Unions object to proposed GNP cuts Firm rejects request not to cancel benefits

MILLINOCKET – The 14 union leaders representing about 900 workers at Great Northern Paper Inc.’s paper mills in Millinocket and East Millinocket plan to oppose a proposed cut in benefits for retirees and workers.

During an informal meeting with Lambert Bedard, GNP’s owner, and other officials on Monday, union leaders asked the company to withdraw a pending bankruptcy court motion that would eliminate the company-paid health care coverage for the 677 retirees, workers’ severance pay and the company’s 401(k) match for employees.

Last week, Great Northern filed for Chapter 11 bankruptcy in a Bangor court, saying it did not have enough money to continue operating. A federal bankruptcy judge granted the company temporary relief to meet minimum expenses and continued the proceeding until Wednesday.

Great Northern’s proposed reorganization plan calls for starting up the company’s two paper mills, which have been idle along with 1,033 workers for 17 days. The company’s current creditors, Congress Financial and Boeing, would lend GNP $25 million to operate for 13 weeks, while the company “dedicates all of its effort to locating a strategic exit from Chapter 11 through a capital infusion or sale of its operations,” according to court documents.

The reorganization plan also calls for eliminating retirees’ health care benefits, workers’ severance pay and the company’s match to the unions’ 401(k) retirement plan for 60 days.

Union officials said the company refused to withdraw the proposal, did not offer any alternatives and refused to change its position. Officials said the unions stood firm and united on the issue of the mills starting up as soon as possible, but say workers have more faith in the bankruptcy judge than in the company’s owner.

“The members at this point have more confidence in what the judge might rule on,” said Lucien Deschaine, an international official representing the Paper, Allied Chemical and Energy Workers International Union. “There is very little confidence in the company.”

Deschaine said union leaders had asked company officials to think long and hard about the repercussions of taking away benefits for retirees and benefits and severance pay for workers. He said company officials told union leaders they could not change the proposal to cut retiree and employee benefits because it was required in order for the company to receive funding to start up the mills.

Dave Lowell, an international representative for the machinists union, said if company officials wanted to negotiate with the unions, they should have done so two weeks ago or as long as a month ago.

“They didn’t even give us a warning and dropped this on us at the last minute,” said Lowell. “We still want to work with the company to get the mills back up running again, but if they are not willing to withdraw that motion we have no choice but to go to court and fight against it.” The unions are also concerned about a provision in the proposal that allows the company to further modify the collective bargaining agreements along with other benefit plans, including the pension. “We just can’t buy this pig in a poke,” said Lowell.

Later, Bedard said the meeting and frank discussions with union leaders did not result in any agreements. “My goal is to return GNP to financial stability by starting up the mills and returning the employees to work,” said Bedard. “On Wednesday we will ask the court to begin that process.” The owners’ comments were conveyed by Brian Stetson, GNP’s spokesman.

Meanwhile, leaders of the 14 unions received official notice from Bedard that the company has invoked the federal Worker Adjustment and Retraining Notification Act, a federal 60-day notice that warns employees of a plant closure, or a substantial employee layoff.

Stetson said the company filed the notice on the advice of its attorneys. “That was sent as a precautionary measure on the chance things aren’t successful in the reorganization of the company,” said Stetson.

In the notice, Bedard said the company temporarily ceased production and laid off 1,033 employees as the result of imports and a downturn in economic markets.

“The good news is that we are able to resume production and continue full-scale operations,” Bedard stated. “We have been successful in securing temporary financing that has enabled us to resume production at the facilities so we will be producing and shipping paper. Because of the temporary nature of our current financing, we are continuing to seek out financial arrangements on a long-term basis. We are optimistic that we will be successful, but if we are not, there is some possibility that further layoffs will be necessary and that all or part of the facilities may be closed.”

But many workers say the only financing the company has is what the bankruptcy judge approved late last week, which is enough to meet the payroll of a small crew and for oil through Wednesday.

Workers say Bedard lost control of the company’s finances when he filed for Chapter 11 bankruptcy, and say the fate of the company will now be decided by the bankruptcy judge.

Workers said they were not willing to give the current owner any more, but would be willing to do things to help the company survive, though under different management.

Many workers said they gave the company between $65 million and $75 million in 1999 in the form of six-year concessionary bargaining agreements, which included no pay increases for five years and higher health care costs. Employees now pay $181 per week for family health insurance.

“They created this mess themselves,” said Bret VanDine of East Millinocket. “This place has been blatantly mismanaged for the past three years.”

VanDine and many other workers said the company had substantially increased the number of its managers. “These managerial jobs pay a lot more in salary and benefits than a lot of the hourly jobs they are trying to cut,” he said.

VanDine and many other workers said the company spent nearly $1 million for senior management bonuses in 2000 and 2001. “It’s just another prime example of how they have mishandled money here. … To know the operation was not turning a profit, yet they gave senior management bonuses,” he said.

Workers said several companies that toured the mills in recent months had made purchase offers, but the owner turned them down because the price wasn’t high enough. “He [Bedard] is trying to squeeze as much out of us here before he finally folds,” said Van Dine.

Some workers said they were told by company officials that even if the judge approves what the company wants, it won’t be enough to run all four paper machines and keep all 1,130 people employed. “It will be a partial operation; we would still be looking at 200 to 400 people being laid off, even if everything goes well through this bankruptcy, and that is kind of the best-case scenario,” said VanDine.