Competition blamed for closure of SC paper mill
By Cindy Macdonald
One of the U.S. paper mills that successfully petitioned U.S. officials to have duties applied to supercalendered paper produced in Canada is shutting down. Madison Paper in Maine is scheduled to cease production by the end of May.
Madison Paper Industries is owned by UPM-Kymmene Inc., a Finnish forest products company, and Northern SC Paper Corp., a subsidiary of the New York Times Company.
“Despite everyone’s best efforts, the difficult decision has been made to cease paper production at Madison. Demand for SC papers declined significantly in 2015 and the decline is expected to continue. The Madison mill is not cost-competitive and has lost a significant amount of sales in the recent past,” says Ruud van den Berg, Senior Vice President of UPM Paper ENA.
The closure of the mill reduces UPM’s supercalendered paper capacity by 195,000 tons. Hydro power assets at the mill site will be sold.
According to the Bangor Daily News site, “union and state officials have attributed the impending closure to steep foreign competition.” But another group representing the mill blamed high natural gas costs.
Duane Lugdon, the United Steelworkers Union representative for Maine, told the newspaper “he and members of the union knew the mill had challenges, with foreign imports chipping taking away part of steadily decreasing demand for its supercalendered paper.”
Madison Paper and Verso Corp. successfully lobbied for the imposition of tariffs on imports of Canadian supercalendered paper last year. The tariffs affect Port Hawkesbury Paper, Irving Paper, Catalyst Paper and Resolute Forest Products.
Lugdon told the Bangor Daily News that the imposition of tariffs on Canadian imports of supercalendered paper helped, but the simultaneous drop in the Canadian dollar made the U.S. an attractive market for producers to the north.
The Bangor Daily News article notes that Madison and Verso made up all U.S. production of supercalendered paper. Facing a substantial debt load after acquiring its larger competitor, NewPage, Verso filed for Chapter 11 bankruptcy protection in January.