CONCORD, N.H. (AP) – The shutdown of a North Country paper mill in January and the planned closure of the state’s last pulp mill in May are hitting logger Josh Boire like a one-two punch.

From one job last fall, Boire sent 54 truckloads of hardwood chips to Groveton Paper Board Co. in Northumberland, and eight truckloads of hardwood logs to the Fraser Papers Inc. pulp mill in Berlin. Together, they bought more than two-thirds of what he cut.

The pulp mill – the biggest buyer of low-grade hardwood in the North Country – consumes nearly a million tons of logs annually. With the announced closing, wood prices already are dropping there and elsewhere.

And when the Berlin mill shuts for good, the ripples will extend throughout the area as loggers, foresters and timberland owners scramble to find new markets.

“Berlin, we got a notice saying they were going to drop their price $7 a ton, and that’s more than our profit. You can work only so cheap,” said Boire of West Stewartstown, who runs a small logging and chipping business with his two sons. “I’m downsizing – I’ll use two men less.”

In the short term the outlook is bleak. Yet, there are more markets now for low-grade hardwood than the last time the pulp mill and the connecting paper mill in Gorham shut down in 2001, due to the bankruptcy of then-owner American Tissue Inc., said Jasen Stock, executive director of the New Hampshire Timberland Owners Association.

In the long term, there are alternative energy markets that will expand for loggers and landowners who can hang on for a few years, Stock said.

RJ Chipping Enterprises of Shelburne, which buys logs, then chips them for use at the NewPage Corp. pulp and paper mill in Rumford, Maine, recently expanded its capacity by 300,000 tons a year, Stock said.

The Timberland Owners Association also is lobbying for a bill in the state Legislature that would require utility companies to buy alternative energy or credits. That would help the small wood-burning power plants in the North Country stay afloat, Stock said.

Public Service Company of New Hampshire is installing a 50-megawatt wood-burning boiler at its Schiller Station power plant in Portsmouth that should come online by September and use more than 400,000 tons of whole-tree chips annually, said procurement manager Richard Roy.

Public Service also hopes to build another 50-megawatt wood plant in Berlin in three years or so, possibly at the pulp mill site. But the Legislature would have to pave the way first: As part of electric deregulation several years ago, it prohibited electric utilities from building or buying new power plants, Roy said.

Berlin city officials also are wooing New England Wood Pellet Inc. of Jaffrey, which is rapidly expanding its capacity as high heating oil, natural gas and propane prices drive homeowners and others to buy pellet stoves and furnaces.

That’s little comfort to Boire. High fuel prices preclude trucking wood from the North Country to Portsmouth or Jaffrey, and the high-quality chips that fetched him $42 a ton at Groveton Paper Board are worth only $26 as boiler fuel.

To try and survive the shutdowns, he’s reviving a firewood business he started the last time the Berlin mill closed, he said.

Meanwhile, overseas competition could close the remaining hardwood pulp mills in the northeastern United States and eastern Canada over the next few years, according to a March report by analysts at TD Securities Inc.

Huge eucalyptus plantations and pulp mills in Brazil can make pulp, dry it and ship it to North -America more cheaply than the paper companies can manufacture pulp in their own heavily forested back yards, said Peter Gordon, vice president for finance at Fraser, of Toronto.

While little of it is exported now, analysts expect large quantities to enter the North American market within the next year, he said.

“These tree farms in Brazil are growing eucalyptus to full height in 10 years,” Gordon said. “The fiber is very cheap and they just grow these trees in concentric rings around a huge pulp mill.”

State Sen. John Gallus, R-Berlin, said overseas pulp also is cheaper because the developing countries producing it have lower wages, fewer protections for workers and less-stringent environmental regulations.

“It’s not a level playing field,” he said.

Gallus also worries about the future of the Gorham paper mill. If it closes, the North Country will lose another 450 good-paying jobs with benefits, in addition to the 250 at the pulp mill and 113 at Groveton Paper Board.

“That’s the other shoe that will drop,” he said.

Fraser has said it may shut down one of five paper machines in Gorham, but Gordon said the overall outlook for the paper industry is improving, due to a wave of consolidations and plant closings.

When Fraser bought the Berlin-Gorham complex and reopened it in 2002 and 2003, it invested millions to upgrade the pulp mill, hoping both to economize on supply for the paper mill and sell the excess pulp at a profit. Instead, due to rising wood, oil and chemical prices, it lost money on both fronts.

With the pulp mill’s closure, Fraser can focus on developing a long-term, sustainable plan for keeping the paper mill profitable, Gordon said. That plan could include using imported pulp, he said.

“You’ve got to create a business model that works … so we’re not always facing the dilemma, Do we run or do we shut?”‘ he said.

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On the Net:

Fraser Papers: http://www.fraserpapers.com/

N.H. Timberland Owners: http://www.nhtoa.org/

Public Service Co.: http://www.psnh.com/

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