Jay paper mill to close in early 2023

·7 min read

Sep. 20—JAY — The Androscoggin paper mill, which employs about 230 people and is the town's biggest private employer, will close in the first quarter of 2023, according to the owner, Pixelle Specialty Solutions of Pennsylvania.

Company CEO Tim Hess on Tuesday cited economic forces that made operations unsustainable.

People hearing the news in the area repeated the same or similar comment: "It is a sad day in town."

Town Manager Shiloh LaFreniere issued a statement Tuesday afternoon after being informed of the closure:

"We are devastated by the news today," she wrote. "Our immediate concern is the welfare of the workers and their families as well as the community members that will be affected by the closing, especially in this difficult economy. There are a lot of questions that we will be asking ourselves and the mill in the coming days to figure out the best path forward for our community but for today, our thoughts are with the employees and the mill."

Gov. Janet Mills also issued a statement, saying the state offered its support to try to keep the mill open, but company leaders said there was nothing they could do.

"The CEO of Pixelle, Tim Hess, called me earlier today to share the sad news of the mill's closure," Mills said. "Since the digester explosion, my Administration has been communicating frequently with mill officials to offer our support. And during our conversation today, I asked Mr. Hess if there is anything the state can do to prevent the closure of the mill and he said that, unfortunately, there is not. He said that if there had been, he would have asked, and I told him that I would have done everything within my power to help.

"I am deeply disappointed, but, more importantly, I am deeply concerned for the livelihoods and well-being of those who work at the mill. I was glad to hear that Pixelle will offer all employees health care benefits and severance pay following the end of their employment in 2023, but I am also directing Labor Commissioner Laura Fortman to send a Rapid Response Team to help support the millworkers and provide all available resources to them and their families."

The mill produces specialty label and release papers, as well as industrial and packaging materials. It was built by International Paper in 1965, but the town has been making paper in several mills since 1888.

"The dedicated and skilled paper making employees in our mill in Jay, Maine, have worked tirelessly to achieve financial sustainability in challenging economic times" Hess tweeted Tuesday. "They have produced products of the highest quality and maintained a safe work environment. Economic forces beyond our control have combined to make profitable operations at the mill unsustainable. We are grateful for the efforts of the employees and are committed to assisting them with offers of continued employment at other Pixelle locations or outplacement support."

Pixelle bought the Androscoggin Mill and associated properties from Verso Corp. in early 2020 as part of a $400 million deal, adding the Jay property to its specialty paper operations in Ohio, Pennsylvania and Wisconsin.

Together, the mills operated 11 paper machines, including two in Jay, and produced more than 1 million tons of paper annually.

At the time the mill changed ownership, its specialty papers portfolio included bleached and natural kraft products for food packaging, pressure-sensitive release liners and labels, packaging tapes, insulation backing for building materials and wet-strength and grease-resistant products.

Shortly after that purchase, in April 2020, there was a massive explosion at the mill when a digester ruptured. One of two wood pulp digesters, known as digester A, ruptured and fell on the second digester, digester B, destroying both in the process. The loss resulted in the mill shutting down one paper machine and, ultimately, a decision not to rebuild its pulp mill.

At the time, Alan Ulman, spokesman for Pixelle Specialty Solutions, said the decision was part of its long-term strategy to continue manufacturing specialty papers on its other two machines and utilizing more than 250 full-time employees.

The company planned to use pulp sourced from other mills, including Maine-based facilities, to feed its paper-making operations.

About 177 jobs were eliminated at the mill in the months immediately following the explosion, which halted manufacturing for eight days and initiated months of recovery and strategic planning.

Pixelle established a $1 million fund to support job retraining for those laid off as a result of the pulp digester rupture, and it developed an ongoing program to further support former employee job retraining.

In May 2021, Pixelle and related companies claimed the digester ruptured as a result of failed welds, and filed a civil lawsuit against Trico Mechanical Contractors, which is based in Florida.

The rupture "substantially damaged the mill and significantly interrupted Pixelle's business activities. Pixelle brings this lawsuit to recover losses and damages sustained due to defendant Trico's wrongful acts and omissions and pursuant to applicable contractual agreements," according to court documents.

In April of this year, Pixelle Specialty Solutions Holding announced it had entered into an agreement to sell the Androscoggin paper mill to H.I.G. Capital, a leading global alternative investment firm based in Pennsylvania. Terms of the transaction were not disclosed, but the sale was supposed to have been finalized in the second quarter of this year. It is unclear if it happened.

"It is a horrible, horrible thing," Franklin County Commission Chairman Terry Brann said. "I think it's going to impact the whole county and all of the counties around us. It is going to impact everybody in the future for a long time. It is a terrible thing."

Jay, once the highest taxpayer in Franklin County, dropped to third this year and will go to fourth next year because of downsizing at the mill over the years.

Jay selectpersons and administrators will be discussing filing a fifth application to Maine Sudden and Severe Disruption of Valuation program, LaFreniere said.

The state lowered the town's valuation by $201.1 million each year for 2019, 2020, 2021 and 2022, after the town filed for relief. The adjusted valuation for 2019 is $347.85 million, 2020 is $347 million, 2021 is $388.1 million and 2022 is $415.1 million, according to a letter dated Feb. 2 from Deputy Director Steven J. Salley, supervisor of Municipal Services Property Tax Division.

In February the state lowered the town's valuation a fourth time since 2013.

Locally, the Androscoggin Mill's value and associated property increased by $30,342 to make it $109.84 million for the 2022-23 valuation, according to information provided by the town's assessing agent, Paul Binette, of John E. O'Donnell Associates of New Gloucester in August. Mill owners were to be assessed a tax of $1.8 million after the tax-increment financing agreement is factored in.

"I can't say I am much surprised," said Glenda DiPompo of Jay. She is an owner of the Riverside Kwik Stop in Jay at the corner of Riley Road, where the mill is located.

There was once over 1,200 employees at the mill. She remembered when it was difficult to find a parking spot at the mill but the numbers of vehicles parked there has decreased significantly.

As much as the mill has downsized over the years, the convenience store and gas station has held its own, she said.

Selectperson Lee Ann Dalessandro, whose husband worked at the mill for nearly 40 years and retired 10 years ago, said they still know a lot of people who work there.

When she heard the news, her first thought was worrying about the employees losing their positions and secondly, she said, the affect the mill's closing will have on the taxpayers in Jay.

Everybody has been saying it is a "sad day," in town, she said.

In 2000, there were 52 private Maine firms involved in papermaking, according to some recent statistics.

That number dropped to 37 by 2010 and fell to 19 as of March 2020.

In 2010, the paper industry employed 7,397 Mainers and paid total wages of more than $470 million.

By 2018, the employment number dropped to 4,386 and wages dropped to $336 million.

According to the federal Department of Labor, the average wage for a chemical engineer in the paper industry in May 2021 was $95,600.