3 paper industry veterans to guide future of GNP

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Jim Giffune and his two long-time friends and paper industry colleagues, Tom Griffin and Warren Richardson, mince no words when it comes to explaining why they came out of retirement to try to rescue bankrupt Great Northern Paper Inc.

“This business of people buying Maine stuff, moving it out of state and shutting the Maine portion down has got to stop,” said Giffune, who lives in New Gloucester. He said the state needs to stop exporting its creativity, ingenuity and initiative and by some sense of social responsibility needs to find a way to keep Mainers employed.

The clock started ticking for Great Northern’s new management team when a federal bankruptcy court judge put them in charge of the century-old paper company three days ago.

The three retired executives, who collectively have worked in the paper industry for 113 years, now face the task of lining up a buyer in a very short period of time, just 90 days.

They are confident about their task and so are many of the 1,130 workers who were left idle 44 days ago when the financially troubled company ran out of money and shut down its paper mills in Millinocket and East Millinocket. It marks the company’s longest shutdown in 25 years. A strike idled the mills for 59 days during the summer of 1978.

When GNP shut down and filed for bankruptcy, the three friends immediately contacted each other to discuss how they might help. At the same time, Giffune’s name appeared on a list compiled by Gov. John Baldacci’s office of likely overseers when it became obvious few believed GNP owner Lambert Bedard could negotiate a sale benefiting the communities.

Baldacci contacted Giffune, who agreed to take the job and asked if Griffin and Richardson could assist him. The trio, who worked a total of 84 years at Great Northern, took on the task for no pay.

“It was pride, in a way,” said Giffune, 65, explaining why he signed on. “It’s pride in what was. I think of all of the guys I knew there, how helpful they were in my growing process and how much I admired them. Many have passed away. I was so proud of the company when I worked there. The ingredients for a return to that level of quality remain there and I want to bring them out.”

Richardson, 64, and Griffin, 60, echoed similar sentiments.

“This is where we learned our trade,” said Richardson, who now lives in Orrington.

“We all had very successful careers beyond GNP,” said Griffin, who lives in Yarmouth. He said the foundation for those careers was built at Great Northern. “The people and everybody there really gave us the ability to be successful,” he said. “We felt this would be an opportunity for us to give something back.”

In 1990, all three men left Great Northern and went to work at different companies. Richardson stayed with Georgia-Pacific Corp. after it sold GNP. Griffin went to Champion International, and Giffune went to Fraser Papers Ltd. “We have additional industry knowledge that we think will put us in the best position to sell these mills,” said Griffin.

Goals and a timetable

Giffune says his goal is very simple – sell the paper mills and get them running again.

“We want to set up a situation where competitive bidding results in the realization of the true value of these mills,” said Giffune. “We will try to secure the best bidder from the perspective of all of the stakeholders in accordance with the mandate of the court.”

The next court-imposed deadline is Monday, Feb. 10. The team is obligated by its charter with major creditor Boeing Capital Corp. to present, if they have one, a stalking horse bid – a bid by which all others are compared. Giffune said the team already has such a bid, but said it would be inappropriate to talk about it at this time.

The next important date is Tuesday, Feb. 18, when the court may approve the stalking horse bid.

Although Giffune would not divulge the name of the stalking horse bidder, Ronald N. Stern of St. Mary’s Paper in Ontario recently said he had more than a passing interest in Great Northern. Stern was reported to have submitted a bid for more than $70 million, according to sources involved in recent negotiations with the company’s creditors. The towns value the mills at more than $100 million each, making the bid very low.

Analysts say at least six companies are interested in purchasing Great Northern, including J.D. Irving and NorskeCanada.

Griffin said the team hopes to attract a buyer who understands the cycles of the business, has the resources to survive the cycles and understands when to strategically invest capital. “If we get somebody that has the resources and the wherewithal to do that, then these mills will have some longevity,” he said.

He said the U.S. paper industry is in serious trouble and many mills are being shut down. “Our effort is to see that these mills are still standing, and we hope the new company views investments as opportunities, not just costs.

“Our effort is to try to conclude this as quickly as possible,” said Griffin, referring to the timetable set by the bankruptcy court. It calls for all bids to be in by March 21 and the sale to be complete by April 21. If a sale is not complete by then, the mills will likely be liquidated by creditors.

GNP’s strengths

The new management team believes the paper mills still can have a viable future and can be competitive in the global economy.

The three men said the 100 years of papermaking experience passed on through the generations of workers is a plus. “We believe the work force is part of the asset base,” said Giffune.

He described the newly rebuilt No. 11 paper machine, the largest in the Millinocket mill, as world-class.

Richardson, who helped install the machine 31 years ago, said the $150 million investment made by Bedard, who recently stepped down as GNP’s chief executive officer, was something he would have liked to see a few decades ago.

Despite several attempts in the 1980s, company executives could not convince Great Northern Nekoosa Corp.’s board of directors to invest in the Millinocket paper mill. In fact, some corporate executives even talked about shutting it down.

About a year ago, Richardson took a tour of the newly rebuilt No. 11 paper machine. “I was extremely pleased,” he said. “They did exactly what I wanted to do. They did a really good job.” He said the company used technology that was not available when he was there. “They built as good a machine there as exists anywhere else in the world,” he said. “Unfortunately, they have not had the opportunity to develop the right kind of markets for it. It is worth some money to somebody, and it can be operated at a profit.”

The three men said the two paper machines in the East Millinocket mill are solid and are very competitive.

“There is no reason in the world that those three pieces of equipment can’t be put together in some way to be profitable in today’s market,” said Giffune. “We are very confident that can happen, and we think the right bidder will see that, too.”

Griffin said he could not believe companies in the paper industry would leave Great Northern’s three paper machines idle.

Success depends on trust

To succeed, Giffune said, the team needs the continued active support of Baldacci and consideration from all of the stakeholders. He would not speculate on potential job losses or concessions if a buyer wants a streamlined operation.

“We believe and trust the unions to be in a position to present a competitive labor situation when it comes time to deal with the right person,” said Giffune.

Giffune said it is important that everybody in the communities understand they have a role to play in the future competitive position of the company.

“I feel confident from what I’ve heard being back in the area that they all understand what that is and that they will make their contribution,” said Giffune. “We have to address all of the components that affect a business, one of which is certainly taxes.”

Griffin said people need to understand the paper mills and the communities are “not ever” going to be the way they were.

“We believe that if everybody makes an effort and we get the right buyer, we could bring those communities to some sort of consistent level of prosperity,” said Griffin. “It might not be what was experienced in the past, but I hope it would be a lot more consistent than what it has been in the last 15 years.” He admitted there would be some pain.

As for when the mills will be running and producing paper, Griffin estimated the earliest could be about June or July. He said he worried about the depletion of “human” resources as laid-off workers look for work elsewhere.

The team, then and now

The three men started building their careers at Great Northern in the early 1960s. They began as research engineers and draftsmen and worked their way to high-level management positions.

Richardson left GNP to become resident manager of the Leaf River mill in New Augusta, Miss., in 1989 just before Georgia-Pacific Corp.’s hostile takeover of Great Northern’s then parent company, Great Northern Nekoosa Corp. At the time, GNP and Leaf River were under the GNN corporate umbrella. A short time later, Giffune and Griffin left.

Richardson, who was promoted to vice president of operations of GNN’s Leaf River Forest Products Division, eventually came under Georgia-Pacific’s ownership. He stayed as general manager of the forest products division until retiring in 2000.

Meanwhile, Griffin went to Champion International in Stamford, Conn., as director of manufacturing in the company’s publication business and in less than a year was promoted to vice president of operations at the company’s Deferiet, N.Y., mill. For the next nine years, Griffin continued to climb the corporate ladder, finishing as executive vice president of the company’s coated papers division. He retired in 2000.

After Great Northern, Giffune went to Fraser Papers Ltd. in Madawaska. He retired in 1995, but then stayed on for a few more years to manage the design, construction and operational startup of a new $120 million co-generation facility. He finally retired in 1998.

Giffune compared the three friends’ new job to building a house, except the saws and hammers are their vast knowledge of Great Northern and the paper industry. “It is a business that we know about, and we want to rebuild it,” he said.