Great Northern Paper in East Millinocket, Maine, now calls paper mill shutdown indefinite after talks stall over profit-sharing agreement on power sales; recent state funding decision makes mill restart 'more remote,' says union official

Debra Garcia

EAST MILLINOCKET, Maine , April 19, 2014 (Bangor Daily News) – As the owners of a local paper mill negotiate with their electricity supplier on a revenue-sharing agreement and ponder whether to move forward with plans to develop a $140 million pellet mill with a $16 million state bond, some of the Katahdin region workers whose jobs are on the line say they are getting tired of waiting to go back to work.

"Everybody has a really sick feeling in their stomach about this," said Don Hendsbee, a trustee of USW Local 37 who is among the 212 workers laid off from the Great Northern Paper Co. mill on Feb. 6.

"I just want to go back to work. Whatever it takes," laid-off mill worker Mark Hoxie said Friday. "The longer we're down, the slimmer our chances get [of restarting the mill]. I am hopeful that we will get a decision here, and back to work we go in a couple months."

Great Northern Paper officials hoped to restart the mill by May 1, then June 1. They recently said the stoppage is indefinite because negotiations have deadlocked with Brookfield Asset Management over the sharing of revenue generated by three Brookfield hydroelectric dams originally built to service the mill. Brookfield still uses mill equipment to transmit power.

"The anxiety level right now for everyone is very high," Hendsbee said. "People are nervous about what happened yesterday, which wasn't great news. They really just want to know which way it is going. It seems like [restart] dates are set, and nothing comes out. They just set another date."

The layoff, the East Millinocket mill's third since 2000, looks more permanent than the others. With the other mill shutdowns, potential owners had at least vetted the place, giving workers hope that the investors would turn the mill's fortunes around.

That's not happening, Hendsbee said.

"A lot of us are going to retire in a year or two. We aren't permanently laid off so we can't start [federally-funded job] retraining, and we aren't working," Hendsbee added. "Everybody's waiting. If it is not going to start, we want to move on, but first and foremost, we want to work at the mill."

Since the layoff, Hendsbee, Hoxie and about three mill workers have walked a three-mile circuit around town. Hendsbee said he sees about 30 mill workers a day. They always ask: What do you hear? Will we be going back?

"I don't have anything to tell them," Hendsbee said.

GNP President Ned Dwyer released a statement late Friday in which he praised the "many talented and dedicated employees of Great Northern Paper, producing a high quality product that is truly at the core of Maine's long-standing tradition of fine paper-making; a tradition that we are proud of."

"Their effort and support throughout this challenging time has been inspiring," but the restart process "has been challenging," Dwyer said. He offered no restart date.

Hendsbee said that workers had hoped the Finance Authority of Maine would reaffirm Thursday its October decision granting Thermogen Industries -- similar to Great Northern Paper, a company bankrolled by New Hampshire investor Cate Street Capital -- a $25 million bond to help build a pellet mill in Millinocket. The pellet mill would employ 55 people directly and about 281 indirectly producing 300,000 tons of pellets annually.

FAME's board of directors voted 8-5 to OK a $16 million state bond. Board members liked the new technology that prompted the second review but said that Thermogen had $16 million in collateral. The board was concerned about Great Northern Paper's debts. The company owes at least $6.8 million to lienholders, including East Millinocket, Millinocket and the Internal Revenue Service.

"I guess it is easy to make a decision when you got a job. The hard part to do is to make a decision that makes jobs and helps people," Hendsbee said.

Cate Street officials said they didn't know whether FAME's decision made the pellet project untenable. As of Friday, no decision had been made, a spokeswoman said.

FAME's decision "makes a [paper mill] restart more remote at this point, and obviously, everybody is anxious to get the wheels back under the mill," said Duane Lugdon, a national United Steelworkers Union representative to Maine.

Lugdon and Dwyer repeated an argument that the Legislature and Gov. Paul LePage made when unanimously approving a bill earlier this month that would permit Brookfield to negotiate a power-sharing agreement with Cate Street: According to state law, the people of Maine own the waters in state rivers. Brookfield uses Penobscot River water to generate massive profits through electricity sales and some of that should help keep the paper mill operational..

"If you want to call the water in the river their fuel, then frankly, they are getting their fuel for free," Lugdon said. "We are thinking probably 7,000 to 8,000 lives are affected because this mill is down. In my opinion, a good citizen in business in the state of Maine ought to be more ambitious in helping people."

Brookfield attorney Harold Pachios said the company wants to help restart the mill but is troubled by what they describe as incomplete disclosure of Cate Street's financial backing and restart plan. He maintains that the company has already done a great deal to help the mills.

Dwyer said that Brookfield's "delays and negative campaigns" and many of that company's "statements in the press have been extremely harmful to the overall effort" to restart the mill.

"If this mill goes down permanently, in three years you are looking at your fire departments, the school departments, all going down," Hendsbee said. "There will be a drastic change if we don't have something to go to."

"I wish people would come up here and see the town," Hendsbee added. "We are no different than someone in Cape Elizabeth. We would like to have a job just like everybody else."

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Industry Intelligence editor's note: Great Northern Paper Co. LLC's East Millinocket, Maine, mill produces newsprint, book paper and newspaper insert paper, according to Industry Intelligence Inc.'s archives.

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