A Belfast startup said Tuesday it has secured the former Madison Paper Industries mill in a nearly $2 million deal that could be an economic boost for the area.
The town lost its paper mill three years ago, when more than 200 workers lost their jobs.
GO Lab, a building products manufacturing startup, plans to make wood fiber insulation from softwood chips that it claims will be renewable, recyclable, nontoxic and perform as well or better than products now on the market. It expects the price of the chips to be competitive with existing insulation.
“The primary insulation products in the home are based on fossil fuels, which produce cyanide when they burn,” said Josh Henry, president of GO Lab. “That has made residential houses and buildings so dangerous to firemen.”
About half of the fire-related deaths in the United States can be attributed in large part to smoke inhalation, according to Medscape, a medical news website for health professionals. That includes firemen and other people in burning buildings that include toxic insulation, furniture and other products.
Henry said 96 percent of his company’s insulation will be made from softwood reclaimed from the refuse from board cutting, so it will be safer.
GO Lab paid $1.9 million for the property, less than the $2.5 million asking price, Henry said. The mill, which is 550,000 square feet, was purchased from New Mill Capital Holdings, a partnership that bought it in December 2017. New Mill held an auction in June 2017 to sell off equipment and other assets.
The company has $8 million in investment to date, half of it from private funders and half from other money including a $250,000 grant received in May from the U.S. Forest Service. It said in May that it expects revenue to reach $70 million when it is fully operational.
The company in April also won a $750,000 Emerging Technology grant from the Maine Technology Institute to develop the insulation.
Henry said the Valmet paper machine in the mill, which was sold for an undisclosed amount to Chinese company Five Star, was completely disassembled last week, so the mill is now empty and ready for renovation.
The Madison Paper Industries mill, which made supercalendered high-gloss paper for printing fine images, suffered from a decline in demand for its product and high energy costs. Madison and many other Maine towns have suffered economically after losing a mill, typically a large employer and taxpayer in the town.
“We lost about one-third of the town’s revenue, or about $150 million,” Madison town manager Tim Curtis said. “Our tax rate went up 30 percent.”
A lot of that tax revenue was from the Valmet paper machine, which Curtis said was worth about $200 million.
“Now, with business equipment being tax exempt, any new equipment GO Lab installs will be tax free,” he said. “So the impact of the factory coming back is more about jobs than taxes. But we’ll never get back what we lost.” He said the town has absorbed the tax losses in the three years since the factory closed and even was able to lower its tax rate this year.
Of the 200 workers who lost their jobs, only one-third lived in Madison, Curtis said. And many workers were able to get jobs at the Sappi paper plant in nearby Skowhegan, which was hiring at the time.
“We were fortunate overall,” he said. “Apart from any tax benefit, we are very excited about having manufacturing jobs back here and utilizing that site. The mill will bring manufacturing jobs and use wood products and services in our area.”
Renovation work in the mill yard and cleaning outside the building will begin this fall, and construction is expected to begin in the spring of 2020. Production will start next summer or fall, Henry said.
Stantec Engineering of Scarborough will work on the project, though no construction firm has been chosen yet. GO Lab plans to retrofit the mill and install a line of manufacturing equipment bought from Germany.
GO Lab currently has 12 employees, but expects to boost that to 120 when it goes into full production over the next year or two. Henry said he’s seen a lot of interest in those jobs by former Madison paper mill workers. He’s already hired three former employees.
The company will make three products under a new subsidiary, Timber Pure Technologies. It will run three production lines, one for each product.
EM Board will be exterior insulation and EM Batt and EM Pack will be for building and home interiors. EM Pack, a loose insulation that can be blown into buildings, will be the first product. The EM stands for “embodied carbon,” the carbon footprint of a material.
The company plans to buy and process about 220,000 tons of softwood chips annually at the factory.