The company that owns the Sappi paper mill in Skowhegan announced Wednesday a $165 million paper machine rebuild project at the Somerset County facility, drawing quick praise from state and local officials as a savvy move that points toward how the struggling paper industry can adapt to market demands and thrive.
In a news release, Sappi Limited described the “significant investment” in Maine as resulting in “further enhancement of offering to graphic paper customers” with a 180,000 metric ton capacity increase on what’s known as Paper Machine No. 1. The project, expanding the machine’s overall capacity and ability to make consumer packaging products, is planned to be finished in early 2018.
Lloyd Irland, a forest products expert who runs a consulting operation in Wayne, called the Sappi news “most gratifying” and a “breath of fresh air,” especially following years of news about Maine mills shutting down or laying off workers.
While Irland said the $165 million investment isn’t what he would called “huge” by industry standards — noting that new paper machines typically cost $250 million or more — it’s still a significant sum that shows the company is willing to adapt to market demands and “do more than just the minimum to keep the place running.”
“The days of being able to turn on a paper machine and run the same grade for months is over,” Irland said in an interview Wednesday. “What’s going on is mills need to be more adaptable, have more specialties and adapt more nimbly to the market.”
The $165 million project comes after a string of recent multimillion-dollar investments at the facility.
Sappi Fine Paper North America announced in August that it also would invest $25 million over the next year in new equipment in the paper company’s wood yard on U.S. Route 201 in Skowhegan, adding as many as 100 temporary construction jobs. Mill Managing Director Tony Ouellette said at the time that the equipment investment, coupled with a $60 million capital investment in equipment and environmental safeguards already put into the Somerset plant since 2011, means the South Africa-based company is committed to the region for the long haul.
Sappi’s Somerset Mill, built in 1976, has three paper machines and employs about 750 people. The company also has a mill in Westbrook.
The town of Skowhegan and the company have struggled over tax value as the mill’s revenue declined, but they reached a compromise in March that both sides said would save jobs while still helping the town’s tax base.
The Skowhegan mill upgrade — among other projects in Europe and the U.S. — helps establish “a strong platform for growth in paper-based packaging while maintaining Sappi’s leadership position in the graphic paper market, increasing annual production capacity at this mill to almost one million tons per annum,” according to the company release.
Steve Binnie, CEO of Sappi Limited, said in a statement that the investment will help the company “pursue growing areas of demand” so it “can remain profitable and competitive in the global marketplace.”
“Somerset’s existing world class infrastructure together with its talented workforce and access to high quality fiber makes the mill an excellent and obvious choice for this investment,” Mark Gardner, president and CEO of Sappi North America, said in a statement. “Increasing our flexibility and expanding the paper mill’s capability and capacity will ensure that we continue to make superior products at Somerset for years to come.”
Gov. Paul LePage issued a statement on Wednesday afternoon, welcoming the investment and saying it demonstrated a commitment to Sappi’s Skowhegan mill.
“Sappi is capitalizing on an opportunity in the packaging market. Our paper mills are not dead, but they do need to reinvent themselves. Sappi has identified new markets and technologies that will ensure the company continues to make superior products and employ Mainers with good paying jobs for many years,” LePage said in the statement.
LePage also encouraged legislators to keep their attention on rising energy costs in the state. He noted that increased energy costs have affected the paper industry and said it resulted in millworkers getting laid off.
“We have slipped from 12th to the 11th highest energy prices in the Nation,” LePage said in the statement. “When Maine businesses are forced to pay more for energy and taxes it is less money the company is able to invest in its employees with higher wages and benefits. We must encourage our economy to grow and we do that by supporting good policies that do no harm to Mainers or the environment.”
Rosaire Pelletier, the governor’s liaison for the paper industry, said in an interview Wednesday he was “very, very, very happy” to hear about the Sappi investment.
“It’s major because these are the highest-paying jobs in these pulp and paper mills,” Pelletier said. “We’re very glad Sappi is investing in Maine and it’s going to be a state-of-the-art machine.”
Pelletier also said the investment signals that the pulp and paper industry can still thrive, despite industry challenges that have forced staff cutbacks and facility closures elsewhere.
“There will be a pulp and paper industry surviving, but we also have to change with the new markets, and that’s what Sappi is doing,” Pelletier said.
The Professional Logging Contractors of Maine praised the Sappi investment, saying in a statement that the move will “benefit hundreds of Maine loggers and truckers.”
“This decision by Sappi is great news for Maine’s loggers, truckers and economy,” Dana Doran, executive director of the PLC, said in a statement. “The Somerset Mill is a major consumer of wood fiber and an anchor for the forest products economy in our state. As other mills have closed, its importance has grown, and we applaud the vision and commitment to the future that this willingness to invest in Maine represents.”
The group also noted that the Sappi investment comes as a comprehensive strategy for the state’s forest products industry is in the early stages of development by a federal Economic Development Assessment Team task force.
Skowhegan Town Manager Christine Almand said Wednesday that Sappi is making “a tremendous commitment to future viability.”
“Sappi’s continued investments will secure their profitability as well as Skowhegan’s local economy and about 750 jobs,” Almand said. “Sappi has a strong business acumen and recognizes the value in the Somerset Mill and its workforce.”
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