PORTLAND, Maine — The new owner of the Rumford paper mill said it has decided to keep its No. 12 coated paper machine out of production indefinitely, after announcing a temporary shutdown in May that prompted laying off 51 people.
Catalyst announced the indefinite shutdown Tuesday, saying that “this decision is fully market-related.”
“This is a difficult but necessary decision that supports Catalyst’s commitment to align mill operations and production with market demand,” said Joe Nemeth, Catalyst’s president and CEO.
The indefinite shutdown makes permanent the previously announced layoffs but does not mean layoffs beyond those announced in May, according to Catalyst.
The Canadian company purchased the Rumford mill for $62.5 million earlier this year. Antitrust regulators required the former NewPage to sell the Rumford mill and another in Biron, Wisconsin, before being acquired by Verso Paper Corp., which operates a mill in Jay.
Since the purchase, Nemeth said the company has invested millions in upgrades and implemented a “proven revitalization program to increase productivity” and to develop higher value products.
The company reported with its second-quarter earnings that it planned to invest $16 million (Canadian) in the Rumford mill, including upgrades to the recovery boiler and about $4.5 million in other capital investments.
The company said that the recovery boiler upgrade will help insulate it from fluctuations in energy costs, which came in $3 million higher than average for the first quarter of the year.
The Rumford mill has the most diverse capacity of products of all of Catalyst’s mills, with capacity for coated specialty grades, coated freesheet grades, coated groundwood grades and market pulp capacity.
The company said in its second quarter earnings statement that it expects power boiler maintenance this fall and a shift to more coated freesheet production will allow the mill to be a net seller of electricity this winter.
The mill has a 103-megawatt cogeneration plant that, according to the Energy Information Administration, has been shifting from burning coal to use mill wood wastes, tire-derived fuel and other alternatives. The plant supplies power to the mill and sells it back to the grid.
More of the same
The indefinite shutdown announcement comes after news earlier this week that Lincoln Paper and Tissue Co. would lay off 20 to 25 workers with the shutdown of one of its tissue machines. Verso two weeks ago announced plans to lay off 610 people at two mills, including 300 in Jay, later this year or in early 2016.
The company shuttered its Bucksport mill in December, laying off about 500 employees. In both cases, the company cited steady recent and projected declines in coated paper demand, high energy costs and foreign competition as factors in the decision.
The Maine Pulp and Paper Association said in a news release that both announcements “serve as a reminder of the dynamic nature of the industry, where success depends upon constant adjustment and innovation due to market conditions and other external pressures.”
The coated paper produced on Rumford’s No. 12 machine was primarily used in magazines, catalogs and for commercial printing.
In addition to its two U.S. mills, Catalyst operates three mills in British Columbia.