HERMON, Maine — The slumping economy, coupled with last year’s shutdown of the Katahdin Paper Co. mill in Millinocket, has had a ripple effect at the Montreal, Maine & Atlantic Railroad.

Company president Bob Grindrod said that the railroad has been forced to lay off 75 of its 315 employees over the past six months. Although he acknowledged that business activity had slowed, the railroad was in no danger of closing.

“Things are tight like they are for many of the other businesses in the state,” Grindrod said Tuesday. “We’re not going out of business or shutting down. We are contracting a bit to control our expenses; we’re trying to balance our revenues and expenses.”

Grindrod said the Katahdin mill was the railroad’s largest customer and its closing had a major impact on the amount of tonnage shipped by the line this year. The mill closed last summer, leaving 208 paper mill workers out of a job. The high price of oil was cited as the reason for the shutdown of the mill’s $150 million No. 11 paper machine.

The mill’s owner, Brookfield Asset Management of Toronto, is currently in the process of conducting an engineering study to determine if it would be feasible to reopen the mill with a new biomass boiler.

The Montreal, Maine & Atlantic Railroad Co. Ltd. began operation in 2003 and owns more than 745 miles of track serving customers in Maine, Vermont, Quebec and New Brunswick, according to its Web site. The line was originally established as the Bangor and Aroostook Railroad in 1891. It was sold in 1995 to Iron Road Railroad and the name was changed to Montreal, Maine & Atlantic Railroad when it was sold eight years later.

From its beginning the pulp and paper industry was the railroad’s primary source of traffic, although the line also moved potatoes, forest products, petroleum and chemicals. The MMA operates trains between Madawaska and Searsport as well as between Brownsville Junction and Montreal. The MMA also connects with rail-roads serving Atlantic Canada, the American Midwest and Western Canada.

Nathan Moulton of the state Department of Transportation’s Office of Freight Transport said the agency was aware of the MMA’s situation. Moulton said the railroad was going through a tough patch but that the business remained strong. He said the recent temporary shutdown at the Fraser Paper Co. mill in Madawaska would also lead to a decline in shipping orders.

“They have taken a hit, there’s no question,” Moulton said Tuesday. “If people are not producing paper, they don’t have anything to carry. It has been slow for them.”

Grindrod said the company was in it for the long haul. He said the cutbacks and layoffs were done to protect the long-term health of the company.

“We’re doing what we can to make sure this doesn’t unduly affect the future prospects of the company,” he said. “We’ve reduced some services and laid off some people, but it isn’t like we’re about to go out of business or go bankrupt.”