Fraser leader touts benefits of split into two companies

ST. AGATHA – Breaking up Nexfor Fraser Papers Inc. into two companies will aide Fraser in the long run, and in turn will be good for the Madawaska-Edmundston complex, Fraser’s president said Monday.

In July, Fraser Papers Inc. will become a separate company with its own board, its own focus and its own business strategy, Bert Martin told businesspeople from Madawaska, Fort Kent and St. Agatha.

He said the “bulk” of employee cuts at the Madawaska-Edmundston complex have been made, except for cutting a second shift in one part of the Edmundston complex.

One year ago, the company embarked on a plan to cut 331 jobs at the twin complex. Today, the Madawaska plant is left with 885 jobs that still bring $53 million in payroll to the St. John Valley.

“There is also nothing to the reports that the startup of machines at Millinocket will hurt the mill at Madawaska,” Martin said. “Those are ungrounded reports because the two mills don’t manufacture the same grades of paper.”

The No. 11 supercalendered paper machine at Katahdin Paper Co.’s Millinocket mill is expected to go on line by the end of June. Katahdin is owned by Nexfor Fraser, a subsidiary of Brascan Corp. of Toronto.

Martin said Monday, “We are here [in Madawaska] to stay. We have a good plant, and a good complex with Edmundston.”

He gave a run-down of Nexfor Fraser Papers and its assets.

The pulp and paper side of the company, which will become Fraser Papers Inc., includes 44 percent of its assets and accounted for 45 percent of sales last year.

The new Fraser unit will include lumber mills and acreage in Maine and New Brunswick, and pulp and paper mills in Maine, New Brunswick, Quebec, New Hampshire and the Midwest.

The company’s markets are 88 percent in the United States, 10 percent in Canada and 2 percent in Europe. All told, the company will have 3,800 employees.

Over the past two years, the pulp and paper side of Nexfor lost $87 million. To that end, the Madawaska-Edmundston complex made $1 million.

Martin defended that, noting that the pulp and paper industry in North America has seen 80 mills close permanently and the loss of 32,000 jobs in the past six years.

The job cuts last year at Edmundston and Madawaska were prudent, Martin said. “If we had not done that, the operation would have lost $8 million,” he said.

“The situation is changing, the economy is getting better for us, and we believe we will make a $3 million profit this year,” he said. “Things are changing, markets are going up, even though the price is not.”

He said the drop in value of the U.S. dollar in the past year cost the company $27 million in Canadian exchange. While most of the company’s sales are in U.S. dollars, much of their costs are in Canadian dollars.

He conceded the ride the past year has not been easy for employees.

The cuts in personnel last year cost the company $26 million for early retirement and severance. The company is saving $21 million a year with fewer employees, he said.

Martin made clear that he was disturbed about one pending issue during his 75-minute session with the Greater Madawaska Area Chamber of Commerce: a bill that would allow loggers and logging truckers to organize.

“The Legislature has no business to be in business,” he said.