town mill’s reliance on selling pulp at market prices and give Expera’s other mills a steady supply of the raw material to make paper.
Expera Specialty Solutions was formed last year when KPS Capital Partners purchased Thilmany Papers and Wausau Specialty Paper. The company makes bags for microwave popcorn, wine labels, candy wrappers and other specialty papers.
Expera bought the buildings in Old Town; the mill equipment and personal property, such as trucks and office equipment; and the land on which the mill is located after creditors forced Old Town Fuel and Fiber into bankruptcy, sending 180 millworkers out the door. Expera did not buy the assets of a biorefinery the previous owner used to research turning wood sugars into fuel.
Employees started going back to work in January after the purchase, and as of Tuesday the company had 151 hourly employees and 44 on salary, Teeters said.
Employees were notified of the pending closure under the Worker Adjustment and Retraining Notification Act, which requires employers with 100 or more employees to provide at least a 60-day notice of plant closings and mass employee layoffs.
Workers were told the mill would be shutting down when they arrived Tuesday morning, Teeters said by phone. She said while the shutdown schedule is not final, many workers will continue to be employed until the doors close. A clause in their contract means “essentially they will get paid through the end of the year,” she said.
“It’s not good. It’s not good,” said a longtime mill employee who works in the control room and asked not to be identified. “Anytime is a bad time. It’s sad we can’t make our country work.
“I’ve been here since 1980 and I’ve been through a few,” he said of the six times the mill had been sold or merged into new companies over the last 35 years.
Duane Lugdon, United Steelworkers Union international representative for Maine, said the union helped find Expera last year and is now looking for its replacement.
“We will work with any willing party to explore a path forward that preserves the future for our members and their families,” Lugdon said in an email. “The Pulp and Paper Industry is facing far different market dynamics today than it did even 10 to 20 years ago and contending with the changes in the market, the declining demand for our products and the resulting decline in profitability are very challenging problems.”
Lugdon said his current focus is on helping the people who are losing their jobs.
“We are working as hard as we can to understand the impact and make a plan to deal with it,” Lugdon said.
He described the Old Town shutdown and the Lincoln bankruptcy as “horrible news.”
Teeters said there “was not a link between our announcement and the announcement coming out of Lincoln,” when asked whether there were any common challenges leading to the decisions. She also wrote in an email that the shutdown did not have to do with a 50,000-ton-per-year agreement it has for supply out of Verso’s Androscoggin Mill in Jay. That contract ends this year.
“The employees of Old Town have worked hard to make this operation viable,” Wanke said in the email. “We are working with the employees to assist them with the impacts of this decision and unfortunately these market conditions were out of their individual control.”
The shutdown is also unrelated to a tax abatement request with Old Town, Teeters said. The city of Old Town assessed the mill’s real and personal property at just over $51 million, and Expera requested a $43.7 million reduction, City Assessor Travis Roy said after the Feb. 2 tax abatement was filed.
Expera said the Old Town mill is worth $7.3 million, Roy said. The city and the company hired assessors to revalue the land this year, but the two entities have not been able to come to an agreed-upon value, Roy said last week.
“This has nothing to do with that,” Teeter said. “That’s really a moot point now.”
City officials were caught off guard by the announcement, according to City Manager Bill Mayo.
“This is the first news we heard of shutdown,” he said Tuesday in response to an email asking for comment. “Current year taxes are unpaid.”
The 2014-15 taxes amount to $553,333 in personal property and $511,580 in real estate.
Expera wouldn’t reveal much about its plans to sell the approximately 40-acre mill site, located on the Penobscot River.
“This is all part of the sell process,” Teeters said.
“We are just in the beginning phases of the sell process and … we aren’t commenting about particulars,” Teeters said.
News of the pending closure quickly reached Maine politicians and government officials.
“This is obviously a huge economic blow for our region and devastating news to the mill’s workers and their families,” state Sen. Jim Dill, D-Old Town, said in an email. “While I remain hopeful that a suitable buyer will commit to keeping this productive facility open, we must in the meantime do everything we can to support the nearly 200 men and women who make their living in the mill and who stand to lose their jobs through no fault of their own. I am committed to doing whatever I can to ensure those workers land on their feet, regardless of what the future holds.”
Julie Rabinowitz, spokeswoman for the Maine Department of Labor, said her office learned of the closure Tuesday morning. A Rapid Response team, which provides guidance to affected employees, has contacted the company, she wrote in an email.
News of the mill closure reverberated with U.S. Rep Bruce Poliquin, a Republican, and the two Democratic challengers for his seat in Congress, Emily Cain and Joe Baldacci.
“My thoughts are with the hard-working employees of Old Town pulp, their families and the Old Town community,” Poliquin said. “It’s times like these when Mainers must band together and help their neighbors.”
Cain took a swipe at Congress for debating issues such as defunding Planned Parenthood against this backdrop.
“While politicians in Washington, D.C. are arguing over Planned Parenthood, my friends and neighbors here in Lincoln and Old Town are going home tonight trying to figure out where their next paycheck is coming from,” Cain said.
She said raising the minimum wage, educational investments and a “real” energy policy are needed to keep jobs in Maine.
Baldacci called the string of recent mill closures and layoffs a “rural economic crisis” that requires redevelopment effort, worker training and government investment in education, infrastructure and research and development.
“What we need to do is to offer positive economic leadership,” he said.
The Old Town mill started as a sawmill in 1860. It became Penobscot Chemical Fiber Co. in 1882, which merged with Diamond International Corp. in 1967. James River Corp. purchased the facility in 1983 and in 1997 the company merged with Fort Howard, creating Fort James Corp. Georgia-Pacific Corp. purchased Fort James in 2000 and announced it was closing the mill on March 16, 2006. Four firms, which created Red Shield International, bought the site but filed for bankruptcy in June 2008. In October 2008, New York investment firm Patriarch Partners purchased the mill out of bankruptcy for $19 million, creating Old Town Fuel & Fiber, which shut down in August 2014. Expera bought the mill four months later.
The longtime mill employee said the shutdown is based on funding as it is with every closure over the years.
“It’s a financial decision,” the control room employee said. “If we owned the company, we would face the same decision.”
He said he hopes a new buyer can be found to operate the mill but added with the recent mill closures and bankruptcies across the state it’s hard to remain optimistic.
“It’s all up in the air,” he said.
The good news, the employee said, is “They haven’t torn it down.”
BDN writers Darren Fishell and Michael Shepherd contributed to this report.