Paper industry job cuts have ‘blindsided’ Maine

BANGOR – The state’s paper industry suffered another body blow Thursday when Nexfor-Fraser Papers announced that it would be cutting 190 jobs in Madawaska, plus another 141 positions directly across the river in Edmundston, New Brunswick.

According to one industry analyst, Maine is being “blindsided” by corporate downsizing, mill closures or bankruptcies. More than 1,600 jobs have been lost since early January, although at least 300 should immediately return when Great Northern Paper Co. is reopened under new ownership next month.

Gov. John Baldacci has a right to be aggravated, said James McNutt, executive director of the Center for Paper Business and Industry Studies in Atlanta, Ga.

McNutt said Thursday that Baldacci has been given “a hot kettle without pot holders,” trying to get a grip on “what his predecessors did and didn’t do and what labor and management did and didn’t do” to keep one of the state’s dominant industries in a top-notch position.

And last week, at the Maine Pulp and Paper Foundation’s annual meeting, the governor heard numerous paper industry analysts criticize the state’s uninviting business climate, with high energy, labor and other production costs, as being the primary reason for job reductions and closures.

On Jan. 8, the day Baldacci took office, Great Northern filed for bankruptcy. In the months that followed, the governor was involved in selling the two mills in Millinocket and East Millinocket to Brascan Corp. of Toronto, the parent company of Nexfor-Fraser Papers.

Then, on April 3, hours before addressing the foundation’s annual dinner, Baldacci was informed that Georgia-Pacific Co. in Old Town would announce the next day that it was “retiring” its tissue operations and eliminating 300 jobs.

And on Wednesday afternoon, Bert Martin, who is vice president of Nexfor and president of Fraser Papers, called Baldacci to inform him that his company would be cutting 331 jobs in Madawaska and Edmundston the next day. Martin and Baldacci had spoken prior to the foundation’s dinner, Martin said Thursday, but he did not tell the governor about the upcoming job cuts.

About the phone call to the governor, Martin said Baldacci acknowledged the situation Nexfor-Fraser was in.

“He understands more than anyone that pulp and paper companies can go bankrupt if they don’t make the changes that they do,” Martin said.

But McNutt said he believes that if paper companies continue to give Baldacci short notice about layoffs that are going to be announced within hours, they could end up trying the governor’s patience.

“If they’re not careful, they’re going to destroy his good will, especially when he’s blindsided like this,” said McNutt, in a telephone interview from Atlanta.

About the recent job losses, Baldacci said, “I’m not happy about it. Nobody’s happy about it.”

On Thursday afternoon, after Nexfor-Fraser announced its 331 job cuts, Baldacci said he believes the paper industry is preparing itself for a major resurgence in activity once the national and international economies emerge from their recessions. He said that at least three unidentified companies are planning major capital investment projects that should strengthen their operations.

“What’s happening in Maine is symptomatic of what’s happening nationally and internationally,” Baldacci said.

In response to the industry’s criticism of Maine’s business climate last week, Baldacci on Tuesday announced that “Maine is open for business.” He convened a press conference of state and local officials, business and paper industry executives, and trade group representatives to publicize what they called business-friendly initiatives. That includes the Legislature continuing to fully fund the Business Equipment Tax Reimbursement program, where businesses are reimbursed by the state for the personal property tax they pay on equipment to the towns where they are located.

Paper companies, though, are streamlining their operations and reducing their labor forces to cut the costs of manufacturing their products in a price-depressed marketplace.

“In today’s world, these operations are going to be smaller than they are now, but they’re going to be stronger,” Baldacci said. “While there may not be the same number of people, they’ll be here for the next 15, 20 years or so.”

Martin said that is what Nexfor-Fraser is trying to do in Madawaska and Edmundston – return the mills to a competitive status in the worldwide marketplace.

“At the end of the day, it’s a good news, bad news thing,” Martin said. “It’s a short-term pain for a long-term gain. Our guts and our hearts are in these operations.”