November 22, 2024
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G-P chief says economy may slow mill sale

CALAIS – The boss of the county’s largest employer talked about the future of his facility at a meeting Wednesday morning.

Ralph Feck, vice president of Georgia-Pacific’s Maine operations, met with about 40 people during the Calais Regional Chamber of Commerce’s monthly Eggs ‘n Issues breakfast meeting.

Rather than give a speech, Feck asked people what was on their minds, to which they responded: “The future.”

The area has been on pins and needles since G-P officials in Atlanta, Ga., announced earlier this year that the pulp and paper mill in Woodland and two other out-of-state facilities were for sale. Company spokesmen said at the time that there had been no decision about selling the two other Woodland facilities – the oriented strand board and chip-n-saw mills.

The other facilities on the block are the Leaf River mill in New Augusta, Miss., and the Brunswick mill in Georgia. When the announcement was made, the spokesmen confirmed that G-P had a potential buyer, though they would not elaborate on whether that buyer was interested in one or all three mills or if more than one buyer is looking at the properties.

The sale of the three mills would affect nearly 2,000 G-P employees. There is no timetable for the sale.

Feck said the local mills have faced some difficult times recently.

“As you are all aware, the [chip ‘n saw] mill has been shut down since last summer. It’s continued on what’s called an indefinite status that is not very comforting, but it’s better than a permanent decision. The OSB facility is closing this Friday, and it’s projected to be down during the first quarter,” he said. More than 140 employees are out of work this winter.

At the pulp and paper mill, Feck said, pulp production has been scaled back because of a soft market. “The pulp mill is running about 80 percent of what we projected we would be running at this point in the year,” he said. The mill’s other product, paper, is still on track, Feck said.

Asked about the status of the mill’s sale, Feck confirmed that a potential buyer had been at the mill and was still contemplating options. “There are other buyers out there that have shown enough interest … but at this point, they haven’t requested a site visit. I would say the potential sale is moving more at a snail’s pace right now, where I think a month ago, it was moving more like a racehorse,” he said.

Feck said he believed the less intense interest might be an indication that the whole economy is slowing down. “I think anyone potentially looking to invest in Maine at this point has a yellow caution light on and is proceeding very slowly,” he said.

But even though the economy is cooling, Feck said G-P’s strategy was still to sell the mill.

“Why do they want to sell the mill? Because we’re 70 percent pulp … and their [corporate officials] current philosophy is that [G-P] wants to be a value-added player like Kimberly Clark or Procter and Gamble. We want to be as close to the consumer as we can be and not be three steps away from the consumer.”

Feck said he hopes a large Fortune 500 company purchases the facility. The mill, Feck said, should be attractive to a buyer.

“We are in a good enough cost position that the mill will continue to function and operate,” he said. But, he said, any buyer would have to spend money to upgrade and improve the mill. Whether the plant sells or not, there could be some tough months ahead for G-P as the economy cools. Feck said he learned Wednesday, that the company’s Kalamazoo, Mich., pulp and paper plant closed. “That facility is a little older than this one, and they made the decision today that come December 22, they are shutting down permanently,” he said. “That mill is over 100 years old, and a little less than 300 people are losing their jobs forever there,” he said.

A number of mills in the industry have recently closed. Feck said International Paper purchased Champion Inc. and recently announced it would shut down three mills. He said he believed the Woodland mill was in a good position to continue to exist.

“Five years ago, this facility would have been a prime facility for them to close and walk away from, because we were very high cost. … In 1995, on a worldwide cost curve this mill ranked 88. Which meant there was 87 mills in the world that made pulp cheaper than this facility,” he said. “Probably the top 10 low-cost producers today are in Indonesia and South America. Today, there are 79 hardwood pulp mills left in the world making pulp. … If we’d stayed at 88, I wouldn’t be here. Today we’re in the real low 20s. That’s what the people [employees] in the mill accomplished.”

The pulp and paper mill has a long history in Baileyville. The St. Croix Paper Co. built it in 1906, and G-P purchased it in 1963.


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