AUBURN – Citing a “perfect storm for the construction industry,” a lawyer for Morin Brick Co. filed Chapter 11 bankruptcy protection Thursday for the 96-year-old company.

“Building is down and costs for raw materials are way up,” said Sam Anderson, bankruptcy counsel for the Old Danville Road plant. “The company requires tremendous amounts of energy use and those costs have skyrocketed. The result has been some short-term cash shortfalls.”

No layoffs among its 52 workers are expected as a result of the filing and the Auburn plant and showrooms in Auburn and Brewer will operate as usual, said Norm Davis, treasurer for the company.

The company’s kilns dry millions of bricks a year in a new energy-efficient facility that is fueled with natural gas. The kilns operate around the clock at temperatures approaching 2,000 degrees Fahrenheit.

“We have 120,000 tons of brick at a time that have to stay at that temperature for three days,” Davis said. “We pay well over $1 million a year for natural gas.”

The company filed its petition in bankruptcy court in Portland Thursday afternoon. The largest unsecured creditor is the city of Auburn, which is owed nearly $300,000 in back taxes, according to the filing. The city placed a lien against the property on June 30.

Sprague Energy is No. 3 on the list, owed nearly $100,000 for natural gas. The company owes its top 20 nonsecured creditors more than $1 million.

Bank of America, the primary secured lender, is working with Morin Brick through the reorganization, Anderson said.

“Everyone believes this is a short-term, cash-crunch issue,” he said. “The filing lets us bridge the gap between a bad economy and when things pick up again.”

Morin Brick specializes in providing bricks for institutional buildings such as libraries, hospitals and colleges. Its bricks form the distinctive arch of the Boston Harbor Hotel and were used in the renovation of historic Fort York in Toronto. Closer to home, they gave shape to Lewiston’s revived southern gateway in the new Northeast Bank and Oxford Networks buildings. They also form many parts of Bates College, both local hospitals, Central Maine Community College and Lewiston High School.

Davis said that specialization is part of what contributed to the company’s cash-flow problems. Because they build so many public buildings, they are locked into bid prices – financed through public bonds – that are set sometimes years before work actually begins. In the interim, material costs go up.

“Those projects have to be quoted way in advance,” Davis said. “There’s some flexibility, but not much.”

The company has also been stung by rising transportation costs. It works on projects throughout New England and Canada.

Nationally, nonresidential construction is taking a hit. According to the U.S. Census, that sector of the industry was down 16 percent from July 2007 to July 2008. Additionally, construction costs have risen 39 percent over the past four years, twice the increase in the consumer price index.

Anderson said the same squeeze that put Morin Brick in bankruptcy court is affecting many other businesses. He said Chapter 11 filings are up about 30 percent nationally in the construction industry.

Davis said he was grateful that the company had a good backlog of work and hoped the reorganization would be brief.

“It’s a very unfortunate thing,” he said. “We brought our new plant online and then the economy went south. If we had had two or three years prior to that, we would be in good shape. Hopefully, things will turn around.”


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