Red Shield plans layoffs Pulp market crash blamed for Old Town mill’s problems

OLD TOWN – Many of the recently rehired workers at the Red Shield Acquisition pulp mill have received an unwelcome holiday surprise – news that they will be laid off again, at least temporarily.

Although about 110 employees were working there this week to operate the biomass boiler and winterize the mill, a local mill official said Wednesday that the number of workers there soon will decrease.

“Next week we will be dropping the number down to about 75 and in the coming weeks it’ll be closer to 50,” said Dan Bird, human resources manager. “As I was bringing [workers] back, the bottom was falling unpredictably, unexpectedly out from underneath us, to a point where it was not viable to run our pulping operation – which is really our only revenue.”

Bird said that he was in the process of rehiring all 180 laid-off workers to return to the mill, which was purchased at a bankruptcy auction about a month ago by a New York investment firm. Then the pulp market crashed.

“Some people will say, ‘You should have predicted this. Why did you bring everybody back?'” Bird said. “But we had double-digit percentage decreases [in price] in just a matter of days.”

Other pulp producers around the country have been negatively affected by the soft market, including Verso Paper Corp. in Bucksport, which is idling one of its four papermaking machines this month, and International Paper, which “indefinitely” closed a Louisiana paper mill last week that employed 550 people.

Bird said that Lynn Tilton, the new owner of Red Shield Acquisition LLC, wants to diversify.

“Her vision is to turn the facility around by diversifying it, so we’ll have these other markets and other products, to buffer our overall business,” Bird said. “The pulp market is very high, very low. It’s a roller coaster.”

Tilton is the founder and CEO of New York investment group Patriarch Partners, which bought the bankrupt mill last month.

In a statement released Wednesday, she had reassuring words about Red Shield Acquisition’s future.

“Despite the sudden drop in pulp pricing, our enthusiasm for this long-term project has not waned,” Tilton said.

According to Bird, the timing for the mill’s intended restart was unfortunate.

“We’re going to restart here. It just didn’t make any kind of business sense to do it right now,” he said. “We’re not insulated from the rest of what’s going on in the world. There’s just an oversupply [of pulp] and diminished demand.”

This is the latest chapter in the troubled history of the mill.

About 400 workers lost their jobs in May 2006 when Georgia-Pacific Corp. officially shut down the mill, which had operated in Old Town for more than a century.

The Red Shield investment group bought the mill in September 2006 in hopes of reinventing the facility, but cited rising costs for materials and fuel when they idled the facility last June.

Patriarch Partners, the new owner, specializes in turning around “distressed” businesses, according to its Web site.

Tilton said that the Red Shield management team was “carefully planning our capital expenditures and gauging the markets.”

“Once the basic operating economics and pricing find equilibrium, we plan to restart production,” she said.

acurtis@bangordailynews.net

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