G-P executive says merger means layoffs

The four-month fight for control of Great Northern Nekoosa Corp. had so many gut-wrenching plot twists that Maalox replaced malt liquor as the favorite elixir in northern Maine.

Don’t close the medicine cabinet yet.

In discussions Tuesday with financial analysts in New York City, the newly appointed president of Great Northern said its imminent merger with Georgia-Pacific Corp. certainly would result in layoffs.

The Associated Press quoted Alston D. “Pete” Correll as saying that Georgia-Pacific doesn’t yet know how many people will lose their jobs. The reductions will be at both Georgia-Pacific and Great Northern, he said.

“Our job is to pick the best persons on both sides,” said Correll, the G-P executive who was named to head Great Northern when the company gave up its battle to remain independent last month.

Correll’s remarks were amplified in the March 13 issue of GNN Update, a company newsletter. In it, Correll is quoted as saying that the merger “won’t affect jobs significantly at the plant level.”

“At the corporate and business unit level, although there will be job reductions to eliminate duplicative functions, the merged staff will be larger than the current one,” he said. “We do not know the specifics, but we are looking to develop a plan and find answers.”

Added Correll: “We will, as always, continue to be lean and cost-conscious, making the adjustments required to stay competitive. Similarly, wages and benefits will continue to be competitive.”

Georgia-Pacific spokeswoman Gail Smith said Wednesday that it was too early to tell if any Maine residents working for G-P or Great Northern would lose their jobs.

In Augusta, the Maine Senate on Wednesday urged Great Northern’s new management to stand by its pledges to the people of Maine. Specifically, the resolution asked the company to proceed with the development of a $400 million lightweight coated paper mill in Millinocket and to revitalize the Pinkham Lumber Co. mills in Ashland and Portage Lake.

But T. Marshall Hahn Jr., the chairman of Georgia-Pacific, told New York stock analysts on Tuesday that the company would manage its business to generate the maximum amount of cash possible in the near term “without foregoing superior projects and maintenance.”

“Capital commitments will be reviewed very carefully and only exceptional projects will be funded,” Hahn told the analysts.

Added Hahn: “We will also, as in the past, continue to review all of our businesses, facilities and timberland with an eye toward future strategic fit and performance. While … no asset divestments are planned today, we have sold some non-strategic assets each year and it is reasonable to assume that this trend will continue.”

The chairman also said that Georgia-Pacific would reorganize its corporate structure based on product lines. According to Hahn, the merged companies will have six major business units: tissue; paper distribution and converting; white paper; pulp and bleached board; containerboard and packaging; and groundwood-containing papers.

The Georgia-Pacific mill at Woodland will become part of the white-paper unit, which will include six other operations in the South and Midwest. But the Great Northern mills in Maine will be the only components of the groundwood-containing papers unit. Such a corporate structure would make it easier for G-P to sell the Millinocket and East Millinocket facilities.

Smith said Hahn’s speech was not meant to imply that Georgia-Pacific was retreating from its promises to maintain and nurture all of its Maine assets. The speech was a broad look at G-P’s total operations, she said, and the company would honor its commitments to Maine.