Madawaska paper mill lays off 100 employees
5/2/09 | 28 comments
economy

Madawaska paper mill lays off 100 employees


By BDN Staff and Wire Reports
BDN Staff

MADAWASKA, Maine — Fraser Papers Inc. is cutting production at its Madawaska mill and laying off 100 workers, a move it blames on the weak economy.

The Canadian-owned company said Friday it is taking its No. 6 paper machine out of service for an indefinite period starting Monday. Fraser said a drop in advertising has reduced demand for publishing papers.

Fraser also said it may slash up to 200 jobs at its operations in Edmundston, New Brunswick, across the St. John River from Madawaska.

The company has scheduled a maintenance outage at the Edmundston mill for early June and unless its financial losses are fixed, nearly half of the 450 workers at the northeastern New Brunswick mills may be jobless.

U.S. Rep. Mike Michaud, who was a millworker for nearly 30 years at Great Northern Paper Co., said his office would work to provide assistance to the affected workers in northern Maine.

“This news couldn’t come at a worse time for the workers, their families and the community of Madawaska,” said the 2nd District Democrat. “This machine going down is yet another sign that we still have a ways to go before we get out of this economic downturn.”

Bill Peterson, director of human resources for Fraser, said Friday the 100 layoffs at the Madawaska mill would reduce the work force there to about 622 employees.

Madawaska Town Manager Christina Therrien said Friday that based on state statistics for the first quarter of this year, the layoffs will push the Madawaska area’s unemployment rate from 9.7 percent to about 13.2 percent.

The paper mill not only is Madawaska’s largest employer, she noted, it also is the town’s largest taxpayer, accounting for about half of its tax base.

Therrien said she’s deeply concerned about the ripple effect the layoffs will have on the larger community.

“They’re good-paying jobs,” she said, adding that the affected employees will have less capacity to support local businesses, which in turn could affect their workers. “It impacts every aspect of the community.”

And given the state of the economy, not just in the United States but globally, those jobs will be hard to replace, according to Therrien.

“Businesses have been downsizing,” she said. “There aren’t too many that are looking to expand. Who are you going to get to [bring jobs to northern Maine] in economic times like these?”

As a border town, Madawaska in the past has been able to benefit from its proximity to New Brunswick during good economic times for Canada and vice versa.

“You usually can kind of play off each other,” Therrien said.

This time, however, the Canadian economy isn’t faring better than that in the United States, she noted.

Edmundston Mayor Jacques Martin said the loss of jobs at Fraser would have a devastating impact on the forestry supply chain throughout the region.

“We keep hearing about the automobile industry, but meanwhile, the forestry industry is in peril,” he said. “The competition in forestry is ferocious right now and the government needs to take the necessary measures to keep the industry alive.”

Despite taking market-related downtime at each of its operations to reduce operating costs, Fraser reported a $16.7 million first-quarter loss, a mounting debt of $25 million and large pension obligations.

Fraser CEO Peter Gordon said the company is asking for concessions from workers, a greater allocation of New Brunswick’s wood supply, more competitive electricity rates, better compensation for power from its biomass cogeneration facility and elimination of the black liquor tax subsidy for its competitors in the United States.

“The next few weeks will be critical as the company works with the union, governments and lenders to come up with a viable business plan,” he said during an interview from the company’s head office in Toronto.

In order to staunch the forestry firm’s losses, Gordon has identified a handful of key problems that need to be fixed.

The first is lowering the fixed costs of operations, including a reduction in the number of workers, compensation and benefits.

The company confirmed in February plans to cut 78 jobs from its Edmundston mill over the next 2½ years, with at least 56 positions eliminated from the payroll by the end of 2009. Although no additional job cuts have been confirmed to date, fewer workers may return to work after the Edmundston mill’s maintenance shutdown.

Doris Lavoie, president of the Edmundston workers’ union, said employees are prepared to make concessions as the union renegotiates the collective agreement, which expires June 30.

“We’re losing 200 jobs and they still want to cut back our wages, pensions and benefits,” he said during an interview from Edmundston. “We can make all the concessions in the world, but if the government doesn’t take action, it won’t do anything.”

Gordon said the company is working around the clock to save the Edmundston jobs, but he added that employee contract issues are only a small piece of the puzzle.

Fraser also is struggling to compete with U.S. companies benefiting from a black liquor tax subsidy. This is a tax credit meant to encourage the consumption of biomass-related fuel such as grain ethanol.

“Somehow pulp producers — with the encouragement of their tax consultants — have driven a huge hole into the tax subsidy and it’s going to cost the American taxpayer billions and force the closure of Canadian pulp mills,” Gordon said.

Brett Bundale of the Saint John Telegraph-Journal, Dawn Gagnon of the Bangor Daily News and The Associated Press contributed to this report.

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Comments
28 comments on this item
On 5/1/09 at 9:10 PM, DaddyBiggs wrote:         Repeated separate thumbs down will cause comment to be hidden

Meanwhile, officials in Augusta work feverishly to pass a bill outlawing smoking on Maine park beaches, and ban the word "squaw"...

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On 5/1/09 at 9:59 PM, theothermaine wrote:         Repeated separate thumbs down will cause comment to be hidden

or supporting gay marriage

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On 5/2/09 at 4:47 AM, Sledman wrote:         Repeated separate thumbs down will cause comment to be hidden

or buying wind turbines from Brazil instead of buying ones built in the U.S.............

Pathetic.

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On 5/2/09 at 6:27 AM, changeneeded wrote:         Repeated separate thumbs down will cause comment to be hidden

and the tax revenue in Maine takes another beating. The well is drying up, folks. Time to actually start cutting State spending, not just making obvious cuts to programs that never should have been put in in the first place.

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On 5/2/09 at 6:41 AM, MikeinFK wrote:         Repeated separate thumbs down will cause comment to be hidden

And, of course, the fact that the unions and workers have pushed for the highest wages immaginable has nothing to do with it.

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On 5/2/09 at 7:04 AM, MurphyL wrote:         Repeated separate thumbs down will cause comment to be hidden

What the heck does gay marriage have to do with the economy? It's not the gays having a problem, again put the blame where blame is due.

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On 5/2/09 at 7:10 AM, apapermaker wrote:         Repeated separate thumbs down will cause comment to be hidden

There is no doubt that the paper industry has been in trouble in North America - even before the recent economic downturn. However, Fraser's performance over the last 3-5 years has been dismal, even as measured compared to the performance of their peers. They are quite simply the biggest loser in a broad field of losers. Instead of blaming his woes on the black liquor tax break in the US, the lack of Canadian government charity, and greedy unions, Mr. Gordon would be best served to look in the mirror for the source of the company's problems.

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On 5/2/09 at 8:30 AM, frenchpilot007 wrote:         Repeated separate thumbs down will cause comment to be hidden

Fraser Paper is at its own demise!! I don't see the powers to be taking concessions in their pay. It is always the workers who have to take concessions while the powers to be grease their pockets with their high wages and bonuses. Also Fraser currently has an add in the St.John Valley Times wanting to hire another supervisor?? Pretty top end heavy if you ask me!!!

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On 5/2/09 at 8:34 AM, freedomfighter wrote:         Repeated separate thumbs down will cause comment to be hidden

We are moving to a paperless society. This is a fact of life that should be planned for. We now only need paper to wipe our _ _ _. This is the only paper we should be concerned with now.

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On 5/2/09 at 8:57 AM, Knightscross wrote:         Repeated separate thumbs down will cause comment to be hidden

Give it up. Shut the Millinocket Mills down already. Paper Production is a dead industry. If you don't make toilet paper then shut down. Time for these Mill Workers to MAN-UP, move and get a real job.

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On 5/2/09 at 8:58 AM, anthoine wrote:         Repeated separate thumbs down will cause comment to be hidden

i feel bad for the workers who will lose their jobs. is this for good or just for awhile? our people in agusta don't give a damn, they are to busy raising taxes for anything and everything. then making new laws for petty things like smoking at the beach. how many cuts do we hear about in agusta, none, but they still get their raises though. with this economy, they use that at times for excuses to cut this and that instead of trying to find ways to keep people working and keep their pride and homes.

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On 5/2/09 at 9:05 AM, Knightscross wrote:         Repeated separate thumbs down will cause comment to be hidden

Fraser runs Madawaska and Millinocket mills. Time to close one mill town down to benefit the others survival. If Madawaska can survive at all. Fraser will have to make this decision soon or both towns will have closed mills.

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On 5/2/09 at 9:42 AM, MurphyL wrote: Click here to view hidden comment         Repeated separate thumbs down will cause comment to be hidden
On 5/2/09 at 9:43 AM, Ronald wrote:         Repeated separate thumbs down will cause comment to be hidden

It's a matter of time before Fraser shuts down both the edmundston and madawaska mills. This was predicted a few years ago by one of the senior executives that used to work at the edmundston facility.

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On 5/2/09 at 11:00 AM, DaddyBiggs wrote:         Repeated separate thumbs down will cause comment to be hidden

Uh, MurphyL...are we hittin' the pipe a bit today? Or are you naturally a knot-head?

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On 5/2/09 at 12:45 PM, mikebrown wrote:         Repeated separate thumbs down will cause comment to be hidden

AS I SEE IT ----- Mike "Mainer Mike" Brown.

The one drawback of the computer age is less demeand for paper, as less people are reading newspapers, for example.

However, I don't think the demand for paper for newspaper production will ever completely disappear, because those such as myself enjoy reading from a paper rather than on the internet.

This is not to say I don't read much off the computer, because I do.

But it's still fun to read the old fashioned way-from a newspaper.

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On 5/2/09 at 2:15 PM, deace1 wrote:         Repeated separate thumbs down will cause comment to be hidden

Maine had a choice that could have alleviated many of these employment problems today. They were offered the opportunity to allow mining in some areas of the state. If mining had been allowed to grow the states coffers the residents would not be in such dire straits today. They chose to remain a taxpayer funded "Park" with nothing to fall back on if the logging industry collapsed. Now without paper, lumber or logging as viable employment venues Maine must "Pay the Piper". Enjoy the view from your foreclosed home. Live and learn.

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On 5/3/09 at 5:20 AM, Joshua wrote:         Repeated separate thumbs down will cause comment to be hidden

The real question is, why are we still using trees as a pulp source?

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On 5/3/09 at 11:29 AM, johnnycakemtn wrote: Click here to view hidden comment         Repeated separate thumbs down will cause comment to be hidden
On 5/3/09 at 1:27 PM, kateindfcity wrote:         Repeated separate thumbs down will cause comment to be hidden

Yeah, we should be using HEMP by products! LEGALIZE MARIJUANA!!!!

Peace.

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On 5/3/09 at 1:33 PM, lgreen48 wrote:         Repeated separate thumbs down will cause comment to be hidden

Hello Augusta lets start working to preserve what little bit of economy Maine actually "may" have. Never mind your stupid ignorant laws outlawing smoking and raising the sales tax which no one has the money to pay for.

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On 5/3/09 at 7:40 PM, patom1 wrote:         Repeated separate thumbs down will cause comment to be hidden

People who think Augusta has anything to do with the world demand for paper are dillusional. It is time to wake up and face the facts that if this country is to maintian its satature in the world we need to start demanding products manufactured here. As everyone is pulling their belts tighter in these lean times we need to buy American, instead of supporting companies like Nike who make billions off of cheap labor in Asia while manufacturing nothing in the US.

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On 5/3/09 at 8:21 PM, HippyKicker wrote:         Repeated separate thumbs down will cause comment to be hidden

Attention! Attention!

kateindfcity - you're an idiot.

That is all.

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On 5/4/09 at 8:00 AM, Mainefriend wrote:         Repeated separate thumbs down will cause comment to be hidden

I would like to send my condolences to all of my hard working honest friends in Madawaska Maine. Loosing your job is considered one of the biggest losses you will experience in your lifetime. You are all very strong and intellegent and I know you will all succeed and bring great profits to your future employers. I will be thinking of all of you in this time of need. I truely hope the best for each of the Fraser employees. I wish each and everyone of you send thank you letters to our hiprocritical government letting them know exactly how you feel.

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On 5/4/09 at 8:03 AM, Mainefriend wrote:         Repeated separate thumbs down will cause comment to be hidden

Ronald, If I was that senior exec's boss I would fire him just for looking down on the company and not being solution oriented. People like him assisted in the failure of this wonderful company!

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On 5/4/09 at 8:22 AM, CeeBlue wrote:         Repeated separate thumbs down will cause comment to be hidden

--: just remember to shut out the lights when crossing the Kittery bridge.

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On 5/4/09 at 10:31 PM, BigBoy wrote:         Repeated separate thumbs down will cause comment to be hidden

This is the paper industry and where its at, just like the shoe industry, textiles, and others that have come and gone we dont need the paper that we use to and it will be made overseas with softer polution laws, less to no benifits, and a wages that no one could live on!!!

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On 5/7/09 at 3:22 PM, MaineLife wrote:         Repeated separate thumbs down will cause comment to be hidden

Meanwhile Officials in August have other things to not just save jobs. Why blame the government as you didn't buy the paper today you read it online hurting the paper industry. wake up. what is wrong with gay marriages are you races. Wait lets cut spending and have other people loss jobs what a great idea. Maybe some workers could take pay cuts and save other peoples jobs.

Attention! Attention! HippyKicker i bet you smoke Tobacco or drink alcohol!!! That is all idiot !! Well best of luck to the people of Madawaska before writing all this BS about the government maybe get out vote, get an education and understand what is happening not only with Maine’s economy but all over the world. People are losing jobs everyday are you are blaming your state government. Meanwhile you shop at wal mart who doesn’t carry mean usa made products. Have nice day.

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