Mill executives say Maine paper industry viable, but there are challenges
By Andrew Neff | September 26, 2012
BANGOR, Maine — Executives from three of Maine’s paper mills told 50 businesspeople that reports of the demise of Maine’s pulp and paper industry have been greatly exaggerated.
“Maine is 92 percent forested,” said Keith Van Scotter, president and CEO of Lincoln Paper and Tissue. “If paper and pulp is going to be made anywhere, it’ll be made in this state, so it’s not a dying industry. It’s a viable industry.”
Van Scotter; Bill Cohen, director of communications for Verso Paper Corp. in Bucksport; and George McLaughlin, manager of manufacturing for Great Northern Paper in East Millinocket, were the main speakers at Wednesday morning’s Bangor Region Chamber of Commerce Early Bird Breakfast.
Van Scotter added that pulp and paper is being used to make rayon clothing in the Far East, opening up a whole new market.
Cohen provided some interesting facts to show how crucial the industry is to Maine’s economy. He said there are more people employed nationally in the pulp and paper industry than in the auto industry, and that the average paper industry job in Maine pays about $60,000 a year. He added that $450 million in annual salary checks are sent out by Verso to employees with Maine addresses.
Chamber president and moderator John Porter asked the panelists about what workforce issues they face now and in the future.
McLaughlin talked about the graying of the current workforce and a shortage of younger, skilled workers to replace them.
“Our average age in the workforce now is 57, so we have a challenge in hiring younger workers with the right skill set,” he said.
Talk shifted to the cost of doing business, specifically electricity.
“The main issue is our general lack of access to natural gas. We need a pipeline,” said Van Scotter. “Another is this state’s overbuilding of our electrical grid.”
McLaughlin talked about the prohibitive expense of having to run a backup boiler on oil recently.
“Oil is not an option to make paper today. It’s too expensive,” he said. “We need that pipeline. We could be around for a long time, but without that, who knows?”
The price of oil is making transportation expensive as well.
“The biggest factor is cost of fuel,” said McLaughlin. “If we could get more customers converted to rail, it would lessen our cost considerably.”
Cohen said as little as two years ago, 70 percent of shipping by his mill was done by rail and 30 percent by trucks. Now it’s 40 percent rail and 60 percent trucking.
The rising costs of toll roads is making shipping by truck even more costly.
“Our toll cost per travel mile is almost 50 cents per mile,” said Van Scotter.
Expanding shipping by railroad, expansion of Maine’s rail network, and building an east-west highway were all on the three executives’ wish lists.
“Everything that comes to our plant comes by truck,” said Van Scotter. “Everything that leaves goes by truck. The east-west highway would be a big help.”
Porter asked the panel about the federal and state regulation of the paper industry.
“First, compliments to the governor and Legislature for looking at regulations to make it less cumbersome for business while still protecting the environment,” said Cohen.
Van Scotter said although Maine is more heavily regulated than many other states, it’s ongoing trends in federal regulation that cause concern.
“This presidential administration is worse, and the previous one wasn’t much better,” Van Scotter said. “It’s frightening.
“We’re all in favor of a cleaner environment, but if no one has a job, it doesn’t do much good.”
One of the last topics was competition, specifically from foreign countries.
“We’re in a global economy and the new model has pluses and minuses,” said Cohen. “This gives us an opportunity, but it also has unique challenges.”
Chief among them are foreign tariffs, subsidies, wage rates and government aid.
“The biggest challenge is foreign companies with access to free and unlimited working capital, which we don’t have,” said Van Scotter.
McLaughlin referred to mills that are reopening in Quebec and Nova Scotia, citing the current U.S.-Canadian exchange rate as well as the subsidies the mills get from the Canadian government.
The event was the first of four in the Chamber’s “business revolution” topical programs. Others include the transportation and higher education bonds on the November ballot and a look at health care.