Ashland-based Northeast Pellets has won a new contract with the University of Maine Fort Kent that’s set to boost employment and sales at the company following a challenging heating season.
Northeast Pellets and UMFK have signed a one-year contract for the firm to supply the university with biomass heating pellets, with the potential for two annual extensions, according to a media release from Northeast Pellets.
Matt Bell, founder and president of Northeast, said the deal is expected to require more workers and to grow the mill’s revenue by around $750,000 over three years if the contract is twice-renewed.
“We currently employ 11, but will need 15 to meet production needs,” Bell said in a media release. “We’re currently operating five days a week, with 12-hour days. We’ll be ramping up as we get into the fall, going back to 24-hour-a-day production, four days a week.”
That production will be the difference between about 50-60 tons a day and 110-120 tons, Bell said. “In colder weather, it is more difficult and time consuming to start and stop the equipment,” he explained in an email. “We plan to produce 4 days and 3 nights with ability to add additional shifts as needed.”
Last year the company produced about 10,000 tons of pellets, down from the usual 15,000 tons in previous years, Bell said.
Northeast Pellets secured the contract through a request for proposals that the University of Maine System issued for heating fuel in June. The news comes at an opportune time, given that Northeast — like other pellet makers — saw slow sales last winter because of milder weather and lower oil prices.
Late last December, Northeast Pellets reduced production by almost half, in part due to slow early-season sales to UMFK, which the company had been supplying through a local contractor. UMFK later moved to buy more of the company’s fuel for the biomass plant it shares with the local school district.
The latest heating contract included an emphasis on economic development locally and within Maine, which “was a priority for members of the Aroostook County legislative delegation who engaged university leaders on the topic,” Bell said.
“Maine’s pellet industry is still relatively new,” said Bell, who started Northeast as the state’s first pellet manufacturer in 2006. “We appreciate the willingness of our elected representatives and university leaders to consider industry concerns and respond to opportunities to boost Maine-based manufacturing.”
Bell said he expects the deal to have a more than $5 million ripple effect in supporting other northern Maine businesses, particularly in the hard-hit forestry industry, such as mills along the Route 11 corridor.
The contract also includes provisions listing Corinth Pellets, another Maine-based pellet operation, as a backup source, and will rely on Houlton-based Agri-Cal for transportation.
“We look forward to working with the university, helping them reduce their carbon footprint through the use of locally-manufactured wood pellets,” said Bell. “It’s all about sustainability and boosting Maine’s economy at the same time.”