MADAWASKA – Fraser Paper Inc. not only is the town’s major employer, but it also is the town’s major taxpayer.

The Madawaska Board of Selectmen and the School Committee received a quick, 75-minute primer Thursday on the state of the paper industry, not only at Fraser, but industrywide.

It wasn’t a pretty picture that Dick Arnold, Fraser’s mill manager, painted. Costs are up, prices are down and some mills have been curtailing operations, including laying off employees.

That hasn’t happened yet at Madawaska. Actually, the company recently hired 13 employees, the first in nearly five years.

“We asked you here to seek the town’s support in holding costs down,” Arnold said at the outset of the session held in a conference room at the mill. “The paper business is not good, and we don’t see a lot of changes in the near term.

“Capital expenditures at Madawaska have been cut, and we don’t see any big capital expenditures,” he said. “The only project we have going is $14 million in a secondary treatment project.”

In the past decade, the company has invested $500 million in capital projects in the Edmundston-Madawaska complex. For last year and this year, capital expenditures will be less than $10 million a year at Madawaska.

Arnold said the mill is into zero budgeting, which could have a major impact on the community.

Fraser pays the town more than $ 4.5 million a year in property taxes, about 66 percent of the local property tax bill. The company’s annual valuation will be decreasing because capital expenditures are not coming and company property is depreciating.

The company official suggested that the town and the school board look at their operations to also decrease costs, as the company has.

Discussions became tense about halfway through the meeting, when Vernon Doucette, chairman of the Madawaska Board of Selectman raised the issue of recent hirings.

“We saw only two people from Madawaska hired,” Doucette said. “The remainder of the new jobs went to Edmundston [New Brunswick] and even as far as Presque Isle.”

“You had a chance to put cash into the community, and you went elsewhere,” Selectman Real Hebert added. “Now you want us to cut our budgets.

“I think you blew a fuse on that one,” Hebert continued. “You did not do the community good when you did this.”

Arnold countered, saying, “I’m not asking you to cut your budgets, I am asking for your support and cooperation. There is no way that I can make the criteria for working here be living in Madawaska.

“I thought the hiring went smoothly,” he said. “We made it a requirement that employees need to live within 30 minutes of the mill. Maybe we missed with the hirings.”

Just as quickly as the meeting turned tense, it calmed down.

Arnold attempted to explain that he was asking municipal officials to look at the way business is conducted, and that perhaps savings can be found, as the company has done in the last 18 months.

“We are looking for support and cooperation,” he said.

Arnold told the officials that the company, Nexfor Inc., of which Fraser is a part, had earnings of $79 million in the first quarter of 2000. This year, the company lost $7 million during the first quarter.

He admitted that the closing of a Midwest operation had a lot to do with the loss and that Fraser’s Madawaska mill was making money.

“That’s because we have looked at the operations and changed the way we are doing things,” Arnold said. “We just can’t keep on doing things the way we had been.”

One thing Fraser has done, he said, is in health care. The company, which is self-insured, has not seen a decrease in health care costs but has curbed the increase to a point that is below the health care increases in the industry.

At the end, Arnold said the session was called in an attempt to create some cooperation.

“Traditionally, the budget process drives a wedge between Fraser and the town,” Arnold said. “I wanted that to change.”

In the past decade, the company tried and received mill rate freezes twice from the town. The ensuing municipal budget deliberations became tense and argumentative during several budget years, and especially so between the Town Council and the school board.

Each time it occurs, the Fraser mill rate freeze is blamed.