May 22, 2019
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Why $1.5 million for Maine’s forest products industry is just a start

Ashley L. Conti | BDN
Ashley L. Conti | BDN
Sen. Angus King speaks on Friday at the Process Development Lab at the University of Maine in Orono. King along with Matt Erskine, deputy assistant secretary of commerce for economic development and chief operating officer of the Economic Development Administration, Sen. Susan Collins and Rep. Bruce Poliquin announced plans for an Economic Development Assessment Team, which will explore ways to keep Maine's forest products industry alive in the wake of several mill closures.

PORTLAND, Maine — Maine’s forest products industry has had a tough couple of decades.

That’s why political officials gave such plaudits Friday to the U.S. Department of Commerce. The agency allocated $1.5 million to help Maine find a way forward for the industry, which has been hit from multiple sides.

Numerous mill closures have highlighted headwinds for the industry, leaving mill workers to upend their lives either to stay in the industry or to find a way out.

That leaves the money announced Friday with some big shoes to fill, particularly as Maine’s paper industry supplies about $226 million less in annual wages than it did fewer than 20 years ago.

Paper’s economic weight has dwindled since 2000. Paper manufacturing payrolls made up about 4.5 percent of wages in the state in 2000, at about $636 million that year.

Last year, paper manufacturing accounted for less than 2 percent of payrolls, which have been growing in other industries, including forestry and logging, according to figures from the U.S. Department of Labor.

While foresters and loggers are earning more, there are fewer of them. From the federal data, which only covers companies that have employees, that could reflect smaller companies shedding their workers in order to continue operating under a sole proprietor.

Maine jobs in forestry and logging were 15 percent lower last year than in 2000, down 428 payroll positions. The paper industry shed almost 7,000 jobs during the same time, a 56 percent decrease.

Members of Maine’s congressional delegation called the situation an “economic crisis of unprecedented magnitude” in a letter to federal officials this spring, pleading successfully for them to also assign an economic development assessment team to study the state’s forest products industry.

The team’s visit in August will give the first inklings of where they might seek to focus the state’s forest products industry, as communities such as East Millinocket and Lincoln remain particularly hard-hit.

Penobscot County has been hit harder than other areas with paper making jobs.

Average paper industry employment dropped 85 percent in Penobscot County last year. With the shuttering of the Lincoln mill, the number of paper manufacturing establishments dipped below three, marking the industry’s disappearance from the county-level statistics.

Somerset County, where Madison Paper industries shut its doors in May, led the state for the highest concentration of paper mill employment. It also has Sappi’s Skowhegan mill. The Androscoggin mill in Jay largely helped keep that county in second place, but it, too, faced a recent loss.

Cascades Auburn Fiber announced in June that it would close July 15.

While it varies throughout the state, most communities that lost paper mills in recent years have persistent unemployment at levels higher than the state average.

East Millinocket remained highest among those in June, with an unemployment rate of 9.1 percent in June, averaged over the previous 12 months. That compares with the statewide average of 3.9 percent and Lincoln’s rate, at 8.3 percent. Old Town was an exception, with an unemployment rate lower than the state average, at 3.4 percent.

Losses in the paper industry challenge other forest products businesses. The decline of the paper industry ripples through the economy, especially a drop in demand for softwood species of trees driven by mill closures.

That drop in demand has left loggers looking for other markets, such as biomass. But biomass plants, which use waste wood to produce electricity, face headwinds, too, as the lingering low price of oil has made it more difficult for them to produce power at competitive rates.

Fuel consumption by biomass generators serving the regional power grid continued to drop in January — typically their busiest month — after a recent peak during the winter of 2014, according to statistics from the U.S. Electricity Information Administration.

Fuel consumption for January was down about 12 percent, according to Electricity Information Administration data, after dipping slightly in January 2015.

A decline in biomass generation was what fueled the state’s effort to prop up the industry with a $13.5 million bailout.

That batch of money, too, has some big shoes to fill.



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