Great Northern Paper to Shut Down Production for Up to 16 Weeks

Great Northern Paper's mill in East Millinocket, Maine will temporarily shut down due in part to high energy costs. The mill produces newsprint and directory paper (uncoated groundwood papers) and operates two paper machines.

Jan. 23, 2014 - Great Northern Paper (GNP), announced today a temporary stop in manufacturing due to the current high costs of production combined with lower market prices for its products.

GNP spokesperson Scott Tranchemontagne said the company is at a crossroads and must make fundamental long-term adjustments.

“Like any business, Great Northern Paper must operate in a way that is sustainable over the long term. We take very seriously our responsibility to employees, customers, suppliers and investors. The responsible action at this time is to temporarily stop production and restructure the company.”

Following the afternoon shift today, GNP will stop production for up to sixteen weeks to implement a business improvement plan. All employees will be retained for at least two months. They will work toward improving operating efficiencies at the mill relating to water and energy usage, among other areas.

Tranchemontagne said the paper industry is more competitive than ever, which continues to drive paper prices down, meaning less revenue during a time when GNP is paying high costs for wood, pulp and energy. The company had been preparing a conversion to heating the mill with natural gas so that its biomass boiler could be dedicated to powering two paper machines, but extremely volatile natural gas prices render this option unfeasible.

“We must operate both paper machines in East Millinocket to be viable, but the high cost of converting to, and heating our mill, with natural gas has made this option impossible at this time.”

During the production stoppage GNP will work on measures to lower GNP’s production costs. It will also work with suppliers to resolve outstanding payables, in addition to maintaining communication with customers to meet their future needs.

Tranchemontagne added that GNP is extremely grateful for all the support it has received from the Katahdin Region and across the state of Maine since restarting the mill in October 2011.

“We have tried to give back to the communities by providing good jobs, relying on local vendors, supporting community efforts, and moving forward with Thermogen, which will provide additional new jobs and economic development,” said Tranchemontagne. “We know how important the East Millinocket mill is to the Katahdin Region, and we are doing everything we possibly can to make it strong again.”

Tranchemontagne added that GNP clearly understands and accepts its role and responsibility in attempting to create conditions that will allow GNP to succeed.

“Stopping production was an extremely difficult decision to make, but continuing to run the mill under the current conditions is neither a viable nor responsible option. We need to fix fundamental, long-term issues, as opposed to applying short-term fixes.

“We cannot alter the very challenging conditions in today’s paper markets,” added Tranchemontagne, “so GNP must focus on reducing all of our various production costs, make critical investments to our operations, and restart as a two-machine mill to be viable over the long term. It won’t be easy, but we are committed to working as hard as we can with all of our partners toward success.”

SOURCE: Great Northern Paper