MADISON — Madison Paper Industries temporarily has cut back on production two days per week, according to the mill’s union president, who said the curtailment is because of declining demand and will result in less pay for workers.
Russ Drechsel, president and CEO of Madison Paper, declined to comment or confirm the hours cutback, citing a “strict silent period” that the company is under until financial information becomes public Tuesday, Feb. 2.
The mill, which produces supercalendered magazine paper in downtown Madison, has operated 24 hours a day, seven days per week, but is now in its second week of operating on a Tuesday through Saturday schedule, a move that’s expected to be temporary but will last at least three months and possibly six.
“Our membership is angry — and who wouldn’t be when you’re taking a pay cut and bringing home less money to take care of your family? People are very frustrated,” said Michael Croteau, president of the United Steel Workers Local 36, the union at Madison Paper, on Tuesday.
While town officials say it shouldn’t have a big effect on the town’s finances, water district officials are concerned it could hurt a planned $3.2 million upgrade.
The news comes around the same time that Verso Paper Corp., which operates the nearby Androscoggin Mill in Jay, filed for bankruptcy after also recently citing declining demand for paper and increasing foreign imports as reasons for that company’s struggles.
No layoffs have been announced at the Madison mill, according to Croteau, but the production cutbacks have changed worker schedules such that they will be working fewer hours a week without the possibility of overtime.
A normal workweek at the mill is 48 hours a week with Sunday pay at double the normal rate.
Workers were scheduled previously for three 12-hour shifts in a row followed by three days off, but under the curtailment they are now working five days per week Tuesday through Saturday for eight-hour shifts with little to no overtime expected, Croteau said.
The change is expected to be temporary and will last between three and six months, Croteau said, but a six-month curtailment could mean a loss of as much as $6,000 to $7,500 in the yearly income of workers.
“It’s all driven by orders (to buy paper), or rather a lack of orders,” Croteau said.
Chris Roy, a member of the Anson-Madison Water District board of trustees, said he was concerned that the water district might not be able to afford a proposed $3.2 million water line replacement project that the trustees are planning for the spring.
Madison Paper makes up about 10 percent of the water district’s revenue, Roy said, and the district already is planning a rate increase for users to fund the project.
“I think all of the utility (providers) in Madison should be concerned,” Roy said. “What will we do if Madison Paper isn’t there? I think it affects all aspects of the town.”
This is not the first time the mill has had production curtailments in recent years. In 2015 the mill endured at least three periods of temporary layoffs in which workers were sent home for 10 days to two weeks. At the time of the first curtailment in January, Drechsel cited rising energy costs and competition from Canada’s Port Hawkesbury Paper as reasons for the shutdown.
Still, the mill’s outlook seemed to improve in November after the U.S. International Trade Commission approved the placement of duties on supercalendered paper being imported to the U.S. from Canada.
The ruling came after Madison Paper and Verso’s Duluth Mill in Minnesota filed a federal complaint alleging unfair subsidies from the Nova Scotia government to Port Hawkesbury were hurting the U.S. market.
The federal decision was applauded by Madison Paper as an important step toward assuring a fair market and the likelihood that Madison would be able to continue to compete in sales of supercalendered paper.
However, Croteau said the decision hasn’t changed the decline in demand for paper.
“Even though we won the (trade) case, Port Hawkesbury is still importing paper into the United States and they’re a competitor. I can’t tell you what their order book looks like, but our orders are less than what they were last year. We don’t have the orders to run 24/7,” he said.
Madison Town Manager Tim Curtis said the town was made aware of the cutbacks from “employees who come into the Town Office” and said the changes are not expected to affect town finances the way a recent drop in tax value at the mill did.
“It’s a business decision,” he said. “It’s just like any other business that has to cut their production because of less demand. I don’t get too worked up about it because it’s just the nature of the paper business right now.”
Curtis said he feels the tax valuation of Madison Paper has stabilized since it dropped about $150 million in 2014 from a $229 million valuation to $80 million.
The change in tax value represented a loss of roughly one-quarter of the town’s tax base and created a funding shortfall for the municipal budget, ultimately resulting in a police consolidation and a tax rate increase for residents.
“That’s where we knew the big adjustment was,” Curtis said. “We’ve kind of weathered that storm for now.”
Still, some people in Madison said they are concerned about the cutback.
At Renys department store on Main Street, footwear and men’s department head Jenn Holmes said Tuesday she heard from friends who work at the mill about the production cutbacks.
“We’re a small community around here, and that’s huge when they’re cutting back,” she said. “It definitely would affect people around here.”
Liz Toner, an employee at the Madison House of Pizza, also on Main Street, said lately she had noticed fewer people eating lunch at the restaurant.
“I’m sure it would have an impact,” she said of the cutbacks. “If anything happened down there (at the mill), it would have a big impact.”
Rachel Ohm — 612-2368
Twitter: @rachel_ohm
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