BUCKSPORT — In an announcement that caught many people off guard, Verso Paper officials indicated Wednesday afternoon the local mill will shut down by the end of this year, laying off about 570 employees.
Verso president and CEO Dave Paterson said in a statement the Bucksport mill “has not been profitable for a number of years, in spite of our employees’ dedicated efforts to make it so.”
The mill has been a supplier of paper used in the publishing industry, specializing in magazine paper.
“Our assessment indicates it is impossible for the mill to achieve profitability in today’s marketplace,” Paterson said.
The declining demand for paper and the mill’s rising costs, especially for natural gas, were major factors in the decision to close the mill, which was made by the Verso board earlier Wednesday.
Lyle Fellows, senior vice president for manufacturing and energy, said Wednesday at a press conference across Route 15 from the mill that the decision to close the facility was not made lightly.
“This is a very difficult announcement to make,” Fellows said. “I personally know a lot of people in this facility. They’re among the most dedicated and proud paper workers that I’ve ever worked with. This has a significant impact on our employees and their families and the surrounding communities.”
The mill’s final day of paper production will be Dec. 1, Fellows said. There will be no layoffs until then, and many employees will work beyond that date in order to shutter the facility, he said.
Fellows said Verso also owns an adjacent power-generation plant that is not being shut down. Verso intends to retain ownership and to continue operating the 273-megawatt power plant, he said.
“That whole asset can stand alone by itself,” Fellows said.
The company said it will work closely with union officials and salaried employees regarding severance benefits and other assistance.
Bob Mundy, Verso’s senior vice president and chief financial officer, said in a phone interview the decision to close the Bucksport Mill has no effect on Verso’s mill in Jay or on the company’s planned acquisition of NewPage, which has a mill in Rumford. If completed, the merger would give the joint company 10 mills, not counting Bucksport, and approximately 1,730 employees in Maine.
The announcement caught government officials by surprise, both at the local and state level.
David Milan, Bucksport’s economic development director, and Derik Goodine, Bucksport’s new town manager, were at the press conference. They said they did not know anything major was happening with the mill until earlier Wednesday. Even then, the news came as a “huge surprise,” Milan added.
“Right now, my gut is just ripped out,” Milan said minutes after the announcement was made. “This is akin to a death in the family.
Milan said 24 percent of the mill’s workers live in Bucksport, which means nearly 140 local residents will lose their jobs when the mill shuts down. Milan added the mill has employees living in all 16 counties in Maine.
Goodine said he drove back from Augusta on Wednesday afternoon to hear what the news was going to be.
“Right now, my thoughts are with the workers and the families,” Goodine said.
According to Goodine, property taxes from the mill make up about 44 percent of the town’s approximate $12 million annual budget. The valuation of the paper mill is $317 million, while the adjacent power plant has a separate valuation of $41 million, he said.
Leo Grunwald, an Orland resident who has worked in the mill’s maintenance department for about 30 years, sat in his truck across the street Wednesday afternoon, waiting a few minutes before he walked across the street to start his shift. He said he heard from his father, who retired from the mill about a decade ago, that some sort of announcement was being made Wednesday afternoon. He said he did not know the mill was being closed down.
“That sucks. We knew the merger was coming,” Grunwald said. “We were all worried about that. We knew some mills would be shut down, but we figured it would be after the merger [with NewPage].”
Grunwald said his grandfather also worked in the mill and he has cousins and other relatives who still do.
“It’s devastating,” the maintenance worker said. “The town’s going to fold up. It affects everybody — woodcutters, truckers, people that sell coffee and whatever. I guess I gotta have time to absorb [the news] a little bit.”
Grunwald said he does not think the mill needs to be shut down.
“I think there could be a profit here,” Grunwald said. “I think it’s mismanaged, [but] I’m just a worker. It’s kind of hard to watch it, that’s all.”
Gov. Paul LePage said in a statement he has called an emergency meeting with his economic development team to work with Verso and other parties to try to keep the mill open.
“I have rearranged my schedule to attend to this developing situation and will be in the Bangor region Thursday,” LePage said in a written statement. “My thoughts are with the workers and families who are affected by this closure. As an administration, we stand ready to provide resources to them, including the training and support needed to transition into new job opportunities.”
The Maine Department of Labor said it has assigned a rapid response team to help advise workers at the mill and to file a request for federal assistance for jobs lost as a product of foreign competition. A regional transition team from the Department of Labor already is working in the area with about 180 workers at Old Town Fuel and Fiber, which shut down in August.
U.S. Sens. Angus King and Susan Collins and U.S. Rep. Mike Michaud also said they would help millworkers get access to federal resources.
“The closing of mills is becoming an all-too-common occurrence in our communities,” Michaud said. “But these are more than just headlines — these closings are traumatic events that impact Maine families all across our state.”
Other candidates running for election in November also issued statements in response to the announcement from Verso, expressing support for the workers.
In addition to the mill closures in Bucksport and Old Town, the Great Northern Paper mill in East Millinocket filed for bankruptcy last week after laying off 212 employees in February. Together, the three closures mean a loss of about 1,000 paper mill jobs in the past year.
The Bucksport mill is the smallest of Verso’s three mills, with three paper machines that have an annual production capacity of about 405,000 tons of lightweight coated groundwood and specialty papers. Its other Maine mill, in Jay, has four paper machines that combined can produce more than 1 million tons of coated groundwood, coated freesheet, specialty paper and pulp.
The company in the second quarter of this year logged $43 million in losses, with an 11 percent decline in coated paper sales from the second quarter of 2013. Meanwhile, sales of pulp and specialty paper increased.
Mundy said the public announcement of the closure allows Verso to explore other options for the Bucksport mill site, but he declined to detail any specifics.
“We’re taking a strategic review of the power facilities, and we’re evaluating the other potential options for the future use of the mill site,” Mundy said. “We haven’t made any decisions.”
The company in February bought a 273-megawatt gas-fired power plant at the site of the Bucksport mill. That power plant provides about 28 percent of its power to the Verso mill, and the rest is sold back to the power grid operated by ISO-New England.
Mundy said selling power into the grid is “certainly part of what’s considered as we evaluate our options.”
Electricity prices are expected to spike again this winter as natural gas pipelines to New England are insufficient to provide enough gas for heating and electricity generation during cold snaps when heating demand rises for a sustained period. Mundy agreed the winter ahead looks like a period of high electricity prices for the region but declined to say whether that factored into the timing of the closure, planned for the fourth quarter of this year.