The fate of the Millinocket and East Millinocket paper mills in the heart of Maine may be decided this week. A deal to purchase the mills fell through earlier this month. Now the owners are suggesting the state acquire the mills for a dollar or they may opt to dismantle the facilities.
Meriturn Partners had signed a letter of intent on 11 February 2011 to buy the two Katahdin Paper Company mills from Brookfield Asset Management by 29 April if several conditions were met, including the following:
- Concessions from unionized workers (including a reported USD 2 an hour pay cut).
- Commitment to build a biomass boiler for the Millinocket mill.
- Local property tax breaks totaling USD 48 million over 10 years.
- Relief from liabilities associated with previous landfill use.
Such a short timeframe made it difficult to meet all the conditions on time. Either way, the loss in revenues to the communities would be significant. Agreeing to the tax breaks would equate to annual tax revenues of USD 4.7 million from the mills plummeting to USD 96,800. And local officials suggest that extending natuaral gas to the mills and other facilities in the area, rather than building a biomass boiler, would be a better and cheaper solution.
Three years ago, the fate of the Millinocket mill, in particular, was threatened by a sudden increase in oil prices. Within 18 months, the price for oil had gone from about USD 40 a barrel to USD 110 a barrel, equating to an annual cost increase of USD 28 million. The mill was shut down in 2008.
Because the East Millinocket mill also has a biomass burner (which the Millinocket mill lacks), it was able to continue operations and even produce excess energy. Even so, the mill is said to have been operating at a loss for several years, Brookfield issued notice in the later half of February that they would close the mill in 60 days, potentially putting about 450 people out of work.
For much of the 20th century, pulp and papermaking has been the primary industry in this region. In 1898, the Great Northern Paper Company began construction of the paper mill at what would become Millinocket, and for a time the mill was the largest of its kind in the world.
Local reports note that the existing Millinocket mill’s paper machine annually could produce 182,000 tons of supercalendered publication papers. East Millinocket is and integrated pulp and paper mill that can produce products with high recycled fiber content. Its two paper machines annually can produce 250,000 tons of uncoated groundwood papers.
“The problem with the two mills is one mill [Millinocket] needs steam, and the other mill [East Millinocket], their two paper machines are producing products that are going downhill, primarily newsprint,” Maine’s Governor Paul LePage is reported to have said.
On Friday, Congressman Mike Michaud, who worked at East Millinocket for many years, took the issue to the U.S. House of Representatives. “Like so many other mills and factories across the country, it couldn’t keep its doors open. In the last decade, our nation has lost nearly 6 million manufacturing jobs and seen 50,000 factories close. It’s because we haven’t prioritized our manufacturing sector and haven’t made an effort to keep good-paying, blue-collar jobs in the U.S.," he said.
“I urge my colleagues in Congress to help me – and workers in Maine and all over the country – by supporting a national manufacturing strategy and a new trade policy,” Michaud said. “I remain hopeful that the governor’s team can find a way forward that preserves these mills and our long tradition of paper making in the region."
Ultimately, the Millinocket mill might be too costly to renovate and might be unable to attract enough customers to be profitable if it were restarted. East Millinocket, which until the recent deal fell through had continued to operate, has better prospects. Perhaps another buyer will be found; if not, the long history of papermaking in this region may indeed have come to an end.