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Rebirth of Canadian Paper Mill Sparks Worry in Maine
10/04/2012   Reported By: Jennifer Mitchell

The first batch of paper rolled off the machines at the resurrected Port Hawkesbury paper mill on Cape Breton Island, Nova Scotia yesterday, to the relief of the more than 200 workers who have been called back to staff the operation after its closure a year ago. But Maine paper makers are not joining in the celebrations. The U.S. government, at the request of 1st District Rep. Mike Michaud and Maine's papermakers, is taking a harder look at the deal that resuscitated the Canadian mill. Jennifer Mitchell has more.

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The $33 million sale of the Port Hawkesbury paper mill on Cape Breton island has been on and off for months. As late as last week, it was off again. But after a contentious, final round of negotiations between representatives for NewPage Corporation and Pacific West Commercial Corporation of Vancouver, the deal was signed Sept. 28, selling the mill to Pacific West.

The company is going to make supercalendered paper, which is used for glossy newpaper inserts and some catalogs and magazines. At a projected 1,000 tons per day, the Port Hawkesbury output could pose a threat to several Maine mills, including the UPM Mill in Madison, and the Verso mills in Bucksport and Jay, all of which produce a similar product.

John Williams is the president of the Maine Pulp and Paper Association. Port Hawkesbury, he says, has been shuttered for a year now - for a reason. "That mill was shut down because they weren't able to compete with other mills around the world," he says. "But with the help of the government they may be able to make paper more cheaply than we can make it here in the U.S."

And that's because the province of Nova Scotia kicked in almost $125 million in aid as an incentive for Pacific West to sign the deal with NewPage. The money is to be used mostly for work force training, timber land management, and energy efficiency upgrades.

No Maine papermaker is being given that kind of leg-up, says Williams. "It just seems to us to be unfair that a government would be, basically, propping up an industry at the expense of free competition," he says.

And Maine U.S. Congressman Mike Michaud agrees. Last week, Michaud asked Trade Ambassador Ron Kirk to scrutinize the impending deal, and the investigation is now a go.

But in Port Hawkesbury? They say it's a case of "pot meet kettle."

"If you look at the total package and what they would consider a subsidy, they better look over their shoulder at the billion-and-a-half dollars that they've been receiving in Maine and everywhere else as a subsidy from the U.S. government for burning fuel mixed with liquor," says Port Hawkesbury Mayor Billy Joe Maclean.

The U.S. government, Maclean says, has propped up its own paper industry by providing billions of dollars in tax credits to companies that burn a waste product known as "black liquor." The $125 million forked over by Nova Scotia is a drop in the bucket by comparison he says.

And he denies that there was anything improper in the deal. Because the mill has been shut down for a year, many of the skilled workers have left the area, he says, and the provincial money is essential in training a new work force. He predicts that the trade complaint will, as he puts it, "die a natural death."

"So we will get on with our lives the same as whoever else is complaining, because if they check as to what was done in the U.S., the magnitude was just unbelievable, compared to what they're sort of suggesting here," Maclean says.

There's no word on how long it might take to investigate the complaint. Congressman Michaud says that the provisions laid down in the North American Free Trade Agreement are complex. Meanwhile, the Port Hawkesbury mill, which posesses the fastest machine of its kind in North America, is shipping out its first paper this week.


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