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Natural gas price spike forces Gorham mill layoffs

New Hampshire Union Leader

January 04. 2014 11:32PM
GPT uses natural gas to create the steam it needs during the paper-manufacturing process. (Mark Ducharme)

GORHAM - Blaming a surge in natural gas prices, Gorham Paper and Tissue announced Friday it will lay off between 20 and 50 employees and run only one or two of the company's four paper machines this winter.

Gorham Paper and Tissue (GPT) CEO Mike Cummings announced a "temporary restructuring" in an email sent to employees about 1 p.m. Friday.

"This is a temporary move ... until natural gas prices come back down to their seasonal norms in the spring," said Cummings. "You can't run a business when production costs are higher than the prices of your products."

Cummings said some employees may opt to retire, and the exact number of layoffs won't be known for "a couple of weeks."

"We spent (Friday) afternoon meeting with employees, going over the situation," said Cummings. "It won't be less than 20 layoffs, but it's too early to know exactly how many right now."

Cummings said some employees may take intermittent weeklong layoffs, and "separations from the company" will affect both hourly and salaried employees. Cummings said the company will look at future staffing levels when gas prices come down. The company has 39 salaried workers and 174 hourly employees.

"It's hard to predict what our business will look like at the end of the winter, running one or two machines," said Cummings. "It's possible some employees could be brought back on in the spring after we reassess our costs and operations, but it's just too early to say anything definitively right now."

GPT uses natural gas to create the steam it needs during the paper-manufacturing process. During an average winter, Cummings said, GPT purchases more than 3,000 decatherms of natural gas per day from Portland Natural Gas Transmission System. According to Cummings, over the previous three Decembers, the average daily market price was $6.70 per decatherm. Cummings said the average daily price this past December was $13.30 per decatherm, with prices reaching a high of $33.

Last month, GPT shut down production for three days, from Dec. 14 to 16, because of the high prices. The Portland (Maine) Press Herald reported last month that some Maine paper companies, also supplied by the Portland Natural Gas Transmission System, had to limit production or shut down parts of their operations during a cold stretch.

In a statement issued Friday, Gov. Maggie Hassan said: "Gorham Paper and Tissue's announcement is troubling news, and I have instructed state officials from the Department of Resources and Economic Development and New Hampshire Employment Security to provide every resource possible to assist and support any affected workers. DRED officials have been working directly with Gorham Paper and Tissue to identify ways to reduce and stabilize the company's energy costs, and I remain hopeful that the situation can be improved. I encourage the company to strongly consider any options that could reduce the number of potential job losses.

"It remains clear that we must take steps to lower energy and natural gas prices throughout our region to help New Hampshire businesses and families, which is why I have joined with my fellow New England governors in a regional statement of commitment to increase cooperation on energy infrastructure issues, including accelerating the development of additional natural gas pipeline capacity. I will continue working closely with all of our partners to identify ways to build a stronger, more reliable energy future for New Hampshire."

U.S. Rep. Annie Kuster, D-N.H., issued a statement saying her office was ready to help those affected by the layoffs.

"For generations, the Gorham mill has employed thousands of proud North Country workers and boosted economic development across the region," said Kuster. "With the difficult news of its restructuring, I stand ready to assist displaced and impacted workers in any way possible, and I will work to help ensure that the mill remains a critical part of the North Country economy for decades to come."

U.S. Sen. Jeanne Shaheen, D-N.H., said in a news release she was disappointed to hear of the layoffs. "I will continue to work closely with state, local and company officials, and remain committed to doing all I can to support the mill and its employees."

GPT was shut down for eight months in 2010 after Fraser Papers declared bankruptcy in 2009. It was eventually purchased by New York investor Lynn Tilton of Patriarch Partners.

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