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Selectboard receives update from mill manager

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Chair Stephen McCourt of the Jay Selectboard, right, asks Town Manager Shiloh LaFreniere a question at Monday evening’s meeting. Left to right are selectpersons: Tom Goding, Pearl Cook, Timothy DeMillo and Justin Merrill.

JAY – A manager with Verso Paper said that he needed “all the help he could get” to keep the local mill competitive Monday evening, as he provided the Board of Selectpersons with data relating to the rising costs of manufacturing paper in North America.

The presentation by Marc Connor, manager of the Verso Androscoggin mill, takes place as the town and company begin discussions regarding a potential revaluation of the facility. Valued at $929 million by the town, the facility employs more than 850 people.

Since Verso paper acquired the mill in 2006, the input costs of manufacturing paper had increased by $129 per ton while the sale price of paper had only increased by $36 per ton, Connor said, referring to the numbers as part of a “very difficult trend in our cycle.” Transport costs had increased and profit margins had eroded, Connor said, particularly for the glossy, high-quality stock made at the mill for magazines, brochures and other products.

Over the past seven years, Connor said, consumption of the products generated at the Androscoggin Mill had fallen approximately 5 percent, a trend he attributed to the advent of tablet and smart phone products.

“We are in a very, very difficult business,” Connor said. “It’s kind of a tough story to tell.”

Connor contrasted the purchase prices and more recent values of other mills to make the point that paper manufacturing facilities had lost value over the past decade. While the same buildings, equipment and other infrastructure may exist at each facility, Connor said, the mills had less value as entities due to the issues facing the industry.

While Androscoggin Mill was trying to look at new specialty markets, Connor said, altering equipment to create different products was expensive and difficult without investment. Connor said that it was his job to keep the 863 people working at the mill employed, and that “I need all the help I can get” to stay competitive.

The board asked no questions of Connor. The town has until the end of the year to decide how to answer the mill’s request for a revaluation.

In other business, the board discussed setting the town meeting in April rather than June. That would bring it in line with the Spruce Mountain School District budget vote, providing more time until the end of the school’s fiscal year if that budget should fail to pass. Superintendent Ken Healey, who attended the meeting, said that he preferred a joint date to set the town and school budgets. Holding the meeting earlier in the fiscal year, he said, allowed Spruce Mountain to go out and hire new teachers before the candidate pool was drained by other districts.

The board agreed to wait for the school board to develop a possible date or set of dates for the vote.

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18 Comments

  1. And I know lots of people without jobs or not making the money that they use to. Will they be paying less in real estate taxes as well.

  2. Jay has had the benefit of lower taxes for years because of the mill. I totally understand facing higher taxes; the prospect is upsetting. However, does the town really care about the mill staying and employing that many people? Or do they dig in their heels, feeling “big corporations” should continue to pay their fair share of the taxes for the town? That’s a tough one, but I’d think 3/4 of a loaf of bread is better than no bread at all. “No bread at all” would be devastating, not only to Jay, but the whole county. This area needs those good jobs!!! I hope Jay’s selectmen can see the forest for the trees on this one.

  3. I think that Verso is setting the stage for a bidding war between Jay and Rumford. They may have one or more mills than they need after the acquisition. If the numbers in the morning print paper are correct, I don’t see how they can even be in operation. Where are they getting all this money they claim they are losing?

  4. Increasing state and federal taxes as well as increasing state and federal regulations that erode market competitiveness. could these factors play a role in this problem?

  5. Its the cost of raw materials, and energy that drive industry…..
    The northeast US has high raw material and energy costs….Regulatory costs are cheap compared to energy and pulp.

  6. The point is being fair and realistic. The mill is simply not worth what Jay says it is. Every other community is already realized that and made the adjustment.

  7. Why not freeze the taxes on the mill for a period of time.5-10 years maybe.? With an agreement that they have to stay running for that period of time.

  8. Jim, if you have been following Millinocket’s delimma, you will see that the day they decide to close and file for bankruptcy, the jig is up and everyone is shut out but the high profile lawyers. No company can make an agreement like the one you suggest.

  9. If things are so bad, maybe its time for new management at the mill to turn things around. Or at least let’s hear what they are willing to do with their salaries and bonuses. Taxes may be going up not only in Jay, but Livermore and Livermore Falls as well. My taxes may be going up, and my income doesn’t even meet their bonuses.

  10. Upper Management at most major corporations are like politicians. Let the little guys pay for the bad judgments.

    There are too many stories of companies asking the people that do actual work at the company to make sacrifices in pay and other benefits and then turn around and give themselves fat bonuses. IF they were so smart in running that company and deserving of those large salaries and bonuses, then why is the company failing or struggling?

    Yes, there are outside factors but a smart leader is always looking down the road and making the adjustments before the ole poop hits the fan.

    Kinda on a side note: Now that gas prices are falling, will we see products in the grocery stores and other locations start to come down on their prices? Not holding breathe, they’re quick to increase their prices blaming it on increased fuel costs but we never hear of any prices coming down because fuel prices have come down. Or how many times have we heard prices going up because of weather related issues, ie coffee, and the prices jump, but when the next year or so the crops are plentiful, do prices come back to where they were post weather related issues. That would be a big nope….

  11. Well said Bruce. High end managenment looks after no one but themselves. Times are tough and they want others to sacrifice, such as the employees below them doing all of the work or the taxpayers where they are located, etc). You can bet the upper management at Verso are continuing to get their bonuses while they are making the decisions that are costing the companies millions.
    I continue to live in Jay and put up with the smell of the mill, so the mill has to continue to pay their taxes. I wonder how many of the upper management live in the surrounding communities of Jay and Livermore/Livermore Falls.

  12. It looks like your all missing the point. What is the mill valued at? Is it fair? What could you or would you pay for the mill?

  13. The mill is valued at whatever the town’s assessor’s say that it is valued at and the facts are the town has already lowered the mill’s valuation by several hundred million dollars. The mill can bring in their own assessor’s who will certaily come up with a lower figure. From here the town will decide where it goes with the mill’s valuation and it will be based on sound policy. If the mill is not happy, and they never will be, they will fight it out in court.

  14. It’s important to focus on the important points (which is not nearly as much fun as railing on about the unimportant ones) concerning this issue. The portion of the paper market that the Jay and Rumford mill represent is in steep decline. The reasons are many but the end result is a lot less “stuff” is being printed so a lot less paper is needed to print it. Demand for this type of paper dropped 20% after the start of the recession, leveled off for a year and has been dropping 5-10% a year ever since. Many mills have already closed around the country to absorb this decline in the market. It not just us.
    So, whatever good or bad decisions management made about this thing or another, what towns upper management live or don’t live in, no matter whether we give back property taxes or not, cut bonuses, cut hourly wages & benefits, put up with the smell, none of it is going to matter because all of that is going to be swept away by the decline of the market. Lots of mistakes were made and lots of greedy people got all they could get over the years no doubt. And remember, all of us earned (and I emphasize earned because it can be hot, miserable, demanding and dangerous work) good livings for all of the good years that the mills were thriving.
    So while we’re having a little fun looking for our favorite villains to blame in this unfolding drama (and IS fun…) be aware that the ultimate villain that is destroying the paper industry is the same one that created it, the American capitalist free enterprise system. And when we’re done having some fun with blame, then hopefully we (us, our elected officials, Gov Paul) can start talking constructively on how to deal with the economic devastation that will come to Western Maine when Jay and Rumford ultimately close. Never happen? Look around.

  15. Did Mr. Connor actually ask the town for anything, or was he just setting the stage for upcoming demands, or just whining about the state of the economy?
    Quite frankly, I had no luck asking for a change when my taxes went up 25% this year, but I asked the assessor, not the Board of Selectmen, to reconsider my evaluation. The only response I received after that meeting was a tax bill in the new amount.
    Perhaps I need to make a hard – luck appeal to my selectmen. Of course, I’m elderly, disabled, and on a fixed income, so I probably don’t stand a chance. Good luck, Mr. Connor.

  16. What is the mill worth?? If someone were to purchase the property when the mill leaves how much would it cost for a toxic clean up? If it does not continue as a running mill it will just be another brownfield site on the list for clean up. No one will want it. The town should look at it that way and lower the taxes now before its to late and it becomes vacant property.

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