Mills trying to limit costs Contracts in flux at Eastern Paper

LINCOLN and BREWER – Difficult economic conditions are prompting Eastern Paper officials to ask salaried and unionized employees at its Brewer and Lincoln mills to take concessions in wages and benefits for the survival of the company.

Company and union officials in Brewer and Lincoln have been engaged in separate talks initiated by the company related to concessions. “The dialogue between the parties has resulted in a proposal at both mills, which will reduce labor costs associated with the labor contracts,” company and union officials stated in a joint press release late Tuesday.

Proposed contract changes for Brewer and Lincoln will be announced to the respective work forces in the coming days. Company and union officials were mum on details as to what kind of concessions would be sought, saying they wanted to present the details of the new packages to rank-and-file members before disclosing them publicly.

Four months ago, Eastern Pulp and Paper Corp., the parent company of the Lincoln and Brewer mills, filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. The filing in Bangor Bankruptcy Court listed debts totaling $181.3 million and assets of $187.8 million. At the Lincoln facility, debts were $110.66 million compared with assets of $113.97 million, and at the Brewer facility, debts were $70.65 million compared with assets of $73.84 million, according to court documents.

Earlier, Joseph H. Torras, chairman of the company, described the filing as a “timeout” for the company. He anticipated a successful Chapter 11 with the company emerging stronger and healthier.

Torras had hoped the filing would not affect the 1,000 employees who worked at both mills, but economic conditions have changed.

Weak business conditions caused the company to shut down its oldest and smallest paper machine at the Brewer mill in November, resulting in the loss of 41 jobs. Officials say 30 other employees have been put on temporary layoff status.

The pulp and paper industry has experienced further declines in profitability during the fourth quarter, creating weak markets, said Douglas Walsh, the company’s executive vice president of operations.

“Eastern Pulp and Paper has not been immune to this economic downturn in our industry,” said Walsh. “As a result, we have asked all our employees, union and salary, at both Brewer and Lincoln to accept modifications to their employment packages. We are confident this action in conjunction with other strategic changes and companywide cost reductions currently under way will place the company in a position of profitability, which will permit its emergence from Chapter 11 protection,” he stated.

“Success at both facilities depended upon the ability of business to generate the kind of income which will keep the mills running and our members gainfully employed, ” said Duane Lugdon, speaking for the unions at both mills. He is an international representative for the Paper, Allied Chemical and Energy Workers International Union, known as PACE.

Lugdon said the most important aspect of the recent talks was to achieve a plan that would assure the court and creditors that the businesses at Lincoln and Brewer not only could survive, but also could return to a healthy state.

“I am confident that this plan, in concert with other changes the company must make in the way it does business, will assure the court and creditors that it can indeed return to a healthy state and meet its obligations,” said the PACE union official.

Walsh said the company was grateful for the support of all of its employees, PACE International, the town of Lincoln and the city of Brewer.

The Brewer union local will hold informational meetings about the new contract proposal for its members at 12:15 p.m., 3:30 p.m. and 6 p.m. Friday, Jan. 19, at the union hall. Brewer union members will vote on the new proposal from 5:30 to 9 a.m. and from 3 to 6 p.m. Monday, Jan. 22, at the union hall.

The Lincoln union local will hold informational meetings on the new proposal at noon, 3:30 and 6:30 p.m. Thursday, Jan. 25, at the union hall. The polls for voting will be open from noon to 6:30 p.m. Jan. 25, at the union hall.

About 14 months ago, union workers at the Lincoln mill ratified a new five-year contract. The new contract provided pay increases totaling 12 percent and set a maximum employees had to contribute for their health insurance costs. The most a union employee would pay for health insurance costs was $75 a month in the first year of the contract up to a maximum contribution of $125 a month in the final year.

A five-year contract for union workers at the Brewer mill will expire at the end of November. In December, the contract provided pay increases totaling 17 percent during the five-year period.