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GNP Shutdown: Can Maine's Once Thriving Paper Industry Survive?
01/27/2014   Reported By: Jay Field

Town leaders in East Millinocket met this afternoon to discuss contingency plans, should the temporary closure of the local paper mill turn into a more permanent shutdown. Great Northern Paper announced last week that it was suspending operations at the mill for 16 weeks due to high production costs and falling market prices for paper. As Jay Field reports, the closure has reawakened longstanding doubts about the future of the paper industry and East Millinocket's economic future.

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It seemed those doubts had eased, at least somewhat, on a late October morning in 2011. Workers that day crowded into the mill's loading dock, where giant spools of paper formed the backdrop for a celebration. The guest of honor drove up from Augusta in a black SUV.

"Good morning!" said Maine Gov. Paul LePage. "I understand that we're getting some smoke out of the flues, which is something we haven't seen for a long time."

LePage wished the assembled workers and paper executives well, as the recently reopened mill ramped up production.
"I am absolutely confident, having been bred in the wood products industry and the paper industry, if you've got good leadership and a strong workforce, you can make things happen," he said.

"We've had lots of fresh starts," says Clint Linscott, as he takes a break from clearing snow to chat from the cab of his plow truck. It's been a little over two years since Gov. LePage came here to celebrate and the optimism of that day has given way to deep uncertainty.

Last week, Great Northern Paper announced the mill would close temporarily for 16 weeks. Linscott, who's an East Millinocket selectman, says the company has been hit with one business obstacle after another since reopening the mill:

"Record breaking drops in the price of paper, which makes it almost impossible to recover a profit," he says. "They're paying probably somewhere in the neighborhood of triple for energy. They're probably paying three to four times as much for wood as they were in the past."

Great Northern Paper says it will use the four month break to retool and look for efficiencies. The company also has to find a way to pay off its debts, including the nearly $700,000 it owes East Millinocket for its 2013 property tax bill.

More than 250 workers at the mill will stay on the job for the next eight weeks. But Linscott says the furlough and uncertainty over when the town will get its tax money are contributing to what's been an already gloomy economic kickoff to 2014.

"Just the beginning of the year we lost the Aerie Restaurant in Medway. We lost the Soup To Nuts Restaurant here in East Millinocket. We lost Dr. John Gaetani, the eye doctor," he says. "They just closed their doors. There's just not enough business and there's a point where you've got to cut your losses."

Linscott says Great Northern Paper has operated in good faith and he remains optimistic that the company can come up with a long-term strategy that will work. Nancy Davis is more cautious. She's run Davis Pharmacy, across the street from the mill, since 1989 and has seen owners come and go.

"We are hopeful that possibly the torrefied wood machines that are supposed to be coming in the future could possibily help the region out," she says.

Cate Street Capital, Great Northern's parent company, has started another company in the area, Thermogen Industries. The Finance Authority of Maine has approved a $25-million loan to Thermogen to build New England's first torrefied wood machine.

Over at the town office, though, officials are focused on the present and the 256 people who currently work at the mill. Shirley Tapley is an assistant to the Board of Selectmen. "Those are jobs that we need to keep here in town," she says, "because If they're not working a lot of it will trickle down to the town. The tax base is affected."

Tapley says that in 2011, when Cate Street took over, locals were comforted by the company's decision to call the mill by its former name. For decades, the original Great Northern Paper provided steady work, good pay and stability to generations of residents.

To continue that legacy, the new Great Northern must find a way to keep energy costs low and find enough markets for a product which is becoming harder and harder to sell.



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