MILLINOCKET — The backbone of Millinocket’s economy is up for sale.
Great Northern Paper Co.’s parent company, Bowater Inc., announced Thursday it will sell its 900-employee mill in Millinocket, and at the same time invest $220 million to modernize its East Millinocket mill.
News from the Greenville, S.C.-based corporation sent shivers through both of these small towns, whose existence began when the mills were carved out of the wilderness nearly 100 years ago.
“The physical operations of both mills will stay as they are, making the same products they are making for between two and a half and three years,” said Great Northern President Don McNeil.
Bowater Inc. plans to spend $220 million to build a thermomechanical pulp mill in East Millinocket to replace the current Great Northern Paper Co. mill.
The TMP mill uses heat and mechanical energy to convert wood chips into pulp and provides a more efficient conversion of wood to high quality pulp than the current mill process. However, the greater efficiency will translate into the elimination of 200 to 300 jobs at this mill, which employs 629.
McNeil said the job impact of starting up the TMP mill won’t be felt until the second half of the 2000.
The improvements at the East Millinocket mill will improve productivity and reduce operating costs but will not increase Bowater’s papermaking capacity. Construction of these projects is anticipated to begin in early 1999 and take up to two years to complete.
Over the next year, McNeil said the company will also reorganize the two mills into independent entities that could result in some job losses.
Currently, the operations of the two mills are tightly linked. Administrative services such as accounting are a centralized operation for both mills. Also, the Millinocket mill produces one type of pulp that is piped to the East Millinocket mill and that mill produces a different type of pulp that is shipped to Millinocket for paper production.
Regarding the sale of the Millinocket mill, McNeil said there is no buyer standing in the wings.
“We believe there are four to six potential buyers,” said McNeil. He declined to identify them. “We are confident we are going to be able to sell the mill. … We will try to sell it as fast as we can and we expect that within three to six months we will have a good idea of where we stand with a potential buyer,” he said.
GNP’s president said the sale of the Millinocket mill would not include the company’s more than 2 million acres of timberlands or its massive hydroelectric system, which is one of the largest privately owned systems in the country.
“We are putting the Millinocket mill up for sale, but we are willing to negotiate power contracts and wood supply contracts with the new buyer,” said McNeil.
He said Bowater decided to sell Millinocket because the plant has been losing money for a number of years. From Bowater’s perspective, McNeil said the mill would require a large capital investment and the company did not believe it gets the necessary return on this investment.
Although McNeil said he is confident the Millinocket mill will be sold, he said the company will consider a number of options, including closing the mill if it is not sold in three years.
“When three years are up, we are going to make a decision … modify it or shut it down, but a good businessman can’t make that decision three years before it happens. I can’t tell you what that strategy might be three years into the future,” said McNeil.
McNeil said the mill will be easier to sell if Bowater is willing to be flexible and if the work force is ready and eager to make changes.
“If Bowater is going to bend over backwards to help sell the mill, the employees are going to have to be prepared to give a little something — that may be sweat, effort, attitude, money,” said McNeil.
Just because the Millinocket mill is up for sale, McNeil said it does not mean no more capital will be invested there. “We are going to continue to make some investments to make the mill more saleable. We are talking in the small millions,” he said.
While many people in this one-industry town were wondering and worrying what the future might bring, town officials tried to send a message of optimism rather than panic.
“We can work with Bowater and we can provide some economic incentives for the new owners,” said Millinocket’s town manager, Paul Bird, who just began work last week. He and the town’s department heads, who met throughout the day, said the announcement will compel every town employee to work together.
“I was not hired to turn the lights out in Millinocket,” said Bird. “There are serious implications if we do not mold ourselves as a community and come together as a community. We need to be spontaneous and optimistic,” said Bird.
“Maybe it’s a chance for another new beginning with another new company coming in. Who knows what might happen,” said Ellen Murray, the town’s administrative assistant.
“We have been down this road before,” said Fire Chief Milan Thornton. “At least the money will be spent in the area,” he said.
Recreation Director Jeff Ketchum said the news could have been worse.
“They could have just shutdown the mill and closed the doors tomorrow and that would be it,” Ketchum said. “It looks like they will continue operations for three years, which gives us time to look into different areas, to address new ideas and directions for economic development,” Ketchum said.
Despite the optimism, some Millinocket officials had a different reaction.
James Mingo, a Millinocket town councilor and a retired papermaker, was upset. “The people here have been real good to this company and have worked hard for them. I think corporate Bowater is abandoning them. We had hopes of having some sort of a life here with Bowater, but it appears that we are not going to have one,” Mingo said.
Mingo said he was concerned about how many of the workers who have spent most of their lives at Great Northern will find new jobs.
“We have a whole pile of people here that are from 42 to 55 years of age that don’t know anything else. Some of them aren’t ready for retirement. Some of them can’t afford retirement. They are going to be left on the street and it’s going to be hard for them to find other jobs,” Mingo said.
At the Millinocket mill, Herbert Clark, chairman of the Millinocket Town Council and a 32-year GNP employee, said workers were speechless at the news.
“I just can’t believe it. It’s devastating. It leaves an awful feeling in your stomach. It’s like losing one of your own family,” said Clark. “What bothers me is we have one of the best work forces and some of the best fiber resources,” said Clark. “Down the road this mill may not exist the way we know it, hopefully, there will be a buyer. Everyone has their fingers crossed,” said Clark.
Tim Smyth of Millinocket, president of the International Brotherhood of Electrical Workers Local 567, which represents electrical workers in both mills, said Millinocket has been “sold down the drain.” Smyth said he did not blame Bowater entirely for the lack of capital investments. He also blamed the mill’s previous owner, Great Northern Nekoosa Corp. “They raped us and threw us in the woods,” said Smyth.
The Millinocket union official blames Maine’s poor business climate for the lack of investment in Millinocket. “The state has regulated us out of business, and the southern part of the state wants us for their playground. Jonathan Carter helped drive the stake into our hearts,” Smyth said.
Bowater’s announcement was met with mixed emotions in neighboring East Millinocket, where town and union officials expressed concern about the sale of the Millinocket mill.
Peggy Daigle, East Millinocket’s administrative assistant, says officials are concerned about neighboring Millinocket. “The economies of both towns are closely entwined and what affects one community affects the other,” Daigle said.
George Tapley, president of the United Paperworkers International Union Local 37 in East Millinocket, is concerned about the Millinocket mill being sold. While he is glad the company will be making investments in East Millinocket, he says those investments will mean fewer jobs.