A new chapter Four companies sign on to run former Old Town G-P mill as mixed-use facility

loading...

After more than 100 years, the days of making paper at the Old Town mill are over. Four new companies have signed on to take over the facility, but none is in the paper or pulp business. When combined, they have goals of creating more than 1,000 jobs at the former Georgia-Pacific Corp. site in the next five years.

“This will really get us into the 21st century and get us a fresh start,” Gov. John Baldacci said Friday.

The businesses, which are expected to be revealed today at a press conference at the Old Town Public Library, include:

. A group of private investors that will operate the facility’s biomass boiler.

. Tamarack Energy, which will serve as the engineering arm for the boiler.

. A label-making company.

. And a low-temperature heat pump manufacturer that will continue with its current business plan in Bangor and operate a second branch in Old Town.

The closing tentatively is set for the end of October, and the speculation concerning the mill’s future is over.

Cascades Inc., a Montreal-based producer of packaging and paper products, originally was believed to be a prospective buyer, but now is out of the picture. The company was thought to be interested in reopening the pulp operation at the facility, but no longer is a player.

“It’s really the promise of a whole new chapter in the history of the mill,” Dan Bird, vice president of the Local 80 papermakers union, said Friday. “We’re not going to be making any more pulp and paper in that bend in the river.

“That chapter’s closed.”

Past, present and future

When G-P announced on March 16 that it was closing the mill, the company agreed to work with the state to find a buyer.

Over the last few months, deadlines have come and gone, but Baldacci, state Economic Development Commissioner Jack Cashman and a host of others have continued to work to find a new owner.

They say they are excited about the prospects of the redevelopment plan in front of them.

The mill closure and the simultaneous shutdown of G-P’s four associated chip mills in the region put 459 people out of work.

Under this agreement, former G-P workers will be offered employment by the new companies before they advertise the jobs.

“There are going to be some wage reductions and benefit reductions,” Bird said, but he added that he’s excited about the possibilities that lie ahead not only for the workers, but also for the community.

“This is a very smart way to go,” Crystal Canney, spokeswoman for Baldacci, said Friday. She said the plan diversifies not only the area’s tax base, but also the work force.

In with the new

RED SHIELD AND TAMARACK

The first part of the redevelopment plan is for a group of private investors, identified only as Red Shield, to operate the biomass boiler at the north end of the mill. The company’s initial revenue stream is expected to come from selling electricity produced by the boiler into the power grid.

“A group of about 50 previous employees, at least hourly employees, will be back at work within two weeks of the closing,” Bird said. He also works as a peer support worker at the Bangor CareerCenter assisting laid-off G-P workers.

Red Shield’s long-term plans are even more exciting, the union official said.

“Initially, it looked like another year before we’d get some others [working],” he said. After some negotiating, it appears that an additional 75 to 100 employees will be brought on before the end of the year.

“I’m looking at sometime mid-December, before Christmas,” he said. “Hopefully, we’ll get the 100, not the 75.”

Who goes back to work and when is identified in the labor agreement that has been negotiated between the union and Red Shield.

The long-range plan is to convert the biomass boiler from producing electricity to making ethanol by burning wood waste. The waste may come from the state-owned landfill, Juniper Ridge in Old Town.

“They’ll be working on that construction and conversion phase,” Bird said.

The ethanol conversion process is new technology, but ethanol is a substitute for MTBE, methyl tertiary-butyl ether, found in automobile gasoline. MTBE is being outlawed in some places because it allegedly causes cancer and has been found in water supplies.

The University of Maine also is part of Red Shield’s endeavor.

UM recently received a $10.35 million grant to conduct research on using wood to make ethanol, plastics, industrial chemicals and other products that now are made with oil.

With the three-year grant, which consists of $6.9 million from the National Science Foundation and another $3.45 million in matching money from the state, UM researchers will help determine the kinds of products that could be made from wood byproducts, how to make them, and how to market them.

Red Shield reportedly is modeling the Old Town operation after one that is being built in Clearfield County, Pa. The company there just received its required permits and is slated to begin production in the third quarter of 2008.

“There’s a lot of demo that needs to be done,” Bird said. Portions of the mill need to be torn down in order for the conversion to take place, and some subcontractors likely will be involved in that process.

The biomass boiler is the only one of the mill’s three boilers that will be operating, at least for a while.

The other two boilers aren’t cost-efficient to operate to produce power at this point, but they also may be converted in the future.

In addition to ethanol, the process creates other salable byproducts, such as carbon dioxide for beverage carbonation and dry ice.

“Anything they can collect and sell, they’re going to be doing it,” Bird said. “It’s going to be a regional business because you can’t transport [ethanol] very far.”

The Red Shield jobs have been identified as union jobs. While the other companies have agreed to hire former G-P workers ahead of others, they won’t give preference to union members, and all workers likely will go through an application process.

Once the Red Shield jobs are filled in the north portion of the mill, about 180 former G-P employees still will be looking to low-temperature heat pump manufacturer Hallowell International LLC and Lamtec Inc., a pressure-sensitive-label maker, for work.

HALLOWELL AND LAMTEC

Hallowell President and Chief Executive Officer Duane Hallowell is turning a city-owned building at 110 Hildreth St. in Bangor into a manufacturing, assembly and heat pump distribution facility.

“The claim is that these will operate at two-thirds the cost of an oil appliance,” Bird said. The pumps extract heat from air as cold as minus 30 degrees Fahrenheit.

The company is expected to produce commercial heat pumps at one location and residential pumps at the other.

“They’ve got a very aggressive plan,” Bird said.

The company hopes to create 300 jobs in the next two years and have 1,000 employees at both its Old Town and Bangor locations by 2011.

Hallowell will use the old conversion area of the mill where large rolls of paper products were turned into smaller versions that consumers found on store shelves.

Lamtec will be located in the mill’s warehouse.

The Portland-based company makes peel-and-stick labels.

Its goal is to hire 50 people the first year, and employ 400 workers by the second year.

To get up and running, Lamtec is expected to invest $20 million to $30 million in new capital equipment in the warehouse facility in the next two years.

Additional information about the four players is expected to be revealed at this morning’s press conference.

Details regarding the redevelopment will be forthcoming over the next couple of months, according to state and union officials.

“It’s going to be tremendous for the community,” Bird predicted.

The Companies

Red Shield

A group of private investors who will operate the mill’s biomass boiler to produce electricity. The company’s long-term plan is to use the boiler to make ethanol, a substitute for MTBE found in automobile gasoline.

They plan to employ 50 people within two weeks of closing and another 75 to 100 by the end of the year.

Tamarack Energy

A New England-based company with offices in Massachusetts, Connecticut and New Hampshire, the company will provide engineering services to Red Shield for the biomass boiler. It is unknown at this time whether any new employees will be hired.

Hallowell International LLC

A low-temperature heat pump manufacturer and distributor owned by Duane Hallowell of Bangor.The company hopes to create 300 jobs in Old Town over the next two years and have 1,000 employees at both its Old Town and Bangor locations by 2011.

Lamtec Inc.

A Portland-based pressure-sensitive label manufacturer.

Its goal is to hire 50 employees in the first year and employ 400 people in two years.

History of the Old Town Mill [timeline]

1860 Production on mill site begins with sawmill.

1882 Penobscot Chemical Fiber Co. established.

1967 Merger with Diamond International Corp.

1983 Facility purchased by James River Corp.

1997 James River merges with Fort Howard, creating Fort James Corp.

2000 Georgia-Pacific Corp. purchases Fort James, including Old Town mill.

February 2003 G-P announces shutdown of a tissue machine for two weeks in March because of sluggish economy. In addition, Old Town mill’s tissue converting department closes for one day a week for seven weeks. Sixty of mill’s 600 employees asked to take vacation or unpaid leave during shutdowns.

March 2003 G-P announces the two tissue paper machines have been shut down indefinitely. Also, limited production shutdowns occur in tissue converting department.

April 2003 G-P permanently stops producing tissue at plant, shuts down 13 converting lines. About 300 employees expected to be affected by closure.

May 2003 Mill escapes closure when state purchases G-P landfill, selects Casella Waste Systems Inc. to operate facility. Casella gives state $26 million to purchase landfill from G-P, which uses the money and additional funding to build biomass plant to cut energy costs, allowing mill to be more competitive and remain open while addressing state’s solid waste dilemma.

June 2003 Despite concerns over potential liabilities, health hazards, Natural Resources Committee signs off on resolve authorizing state to buy 64-acre landfill in Old Town from G-P. LD 1626 later passed by full Legislature. Seven salaried employees at mill lose jobs.

April 2004 More than 100 people at informational meeting at G-P training center learn that biomass boiler G-P proposes to install at mill will burn more efficiently, improve company’s ability to succeed in paper market. Purchase of boiler to be funded by sale of G-P’s West Old Town Landfill to state. Company plans to recycle biomass boiler built in 1986, previously used at wood-fired power plant in Athens. Maine Department of Environmental Protection approves landfill project. Numerous attempts to appeal decision are unsuccessful.

July 2004 G-P to reduce tissue production temporarily at Old Town mill because of nationwide decline in retail sales.

February 2005 Mill successfully fires up $27.2 million biomass boiler for first time, uses natural gas for test while awaiting permission to burn waste wood chips.

September 2005 G-P says about 15 employees expected to be laid off in October when two tissue converting lines temporarily shut down.

October 2005 About 50 G-P workers expected to lose jobs by end of year after G-P announces all converting lines at Old Town paper mill to be shut down.

November 2005 Koch Industries Inc., nation’s second-biggest private company, announces plans to buy G-P for more than $13 billion. G-P officials in Old Town say it’s “business as usual” until they’re told otherwise.

March 16, 2006 G-P announces it’s closing the Old Town mill and associated chip mills in Milo, Costigan, Portage and Houlton. The closure put 459 people out of work.

May 2006 G-P fails to find a buyer as 60-day deadline with state passes.

September 2006 The state, G-P and union negotiate with potential G-P buyers.

September 25, 2006 The state announces the four companies involved in the mill redevelopment.

SOURCE: Bangor Daily News research