Staff Writer
The announcement last week that two local mills would be shutting down, affecting over 140 jobs, came as quite a shock, though not entirely a surprise, considering the nation’s current economic picture, with the slump in the housing market being blamed in both cases. In Ashland, word that Fraser Papers Inc. – based in Toronto – would be shutting down for at least a four-month period, following a Jan. 16 press release from the company.
“Housing starts in the U.S. are about 50 percent lower than 2006 peaks. That led to a significant reduction in lumber prices,” said Glen McMillan, senior vice president and chief financial officer with Fraser Papers Inc.
McMillan said the decision for the temporary shutdown came as the result of dropping lumber prices affecting operating costs.
“We (the company) can’t sustain operating costs (with lumber prices on the decline),” said McMillan.
The mill, according to McMillan, has the capacity to process 70 million board feet of lumber on an annual basis.
“The four-month shutdown will affect production by about a third,” said McMillan.
Employees of the Ashland mill will be eligible for unemployment benefits.
“We’ve spoken to the appropriate authorities so employees won’t be subject to the two-week waiting period when filing for unemployment. We’ll maintain certain insurances through the shutdown,” said McMillan.
Company officials were unable to say if employees would be guaranteed their positions once the shutdown was over.
“The mill is a non-unionized environment. As startup occurs, employees will be eligible for positions as they become available,” said McMillan.
The shutdown will allow the company to effectively reduce its losses, due largely to the slump in the housing market.
“Overall, from a profitability perspective, we’re running losses at that mill. Those losses will go away (with the shutdown), with no material impact on the rest of Fraser’s operation,” said McMillan.
The shutdown at the Ashland facility will affect approximately 70 employees. The Masardis mill will not be affected by the closure, with production continuing as normal at that facility.
A second closure at an area mill was announced within a day of the first, following an announcement by J.D. Irving, Limited, that it would be shutting down its Nashville Plantation facility indefinitely, affecting the jobs of 73 employees at that mill.
“Current market conditions – the slump in housing starts, a decline in lumber prices and demand – has meant some difficult decisions regarding our company’s sawmill (in Nashville Plantation),” said Mary Keith, spokesperson for Irving.
Officials notified the employees at the sawmill that the company would undertake an indefinite shutdown and will work with those affected to place them in other positions with the company.
“This mill was already operating on a reduced schedule of three days per week producing softwood lumber for construction. We are working to place as many employees as possible, based on their qualifications, at our other operations (woodlands and possibly our Dixfield sawmill),” said Keith.
Keith said employee placement is currently under way.
It isn’t clear how long the Nashville Plantation mill will be offline.
“We will continue to monitor market conditions but at this point in time, I am unable to speculate as to when the mill will reopen. It will depend on the recovery of housing construction, lumber demand and lumber prices,” said Keith.
The shutdown date for each mill – Ashland and Nashville Plantation – will be based on when each yard runs out of product to be processed at each site.
“We will process the remaining wood in the yard and anticipate the shutdown to begin at the end of this month,” said Keith.
Congressman Mike Michaud – whose career includes 30 years as employee with Great Northern Paper – was quick to respond to the announcements. He indicated in a press release that officials in Washington, D.C., should do more to help citizens affected by growing economic problems in the U.S.
Commenting on President George W. Bush’s speech on the economic stimulus package, Michaud said, “I appreciate the President’s comments on the need for an economic stimulus package. Mainers have been flooded with recent announcements of mill shutdowns and layoffs. A bipartisan stimulus package is needed so that we can provide immediate relief to struggling Americans.”
Michaud expressed concern that action couldn’t come soon enough.
“Within this past week, Maine industries have received devastating news about job loss and layoffs in the paper and wood processing industry, spanning from Ashland to Rumford (at NewPage Corporation in Rumford) to Nashville Plantation,” said Michaud, adding that he’d also received word of layoffs at Bath Iron Works the same week.
Economic and trade issues, according to Michaud, are no secret to Mainers.
“In Maine, we are all too familiar with an economic and trade policy that has devastated our manufacturing sector. As a mill worker for nearly 30 years at Great Northern Paper Company, I know how devastating this news is for these workers and their families. When this happens in small rural communities in Maine, it ripples through the economy and cripples our infrastructure,” said Michaud.
Michaud hoped as the House considered a potential economic stimulus package in the next few weeks, it would keep workers like those affected by recent shutdowns at the forefront.
“Any economic stimulus package the House considers must be good for our workers and their industries. We must get back to fiscal discipline, yet provide the relief so many in Maine need,” said Michaud. “But if we are truly trying to reform our economy, we must also address the serious trade imbalance that is creating this job loss. It’s no secret that trade has gotten the better of Maine’s manufacturing industry.”
Michaud, co-chair of the House Trade Working Group, is working closely with other members of Congress to ensure the Trade Adjustment Assistance program expansion happens.
The President has refused to sign or negotiate with Congress on expanding the TAA, a program that provides direct financial relief to workers who lose their job due to trade,” said Michaud. “I strongly encourage the President and congressional leaders to include a TAA expansion in the economic stimulus package to ensure there is a continuum of coverage.”
At the local level, Ashland Town Manager Jim Gardner is optimistic that the shutdown in his community will be short-term and that production will return to normal in time.
“I met with Fraser officials on Jan. 16 and 17. It’s a temporary shutdown for four months. It will affect our community, sure. The market’s down, so they can’t produce lumber for what it’s being sold for. Sometimes you have to take measures to put yourself in a better financial picture,” said Gardner.
Gardner said he hoped the shutdown is temporary.
“I hope that will be the case, but we don’t know. No one has that crystal ball to show when markets will be back up again,” said Gardner.
With construction of a new school being considered in Ashland, Gardner wanted to address a few concerns.
“We’re in line for a new school. A rumor has started that Fraser is leaving. I want to reassure everyone that Fraser isn’t going anywhere. It’s an economic issue. The economy is sluggish and affecting a lot of places. We can’t forget Fraser is still part of our tax base,” said Gardner.
With the school vote slated for Jan. 31, Gardner said he didn’t want the community to get confused or misled.
“It’s not like Fraser is pulling out of town. Don’t let that (the rumor) affect your vote on the school issue,” said Gardner, adding, “Masardis and Ashland are one in the same, Fraser’s Fraser. Ashland will still have the pine mill, finger-joint mill, the kilns will continue to run and boilers will be operating. They’ll still have some staff on hand – security, maintenance,” said Gardner.
While the shutdown isn’t the best news, Gardner said it wouldn’t last forever.
“It’s a temporary shutdown. It’s not a glorious thing, but we have to think positive. They’ll come back,” said Gardner.
