JAY – Citing the price of oil and other rising costs, Wausau Paper announced Monday that it would permanently shut down one of its two Otis mill paper machines by the end of the year and lay off approximately 146 of the mill’s 235 workers.

Kim Lavoie, president of the local chapter of the United Steel Workers at the mill, said he expects when the machine is finally idled, the mill will be left with 85 to 90 people.

“It is really sad to think that this was the largest paper mill in the world,” Lavoie said, of the former International Paper facility. “If there’s a thankful side to this, they didn’t wait until mid-December to tell us. They told us in midsummer so people can make plans.”

The mill, which is more than a century old, has two paper machines. No. 10, which was formerly No. 9, will be shut down permanently. It makes a backing paper used on dashboards and headliners of vehicles and has been running a limited schedule of five days a week, Lavoie said. No. 11 makes masking tape and blue painters’ tape and is running seven days a week.

The No. 10 machine sits in the part of the mill that is in Livermore Falls, and the rewinder for the machine is in Jay, Lavoie said.

The mill is heavily invested in automotive and aerospace industries and they’re on a decline, Lavoie said.

“While the release liner market remains a strategic focus for Wausau Paper, the high cost structure of the liner machine at our Otis mill has made it uncompetitive in today’s business environment,” Wausau Paper President and Chief Executive Officer Thomas J. Howatt said in a statement. “While we regret the impact this decision will have on so many dedicated and loyal employees, it is a decision made in keeping with our commitment to address underperforming areas of our business and to deliver acceptable returns to our shareholders. This move is in keeping with our strategic marketing plan for specialty products that focuses on tape backing grades, high performance release liners and food service and food packaging markets.”

Michael J. Behrens, vice president of human resources for specialty products for Wausau, said in a written notice of layoffs to the town that the cost of oil was a factor in the company’s decision.

The Wisconsin-based company reportedly had record revenues of $1.2 billion in fiscal 2007. It manufactures fine uncoated printing and writing papers, technical specialty papers, and towel and tissue products at eight facilities and employs more than 2,800 people in the United States.

“The paper industry in North America has been changing and declining, and this is just another symptom of the decline of the paper industry,” Lavoie said. “The small old paper machines are becoming less viable and unfortunately we have one of those.”

Going are good-paying, working-class jobs, and people will have a hard time replacing the level of income that is derived from the mill, Lavoie said.

Hourly workers on average make $48,000 to $50,000 a year, and a salaried employee makes more, he said.

The shutdown is expected to occur between Oct. 31 and Dec. 31, contingent on demand, he said.

Mill representatives told union officers of the coming layoffs at 1:15 p.m. Monday.

When the union told workers, Lavoie said, they were depressed and surprised.

“I am deeply concerned about the workers, their families, and the community as they face this difficult news,” Gov. John Baldacci said in a statement Monday. “I have instructed Rosaire Pelletier, the administration’s senior forest products adviser, to visit with mill officials on site (Tuesday), and will deploy Maine Department of Labor’s Rapid Response Team to Jay shortly.”

Jay Town Manager Ruth Marden said Gary Rudemiller, Wausau’s vice president of specialty papers operations, told her the news in person on Monday.

Most important, she said, are the workers and their families.

“It’s going to devastate a lot of personal lives,” Marden said. “Of course, it’s going to affect the tax base as well.”

How much, she said, depends on what part of the machine operations were in Jay or in Livermore Falls.

Livermore Falls Selectmen’s Chairwoman Louise Chabot said, “The closure of Wausau Paper’s No. 10 paper machine is a great loss to the communities of Livermore Falls and Jay and the impact to the employees that will lose their jobs is devastating, particularly in these economic times.”

U.S. Rep. Mike Michaud, D-Maine, issued a statement, saying “I am deeply saddened by the news of the Otis Mill machine shutdown.” He said his office has been in contact with mill officials and with union representatives.

Wausau was founded in 1899 and acquired several paper companies over the years, including the Groveton, N.H., mill in 1993 and Otis Specialty Papers in Jay in 1997. The Groveton mill closed last year, putting more than 300 people out of work.