December 03, 2019
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Woodland pulp mill expansion ‘a great source of happiness’ for Baileyville

BAILEYVILLE, Maine — This faded mill town perched on the American side of the St. Croix River is actually one of Maine’s lucky ones: It still has a mill.

Better still, just this year the mill has expanded, adding tissue production to its portfolio and 80 jobs with its new division, St. Croix Tissue, to its roster of employees. The mill’s pulp production side, Woodland Pulp, employs 320 people.

The mill’s current owner, Hong Kong-based International Grand investment Corp., spent $150 million to purchase and bring online on two new tissue machines — work that lasted for more than two years since the expansion was announced in March 2014.

The addition of two new tissue machines and 80 more jobs at the mill has been “a great source of happiness” for Baileyville and surrounding towns, according to Richard Bronson, town manager of Baileyville.

“They are a big deal to more than just this town,” Bronson said last week, adding that the mill is both the largest employer and the largest taxpayer in Washington County.

The expansion project is expected to result in 126 metric tons of tissue being manufactured annually in Baileyville, enough to supply 5 million people each year with tissue products — about the same number of people who live in Maine, New Hampshire, Vermont and Canada’s maritime provinces, mill officials have said. It is expected to manufacture products such as paper napkins, towels, bathroom and facial tissue for national and international markets, according to information on its website.

Officials have cited a few factors for why Baileyville is a good site for manufacturing tissue. It already has direct access to the pulp it needs for tissue production, thanks to its sister pulp-making facility, and it generates its own electricity with dams it owns in the adjacent St. Croix River.

It is less than 40 miles away from the marine shipping terminal in Eastport, which helps to keep trucking costs lower than mills further away from the coast. And, a few years ago, IGIC spent $15 million to convert the mill from using oil to cheaper natural gas.

“That has helped us considerably with our energy costs, which are still very high,” Scott Beal, the company’s spokesman, said at the time.

State, federal and local officials have praised IGIC’s investments in the mill, made under CEO Arvind “A.K.” Agarwal, that have made it more competitive and created more jobs. In gratitude to Agarwal’s investment in the mill, Baileyville officials decided to dedicate the town’s 2015 annual report to him.

Despite their enthusiasm, some officials, especially Gov. Paul LePage and U.S. Rep. Bruce Poliquin, have raised concerns about what they say is the continuing high cost of electricity in the state and the impact it has on doing business in Maine.

More specifically, LePage and Poliquin have said that the mill’s dams should be able to be relicensed without facing additional regulations from the Federal Energy Regulatory Commission which, according to Poliquin, could add approximately $1 million a year to the mill’s expenses.

“You don’t have growth and you don’t have jobs unless you have investment,” Poliquin said at an opening ceremony at the mill earlier this week. “Those of us who have run businesses know that for that investment to take place, you need to be able to compete. You need to be able to keep your costs low.”

The economic challenges that the mill’s owners have faced over the decades has been apparent in both the mill’s employment levels and in the streets of Woodland, the village just west of the mill that sprang up with the mill’s founding 110 years ago. Last week, there were only a handful of small businesses in the village with their lights on and doors open, but dozens of “house for sale” signs in the yards, often more than one on each block.

“This town only exists because of the mill,” Bronson said. “It’s the only reason [the town] is here.”

The town’s population was only a couple hundred in 1900, he said. By 1910, after the mill had been built and started operating, it was more than 1,000.

With a current estimated population between 1,400 and 1,500, Baileyville at one point had twice as many residents as it does now, according to Bronson. He said the mill employed 1,000 people decades ago, with many of them living in Woodland in houses built specifically for mill workers by St. Croix Paper, the first entity to start producing paper products at the site in 1906.

By the early 1990s, when the mill was owned and operated by Georgia-Pacific and manufactured both pulp and paper, it employed nearly 700 people. By 2001, when Montreal-based Domtar acquired the mill from Georgia-Pacific, it has 500 employees.

Six years later, when Domtar ceased paper production at the site, it laid off 150 employees, reducing the workforce to about 300 people. After that, temporary work stoppages initiated by Domtar at the mill at times reduced its workforce to “near-zero,” according to Bronson.

IGIC bought the mill from Domtar in 2010 for $64 million.

But the mill’s recent good fortune has yet to become readily apparent in the surrounding neighborhood where many of the houses became neglected, some even derelict, over the past 20 years.

According to Bronson, an informal survey conducted by the town in 2014 indicated that roughly a quarter of the houses in the central village were vacant.

“This village got, and you can still see it, to a terrible physical condition overall,” Bronson said.

The town acquired a lot of the neglected houses through nonpayment of taxes, he added, and demolished more than a dozen of them in 2014 and 2015. Others, he said, it resold.

“We’ve been selling them for next to nothing — shockingly low,” the town manager said.

According to online real estate listings for Baileyville, there currently are at least a couple of houses in the central village that can be bought for as little as $22,000.

Linda Fell, 49, has owned and operated a pizza parlor directly across Second Avenue from the mill since 1993. She said that, for many years, local residents were scared that the mill would be shut down altogether, in keeping with the trend of mills elsewhere in Maine.

“It was pretty scary. Everybody didn’t know what to do,” Fell said. “We all depend on the mill. Fifty percent of my income is from the mill [workers].”

Since the arrival of IGIC in town six years ago, she said, area residents have become more hopeful and feel like the local economy has been more stable.

“We’re all excited,” Fell said.

More than that, she added, in the past two years construction work at the mill has helped to boost business at her pizza parlor, enabling her to double her workforce.

“I hired two more people,” Fell said.

 



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