JAY — Verso Corp.’s announcement Tuesday that the Androscoggin Mill would idle a key papermaking machine and lay off 190 employees sent shock waves through the community and the state with the prospect of another struggling Maine mill on the edge and hundreds of jobs on the line.
By midday, news of the layoffs — amounting to about one-third of the mill workforce — cemented an uneasy and all-too-familiar feeling of uncertainty for this town of about 5,000 people, which is still reeling from 300 layoffs at the mill a year ago.
“It’s definitely going to hurt. The mill is our bread and butter,” Jay native Deana LeSuer said Tuesday while working the counter at her parent’s business, Riverside Kwik Stop, which is just down the road from the Verso mill.
LeSuer’s family has owned the market since 1975. LeSuer said she is always hearing changing stories about the state of the mill. “I’ll have one person say it’s closing tomorrow and then the next day it’s, ‘Oh no, we’re all set. Don’t worry about it. We’re going to be here another 20 years,'” she said.
Verso, which just emerged from bankruptcy three months ago and has about 560 employees, said in a release Tuesday morning that the Androscoggin Mill will idle the No. 3 paper machine temporarily, reducing annual coated paper production capacity by about 200,000 tons. That reduction is scheduled to happen early next year, the company said.
Verso’s news is the latest in a string of closures and layoffs that has bedeviled Maine’s paper industry in recent years. Five mills have closed in the last two years — including the Madison Paper mill this spring, putting more than 200 people out of work — and more than 2,300 workers have lost their jobs since 2011 as the industry reels from declining global demand for paper.
Workers outside the mill Tuesday afternoon declined to comment.
A wood hauler leaving the mill, Ed Edmondson, said he has not heard a lot of information about the layoffs. Edmondson said he has lost $20,000 this year since cutbacks at the mill resulted in his deliveries going from an average 20 loads per week to five per week.
Lloyd Irland, a Maine-based forest products industry consultant, called the Verso news on Tuesday a blow to the industry but said it’s not unheard of for mills to re-start idled machines.
“Sometimes to ensure long-term viability you have to shut down things that are bleeding cash and don’t show an obvious prospect for turn around,” Irland said. “The hard part is how long do you hold out hope?”
With that climate of uncertainty and Tuesday’s announcement of a new round of layoffs, LeSuer said the only way to keep going is taking the news day by day.
“It’s all you can do around here. I’ve got a job today. Just like (the millworkers), I have a job today,” Lesuer said. “You keep smiling. You got to do it.”
Coated paper like the kind made on the No. 3 machine is used for catalogs and newspaper inserts. Once the machine is idled, it will leave just two operating machines at the mill — one for coated paper and another for specialty paper.
“It’s critical to Verso’s long-term success that we balance the supply of our products with our customers’ demand for them, and we currently have more coated paper capacity in our mill system than we can fill,” Michael A. Weinhold, Verso’s senior vice president for sales, marketing and product development, said in a statement Tuesday. “Verso made the decision to temporarily idle the No. 3 paper machine and transition the machine’s production to lower-cost machines in our manufacturing system to help us stay ahead of the curve and move the entire company toward sustained profitability. At the same time, we are positioning the mill for future success by optimizing equipment, enhancing process efficiency and expanding production for the growing specialty papers market.”
Sen. Thomas Saviello, R-Wilton, said he was disappointed to learn about the 190 employees who will be laid off; however, he said he was not surprised by the announcement. In addition to the affected millworkers, Saviello said he is concerned about the trickle-down effect that people such as Edmondson are seeing as a result of mill production cutbacks.
“It’s going to ripple through the economy of the area,” Saviello said.
The Professional Logging Contractors of Maine echoed that concern Tuesday, saying in a statement that the Jay mill’s actions “will immediately hurt hundreds of loggers across Maine.”
‘DOWN TO BASICALLY NOTHING’
Because the value of Verso’s mill has declined, Jay’s property tax rate increased from $17.25 to $21.10 in 2016, according to Town Manager Shiloh LaFreniere.
With the first payments on tax bills being due last month, LaFreniere said Tuesday’s news came as a “punch in the stomach” to the town, which is still coping with previous mill turmoil.
“We were hoping that with the changes they made last year, the downsizing they had done and going through the bankruptcy and coming out of that, that maybe that would put them in a better position so we wouldn’t be facing (layoffs) again so soon,” LaFreniere said. “I think that everybody wants to keep being hopeful, but every time (bad news) happens, it kind of knocks you down a little.”
When Verso emerged from its bankruptcy this summer, the company announced it would focus increasingly on the production of specialty papers, the kind of customized paper produced for specific end uses such as food packaging and labels. Almost half of the 450,000 tons of paper produced at the Androscoggin Mill is coated paper, used for catalogs and magazines.
Specialty papers make up only 12 percent of its production volume, according to Verso financial filings, but the Jay mill recently has started making several new types of specialty papers.
Despite the company’s promise of shifting its paper-making to focus on specialty paper markets, former Verso mill employee Cindy Naaykens, of Wilton, said she is skeptical how much longer the mill will remain viable with its trend of shutting down machines. Naaykens was one of the about 300 people who were laid off in late 2015.
“(The mill) is kind of down to basically nothing,” Naaykens said Tuesday. “That mill used to have five machines running. If they go down to two, it’s not going to be the most profitable mill.”
Her last day at the mill was Dec. 28, and in January she enrolled in courses at Kennebec Valley Community College, where she is now a full-time student studying business administration and is on track to receive an associate degree in 2018. She received the opportunity to go to school after being laid off through the Trade Adjustment Assistance program, a federal program that pays for workers to go back to school.
Naaykens’ boyfriend still works at the Verso mill. Naaykens said he worked Monday night and is not sure if he has heard about the latest round of layoffs. But she said they’re not surprised to hear news like this anymore; it’s reality.
Her boyfriend’s brothers also work at the mill, and Naaykens said she doesn’t think their jobs will be affected; but if they are, she is optimistic.
“They’re all hard workers and they will have a job if they’re out the door,” she said.
THE MILL’S VIABILITY
Irland, the forest products consultant, said Vero’s announcement is not necessarily a result of the company’s recent emergence from bankruptcy and subsequent restructuring, nor is it an indication that more layoffs, or even closure of the mill, could be in the future.
As a newly formed company, though, Verso is not in the position to sustain losses for long, Irland said.
“They have to be tough-minded,” he said. “Maybe in a year they will be doing better and in a better position to sustain those losses.”
In its Tuesday news release, Verso Corp., based in Memphis, Tennessee, said it will “continue to evaluate market conditions to determine if and when the No. 3 paper machine” at the Jay mill should be restarted. If the company decides the machine should not be restarted, then the affected jobs probably will be eliminated, the release said.
“Challenging market conditions have made these types of actions far too frequent in recent years, and they are never easy,” Weinhold said. “They are especially difficult for the employees and their families who are directly affected. Verso is committed to treating all of our impacted employees with fairness, dignity and respect and to communicating openly and honestly with each individual about how this decision will affect him or her.”
Weinhold said the company’s human resources staff would start meeting with affected employees immediately.
Saviello, the Wilton legislator representing Senate District 17, which includes Jay, described himself as an “eternal optimist” when looking toward the future of the Androscoggin Mill. Saviello worked at the mill before becoming a lawmaker. He said given the fully integrated infrastructure that exists there, he doesn’t anticipate it going out of commission.
“I don’t know whether Verso will always own that mill, but I believe someone will,” Saviello said. “That’s a very viable mill. … It’s fully integrated.”
Saviello lists the mill among what he says are the three majors “prongs” holding the area together, along with the school system and Franklin Memorial Hospital in Farmington. Effects from these layoffs will be felt throughout surrounding communities, Saviello said, because “one mill job is equal to seven jobs in the area,” whether it’s a millworker’s health insurance keeping revenue going into the hospital or money earned from mill paychecks being spent at area businesses.
“I’m not sure what to say. It’s a disappointment,” he said. “I’m hoping that the markets can turn around.”
In a statement Tuesday, the Professional Logging Contractors of Maine said Verso’s announcement would have “an immediate effect on professional loggers throughout Maine as the mill reduces its paper production in 2017.”
Based on a typical ratio of fiber required to produce a ton of paper, the logging group said, Verso’s cut in production would likely “lead to a reduction in fiber consumption of about 500,000 tons, which will immediately hurt hundreds of loggers across Maine who rely on the mill as a market for timber.”
“Verso’s Jay mill is a major purchaser of wood fiber and this news will affect hundreds of logging jobs in our state,” Dana Doran, executive director of the logging group, said in a statement. “This should be a reminder that now is the time for Maine’s legislators, business leaders, communities, and industries to pull together and support every effort to preserve our forest products economy.”
U.S. Sen. Angus King, I-Maine, said early Tuesday afternoon that he had just heard of the layoffs at Verso Paper.
“It’s a shame and I hope they’re going to be able to bring those people back,” King said during a made-in-Maine tour of manufacturing plants in Somerset County. “Usually those decisions are based on demand for the product, and I know that demand for coated paper is way down worldwide; but I don’t know the specifics of this one.”
King said he visited the Verso mill during the summer and saw how that people were “working hard to make it go” but demand continues to be a “really hard problem.”
Verso has been trying to realign itself in response to the shifting demand. In August 2015, it shut down a paper machine at the Androscoggin Mill and trimmed 300 jobs, a move that cut one-third of its then-workforce. It also announced plans to “indefinitely idle” its mill in Wickliffe, Kentucky, laying off 310 employees there.
A year earlier, Verso closed its Bucksport mill, laying off 500 workers.
The company went into bankruptcy protection in January, emerging six months later after shedding $2.4 billion in debt and closing its mill in Kentucky.
In August, Verso announced its new senior management team, which included a graduate of Old Town High School and Maine Maritime Academy. Adam St. John, who holds an engineering degree from Maine Maritime Academy, was promoted to senior vice president of manufacturing for the paper company.
Irland, the forest products industry consultant, said the Jay mill’s current situation is complicated further by the ever-declining market for paper, which has “refused to bottom out.”
“So many times we’ve predicted or hoped it would stabilize,” he said, “and so many times we’ve been disappointed.”
LaFreniere, the town manager, said that after the last round of Verso layoffs, the town worked with the Department of Labor to put together a resource fair for those who needed assistance.
As a town, she said, they will continue to do what they can to help.
“We do have a close-knit community. I think the people want to help each other out, and sometimes it’s hard to know how to do that,” LaFreniere said. “It’s one of those things. How do you help people?”
Lauren Abbate — 861-9252
Staff writers Rachel Ohm and Doug Harlow contributed reporting.