MAINE (From news reports) -- Sappi North America said it will permanently shut down a paper machine and lay off 75 people, nearly 30 percent of the workforce at its Westbrook mill.
Just hours later, Pixelle Specialty Solutions said it will lay off 59 workers in the first part of a phased workforce reduction, in response to a suspension of pulp production there after its pulp digester exploded in April.
The job losses are another blow to Maine's pulp and paper industry, which has struggled in the past decade. Thursday's layoffs amount to about 3 percent of the state's nearly 4,600 paper manufacturing workers.
Sappi on Thursday said it will shut down paper machine No. 9 and major components of the biomass energy complex at the Westbrook mill. The mill's earnings are under pressure because of increased competition in the market and costly mill infrastructure, Sappi North America CEO Mike Haws said in a letter to employees.
About 75 positions will be affected by the shutdown, which the company expects to be completed by the end of 2020. The machine's base paper production will be shifted to mills in Cloquet, Minnesota, and Skowhegan, the company said.
Westbrook Mayor Micheal Foley said that despite the layoffs, the city was encouraged by Sappi's commitment to considering redevelopment opportunities for the Westbrook site.
"We have all experienced the steady decline in operations and employment at the Sappi Westbrook mill, which reflects the dramatic changes we have seen elsewhere in the paper manufacturing industry over the last few decades," Foley said.
The economic effects of the COVID-19 pandemic "reinforced the need to restructure and ensure a sustainable business going forward," Sappi spokeswoman Olga Karagiannis said in an email.
Layoffs will be coordinated with the mill's labor unions under the provisions of their contracts, Karagiannis said. Some employees may be provided opportunities at other Sappi sites, she added.
About 260 workers are employed at the Westbrook mill.
The restructuring "is necessary to ensure the Westbrook Mill is a sustainable contributor that can compete effectively in the global marketplace," Haws said in the letter to employees. "We believe that these difficult steps will set up the Westbrook Mill for future success."
Pixelle bought the Jay mill from Verso Corp. in February for $400 million. In April, a massive explosion rocked the mill and destroyed its pulp digester. No one was injured in the explosion.
Within two weeks of the explosion, the mill had re-established its pulp supply and was producing paper, mill manager Jay Thiessen said. However, operating competitively and profitably by making paper and not pulp means the mill has to reorganize and reduce staff.
Initially, 59 workers will lose their jobs, about 12 percent of its workforce. The mill currently employs 476 workers.
"The reduction is an unfortunate consequence of a circumstance no one expected, wanted or caused," Thiessen said in a statement. "Everyone affected has been a valued member of our team."
The company will complete the first round of layoffs by next week. There may be further staff reductions after the mill completes its evaluation of operating options and finalizes a long-term strategy.
It will take at least until the end of the year before the mill's owners determine a long-term plan, remediate the explosion site and determine the exact cause, Thiessen added.
The shutdown at the Sappi mill and loss of pulp production in Jay constitute another major blow to the state's forest products industry.
"Time is running out for many Maine logging and trucking contractors, and if we lose these companies, many will not be coming back no matter what happens in the future," said Dana Doran, executive director of Professional Logging Contractors of Maine, a trade association.
The American Loggers Council is lobbying Congress and the president to set up a $2.5 billion forgivable loan program to help it through the economic downturn.
Sappi's Westbrook mill was a crucial market for the state's logging and forest trucking industry, consuming 275,000 tons of biomass and creating $7.4 million in revenue for logging companies, Professional Logging said.
"Westbrook is just the latest reminder that our state's logging industry and the rural communities that rely on it are all now at risk due to factors beyond their control," Doran said. "This is an industry that hates to ask for help and which rarely receives it, but our leaders in Washington need to understand it is an industry vital to our economy and future, and both will suffer if we do not act to protect it."
Maine politicians reacted to the news of Sappi's announcement with concern and committed to assist workers displaced by the company's restructuring.
"Today, my thoughts are with the 75 workers and their families that will feel the devastating impact of this decision," said state Sen. Drew Gattine, D-Westbrook, in a statement. "For generations, the mill workers at Sappi have been the heart and soul of our community, and we need to stand with them and support them in the uncertain times ahead."
Gov. Janet Mills said she received assurance from Haws, Sappi's CEO, that the company's Somerset mill in Skowhegan is economically productive and would be unaffected by the Westbrook closure.
"Sappi is a valued employer in our state, and my administration will continue to support their ongoing (research and development) efforts in Westbrook, which are crucial as we continue to transform and revitalize our forest products industry, a vital pillar of our state's economy that supports the livelihoods of thousands of Maine people," Mills said in a statement.