BREWER (AP) – In the latest blow to Maine’s struggling paper industry, Eastern Fine Paper said Tuesday it was shutting down its No. 2 paper machine and laying off about 125 employees.

The mill’s parent company, Eastern Pulp & Paper, said the shutdown resulted from a slump in orders over the past few months and would continue for an indefinite period.

In addition, all other company employees, including those at Lincoln Pulp & Paper, were being asked “to make further sacrifices,” the company said. Management said pay for salaried employees will be cut 10 percent effective June 1 and officials planned to meet with union leaders to discuss changes in labor contracts.

With Tuesday’s layoffs, Eastern Pulp & Paper has a combined work force of 725 at the Brewer and Lincoln mills.

The parent corporation, based in Amherst, Mass., and the two mills have been operating under Chapter 11 bankruptcy protection since September 2000. Officials said shareholders have pumped $8 million into the company during that period and has implemented millions of dollars in cost savings, including worker concessions, without loss of efficiency or product quality.

“In spite of what we have done, we are forced, by recent and unforeseeable conditions in the pulp and paper market, to make substantial cost reductions in order to assure the continued viability of our company,” Chairman and CEO Joseph Hill Torras Sr. and President Joseph Hill Torras Jr. said in a statement.

The executives said paper orders by the federal government placed through mid-June have come in well below levels originally contracted, causing machinery to remain idle.

“Due to these unforeseen circumstances, Eastern Fine Paper in Brwer currently has insufficient business to support all its existing machinery and we have no reason to expect a significant change to occur in a time frame which would enable us to avoid the cost reductions we are announcing today,” the statement said.

The company said Gov. John Baldacci and members of the state’s congressional delegation were aware of the situation and were taking steps to help the displaced workers.

U.S. Sen. Susan Collins said that while she was able to secure a commitment Friday from the Government Printing Office to accept a previously declined shipment from Eastern Fine Paper, company officials indicated that the mills were struggling with sluggish demand and low prices.

U.S. Rep. Michael Michaud, himself a longtime paper mill worker, said that if the industry in Maine is to recover, the nation must address trade policies that benefit foreign paper makers that are not subject to environmental or labor laws.

The cutbacks in Brewer follow this year’s bankruptcy that idled Great Northern Paper in the Millinocket area and led to its sale to Brascan Corp., and Georgia-Pacific’s decision to scale back production at its tissue mill in Old Town.

AP-ES-05-27-03 1831EDT

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