Friday, April 18, 2014
Verso Paper Corp. said Friday it will idle its Bucksport mill for about two weeks to control inventory amid a flood of paper supply on the market and a spike in natural gas prices.
Verso Paper’s Bucksport mill will shut down for two weeks, idling about 650 workers.
2008 Press Herald File Photo/Shawn Patrick Ouellette
Verso, which Monday agreed to buy rival NewPage Holdings for $1.4 billion, employs about 560 workers at the Bucksport mill, said spokesman Bill Cohen.
The mill will shut down by Jan. 17 and remain idle for about two weeks, Cohen said. The company’s biomass boiler will remain in operation and produce electricity during the shutdown, he said.
“This is happening because of the extraordinary cost of natural gas, which happened last winter as well. And also, a soft order book, which is typical for this time of year. Instead of making paper and keeping it in a warehouse, we’re shutting down for two weeks,” Cohen said.
The company also is idling a large gas turbine because the “cost of natural gas is exorbitant,” Cohen said.
Memphis-based Verso, which makes paper used in magazines and catalogs, sent a letter to Bucksport employees Thursday. A copy of the letter was obtained by the Portland Press Herald.
“The company works to balance our supply with customer demand. Our forecasting models combined with current inventory levels and customer orders show that this downtime is necessary to keep supply and demand in balance,” Verso said in the letter.
“We cannot control the demand for our products nor the cost of natural gas delivered to Bucksport. Several other paper mills ... have curtailed production due to the high cost of natural gas,” Verso said in the letter.
Increased natural gas prices and constrained supply have driven the cost of production to the level where it is unprofitable to produce paper for many mills, said Anthony Buxton, an energy expert and partner with law firm Preti, Flaherty, Beliveau & Pachios. Buxton is counsel for the Industrial Energy Consumer Group, a trade group in Augusta.
“At the price at which they have to produce the product, they’d lose money,” Buxton said.
Other Maine paper companies have limited production or shut down parts of their operations this winter as extreme cold spells triggered a spike in wholesale prices for natural gas and electricity.
The lack of natural gas pipeline capacity north of New York has pinched the supply in New England.
Huhtamaki Inc.’s molded-fiber mill in Waterville said in December it would likely idle machines and send workers home again this winter if power prices continue to make production unprofitable. Another workplace, the UPM paper mill in Madison, said it took unspecified steps to adjust its output.
Jessica Hall can be contacted at 791-6316 or at: