State Scrambles to Save Old Town Pulp Mill, 200 Jobs

Aug 14, 2014

Old Town Fuel and Fiber's parking lot was nearly empty today, after nearly all the pulp facility's 195 workers were put on furlough.
Old Town Fuel and Fiber's parking lot was nearly empty today, after nearly all the pulp facility's 195 workers were put on furlough.
Credit Jennifer Mitchell / MPBN

OLD TOWN, Maine - "Effective immediately all Old Town mill operations will be indefinitely suspended." That was the message employees at the Old Town Fuel and Fiber Co. received Wednesday evening. The written statement went on to say that all workers except those needed for security were being sent home. The workforce currently numbers about 200 people.  

In its brief statement, Old Town Fuel and Fiber said the impact of foreign competition and high wood and energy costs have made it difficult to sustain operations. A company spokesman declined further comment. But a longtime mill employee, who asked not to be identified, said he's disappointed but not surprised.

"We been financially strapped for awhile," he says. "I don't know if a lot of people know that because they think papermakers make big bucks, but we've been strapped. We've been strapped."

John Williams, president of the Maine Pulp and Paper Association, says a lot of Old Town's competition has been coming from South America and other places that grow eucalyptus, a rapidly growing hardwood that can be used to make pulp.

"It can be grown at lower costs," Williams says. "There are a lot of fairly large plantations, and there are a lot of pulp mills that have come on line fairly recently, and so they're competing in the world market and they're driving the price of what Old Town can sell their products for - they're driving it down."

Old Town Fuel and Fiber, which began as a sawmill in 1860, has been through some turbulent times in recent years. In 2006, Georgia Pacific closed, putting nearly 500 people out of work. Hopes rose after that when a company known as Red Shield partnered with the University of Maine on a bio-research pilot project to produce ethanol at the plant. But within two years Red Shield had filed for bankruptcy.

Enter the woman dubbed "the diva of distress" with yet another rescue plan.

"I buy what other people leave behind. I come in when there's no hope, and my challenge is then to take these assets and to rebuild them." That's former investment banker and billionaire Lynn Tilton in a 2011 YouTube video, telling Old Town employees that she and her company, Patriarch Partners, have a plan to secure the mill's future. "It's a great story of small town America where putting people back to work with innovation actually puts a whole town back in play."

A holding company with investments in 75 companies, Patriarch Partners sank $40 million into the Old Town operation and had big plans to turn wood chips into aviation fuel. Its Web site, which had not changed as of Thursday, says Old Town Fuel and Fiber is well-positioned to be a market innovator in the eco-pulp and biofuels sectors.

Gov. Paul LePage is hopeful that's still true. "If the technology is where I'm told it is, it's on the cutting edge of being commercialized, than I believe there's somebody out there that would be willing to invest," LePage says.

The governor says state officials are already in contact with several companies that have an interest in the technology. The state is also deploying its rapid response team to help displaced workers with unemployment and other services. The first meeting with workers is scheduled for Tuesday.

Meantime, Gov. LePage says he wants to find out whether the company broke the law by abruptly sending workers home. "If they start collecting unemployment, then the ownership needs to recognize that we have laws on severance here in the state of Maine," he says. "I'm serious. They're not getting away with that because they should have been talking to us ahead of time."

A call to Patriarch Partners was not returned by airtime. Old Town city officials also declined to be interviewed. But they released a statement thanking Lynn Tilton for purchasing the mill in 2008, thanking employees and pledging to help find a new buyer.