Wood availability, tax credits may affect Domtar mill’s future

BAILEYVILLE – The availability of wood, the cost of raw materials, tax credits and the loss of foreign workers will have an impact on Washington County’s only big business, Domtar Industries Inc., company officials said Thursday.

Domtar pulp and paper mill General Manager Debby Feck Thursday talked about the company’s future at a Community Leaders Business Forum.

The mill produces premium-quality business, printing and specialty papers, including inkjet, digital publishing and copy paper and northern hardwood market pulp. The pulp and paper mill has been at its current location since it first opened as St. Croix Paper in 1906.

Domtar employs more than 550 people at its Woodland mill.

More than 95 percent of its employees live in the county. The company’s annual payroll is $39 million, with $24 million being spent locally. More than $56 million is spent statewide.

So when the company is faced with an economic challenge, there is a ripple effect.

One problem, Feck said, is a move by the state to eliminate the tax break on business equipment, something Domtar depends upon.

Recently, there have been proposals to phase out the Business and Equipment Tax Reimbursement Program.

Enacted in 1995, the BETR program provides a dollar-for-dollar state reimbursement for personal property taxes paid on qualified business property.

The BETR program provides all businesses in Maine relief from the personal property taxes assessed by cities and towns. Once those taxes are paid, a business then submits a claim for reimbursement from the state.

“For us not to continue to have that kind of support would be a major change for our organization,” Feck said. “When your facility only makes a couple of million dollars a year and 1 million is coming from tax returns, it doesn’t take very long to say you’ve got to protect it.”

Feck said the mill supports efforts to fund education and other programs, but not at the expense of industry. She said a fear among industry leaders is that the state might modify or eliminate the program.

“Every year we spend hundreds of thousands of dollars to fight off bills that might modify that,” she said. “Wouldn’t it be nice to take that $50,000 to $100,000 and spend it on this mill?”

A little known federal law that could have an impact on the mill if the state’s congressional delegation doesn’t step in to help is the scarcity of visas for foreign harvesters.

A decline in rural population has led to a loss of American harvesters. So industry has looked to foreign workers to fill in the gaps. “There aren’t enough people who want to cut wood in the state of Maine,” Feck said. “It’s fine that we want to give Maine people the jobs, but quite frankly Maine people don’t want them.”

She said the industry has investigated ways to encourage Mainers to seek jobs in the harvesting field. “We need to find those answers, but in the short term, do we shut down mills while we find answers?” Feck asked.

In the past, the industry has recruited harvesters from outside of the country, but not this year. The recent cap placed on U.S. Department of Labor applications for foreign workers, known as H-2B, poses serious implications for Maine’s forest products and hospitality industries, the Forest Resource Association said in an information sheet.

“Each year the forest products industry in our state depends upon between 700 and 800 laborers coming into the state primarily from Quebec on the bonded labor program,” Domtar legislative affairs spokesman Tom Howard added.

Five months into the fiscal year, Howard said, the program reached its limit. As a result, those forest product workers can’t come into the country.

“It is a situation that is estimated to impact as much as 30 percent of the total harvest of this state,” he said.

With the wood costs climbing, Howard said, this latest wrinkle will have a negative impact. He said that the state’s congressional delegation has written letters to President Bush asking him to intercede.