June 20, 2019
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Paper industry charts plan for navigating ‘challenging times’

BANGOR, Maine — Maine’s paper industry is down, but not for lack of effort.

The industry’s power to draw a crowd was clear Tuesday, with more than 200 people ranging from woodlot owners and loggers to paper mill managers, economic development officials, lawmakers and lobbyists gathering in Bangor for a daylong summit.

Pulp and paper’s challenges served as the backdrop for a range of broader economic and infrastructure issues Maine faces, from energy to workforce development to transportation.

By the end of the event organized by the Maine Pulp and Paper Association, energy costs and high property tax valuations emerged from a survey of attendees as the top priorities for saving the legacy industry in Maine.

One case study on the issue of tax valuation will be offered later this week, with the sale of the Lincoln Paper and Tissue mill, for which the starting bid is about 10 percent of the property’s assessed value.

The goals identified Tuesday give industry officials and lawmakers some direction heading into the upcoming legislative session, but MPPA Chairwoman Donna Cassese said it’s not decided yet what law or policy changes the group will propose to state government.

“What we have to decide is whether there are some quick wins. If there are just two or three quick things, we’ll do that,” she said. “I think we’ve got some momentum now.”

The day highlighted some bright spots amid the spate of mill closures, layoffs, bankruptcies and other bad news, making the case that the industry’s long-term survival needs more coordination.

St. Croix Tissue in Baileyville was mentioned throughout the day as a positive tale for the industry, based on its plans to start two tissue paper machines in the next year that will ship parent rolls of tissue to Virginia for final processing.

That investment is already on its way into the state, but the Baileyville mill still faces challenges compared to other parts of the country.

Scott Beal, spokesman for affiliate Woodland Pulp, said the adjacent pulp mill’s energy prices are about triple that of the company’s sister mill in Oregon. And the company is still considering how to transport its parent rolls down to Virginia for finishing, he said.

“Energy costs are a major concern for us,” he said.

The company also reflects an example of changes in energy markets, as it draws natural gas through its own pipeline connected to the north-to-south Maritimes and Northeast Pipeline.

Patrick Woodcock, head of the Governor’s Energy Office, said discovery and harvesting of natural gas from shale deposits to the west have created one of the most rapid shifts in energy markets in the last 50 years.

It also means the Maritimes Pipeline feeding Woodland is coming from the less preferable direction. Its owner, the Houston-based Spectra Energy, plans to reverse the flow on that pipeline and make other improvements to get more gas from west to east, into Massachusetts, and then north into and through Maine.

That project would be in service in late 2017 and is one of many dynamics in the regional energy market that stand to affect not just paper mills but all natural gas customers, electricity customers and others up and down the supply chain of the pulp and paper industry.

For instance, loggers and foresters cited higher fuel and equipment costs as challenges to their business, according to Dana Doran, executive director of the Professional Logging Contractors of Maine. Those costs stand to put more loggers out of business, he said.

“My prediction is a 10-15 percent reduction of logging capacity by mud season 2016,” he said.

That, in turn, adds to a shortage in logging capacity that has contributed to an increase in regional wood prices.

Doran also said taxation is an issue for loggers, who are seeking a tax exemption for fuel expenses that he said would help an industry that’s increasingly diversifying to markets for biomass, pellets and other end uses.

Lawmakers speaking Tuesday said taxation is one issue on which they think they could find bipartisan support, along with workforce development, which state economist Amanda Rector said is not a problem unique to the paper industry.

“It’s not just you, it’s the whole state,” she said.

The MPPA also suggested Tuesday that the state form a task force to identify and seek specific policy changes that stand to help the pulp and paper industry, which both Democratic House Speaker Mark Eves and Republican Senate President Mike Thibodeau said they would support, with help from the industry.

Cassese said Tuesday she’s not sure the MPPA will push for such a task force on the model of Minnesota, where such a group developed and pushed for policies through the 2000s.

As support forms around specific issues, she said the group will lobby for those changes, but she said in her opening remarks that the industry’s ultimate success depends on changes from within, too.

“These are challenging times and we need to change,” Cassese said.



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