SKOWHEGAN — Sappi Fine Paper North America is cutting 5 percent of its workforce nationwide, including an undisclosed number of positions at the paper mill in Skowhegan.
The job cuts come in response to a challenging market environment and further steps to reduce costs, according to a company statement. The cuts include permanently eliminating 110 salaried and hourly positions, according to the company. Of those, approximately 30 are active employees who lost their jobs, with the remaining reductions eliminated by not filling open positions and an overall reduction in force.
While the company wouldn’t comment on the specific impact in Skowhegan, the cuts were not believed to have resulted in any outright worker layoffs at the Somerset County plant.
Employees with direct knowledge of the situation, who asked not to be identified because they were not authorized to speak, said the cuts in Skowhegan were described to staff as involving eliminating vacant jobs, moving other positions around to fill holes and some shift reductions.
Of the estimated 800 workers at the Sappi mill in Skowhegan, 170 are salaried. The remaining employees are represented by four unions: International Association of Machinists and Aerospace Workers, with 74 members; International Brotherhood of Electrical Workers, with 60 members; United Steelworkers, with 465 members; and Security, Police & Fire, Professionals of America, the mill’s security group, with 15 members.
Duane Lugdon, a staff representative for the United Steelworkers, said in a statement late Wednesday that the Sappi announcement “is further evidence of a slowing market for paper in our nation.”
“Not only are Americans using less paper in their personal written communications but the advertising industry is using less paper in catalogs and magazines, packaging methods are changing and other forms of paper products like newspapers are going âonline’ instead of a printed medium. The Internet and the ever-growing electronic forms of communication are impacting the demand for paper in ways that we could not have imagined just eight or 10 years ago. And finally there is the impact of foreign paper finding its way to America even as the demand for it is shrinking.”
Lugdon said no matter how efficiently paper is made, some companies won’t be able to sustain themselves.
“It will be those who are strongest, have the most resources and the right products, along with those who can create new purposes for their products, that will survive,” he said. “Sappi has a research and development structure that we think will allow it to be a survivor and our union’s members continue to work diligently with Sappi to find unique paths forward to the future.”
Sappi in its company statement announcing the job cuts called reducing its salaried and hourly workforce “an extremely difficult decision.”
But it’s “necessary to reduce cost, remain competitive, and support our ability to deliver against Sappi’s long-term strategic initiatives, while continuing to meet the needs of our customers,” Sappi’s statement says. “We remain committed to our workforce and the community at all of our facilities and will continue to selectively hire and provide training and scholarship assistance to new talent seeking a rewarding career in the paper industry.”
Positions were eliminated at all Sappi locations and across all functions in North America. Job cuts even included the position of Joanna Rieke, the company’s longtime manager of corporate communications in Boston. A company spokeswoman later said Rieke’s layoff had been disclosed inadvertently. “Sappi is specifically not commenting on individual departures out of respect for all parties,” said the spokeswoman, Shannon McLoughlin.
Sappi has six locations in North America, including three paper mills — Westbrook and Somerset in Maine, and Cloquet in Minnesota. The company maintains corporate offices in South Portland and Boston and the Sappi Technology Center in Westbrook.
Sappi North America President and CEO Mark Gardner sent a statement to employees Tuesday saying about 50 salaried positions and 60 hourly positions were cut across the company’s North American operations.
“I am personally very aware of the impact this decision has on our affected employees,” Gardner said in the statement. He said the company will provide separation benefits to salaried employees, while discussions will be held with union officials regarding the impact on hourly employees.
Gardner said Sappi’s operating income for the first six months of fiscal year 2014 was far lower than expected.
“It is imperative for us to focus on good cash management and running operations as efficiently as possible,” Gardner wrote to employees.
In the first six months of the 2014 fiscal year, Sappi North America has generated $2 million in operating income, which Gardner said is “well below plan and last year.”
At the Skowhegan mill, 2,200 tons of coated paper are made, rolled, wrapped and put on trucks and rail cars each day for use on glossy pages and covers of fashion magazines all over the world. The mill, on U.S. Route 201, is the seventh-largest paper mill in the world, according to the company.
Sappi, with New Balance Athletic Shoe Inc., is one of the top two employers in Somerset County. The company ranks in the top 20 employers in Maine when including employees from its Westbrook mill, according to state labor statistics.
Sappi bought the S.D. Warren Co. from Scott Paper Co. in 1994. It is a publicly traded company with about 15,000 employees worldwide.
The company pays the town of Skowhegan about $9.76 million in real estate and property taxes annually.
The federal government’s latest list of the biggest polluters in Maine released in February includes the Sappi mill in Skowhegan. It was third on the list of the state’s 10 biggest polluters, with more than 2 million pounds of toxic chemicals emitted. The company’s Westbrook operation also made the list as the state’s eighth-largest polluter, with about 257,000 pounds of emissions.