SKOWHEGAN, Maine (From news reports) -- In his address to guests Wednesday announcing the completion of a $200 million investment in new paper machine technology, Sappi North America Managing Director Tony Ouellette displayed a photo of a double rainbow over the construction site.
The pot of gold at the end of the rainbow, he said, was the paper mill itself.
Investments in technology on Paper Machine No. 1 and the wood room at the Somerset Mill on U.S. Route 201 in Skowhegan reflect that pot of gold and the growth in paper-based packaging while maintaining Sappi's leadership in the graphic paper market, Ouellette said.
Annual production capacity at the mill will increase to almost 1 million tons per year, he said.
Ouellette, along with Sappi President and Chief Executive Officer Mark Gardner, and Heather Pelletier, Sappi director of packaging brands, all stressed the importance of the workforce on the Somerset mill's three world-class paper machines to get to where they are now.
"When I talk to customers and people from the outside about what makes Somerset what it is today, it is the people," Ouellette told the gathering of state and local officials and members of the state's news media. "We all work together. We have a phenomenal workforce."
The $200 million has been invested over the past 16 months to compete globally in the burgeoning paperboard market, making luxury packaging and folding cartons for food products and can and jar labels. Products include pet food bags, tapes, filters, paper medical products, even popcorn bags and takeout boxes for Popeye's Chicken and Biscuit franchises.
"The main reason this site was chosen, was the people we have here," Gardner said. "At the end of the day, what will separate the winning company and the loser is the people. It's the key to the success of the site."
The investment expands the mill's capability and capacity to make consumer-based packaging as well as the coated paper the company is known for.
The Sappi Somerset mill employs about 800 people, 75 percent of whom are represented by four trade unions -- United Steel Workers, the International Association of Machinists, the International Brotherhood of Electrical Workers, and Security, Police and Fire Professionals of America.
It's a publicly traded company with about 1,300 employees in Maine, including the Westbrook mill and business offices. The company has a $123 million annual payroll plus $32 million in offered benefits.
Sappi has manged to fight off the trend of layoffs and paper mill closings, much as Verso Corp. did earlier this year when it announced plans to upgrade the shuttered pulp line and No. 3 paper machine at its Androscoggin Mill in Jay. The move brought back an estimated 120 jobs and is enabling the company to restart its equipment for the manufacture of packaging products, as Sappi has done.
As the Skowhegan mill did, Verso reversed the company's strategy to reposition the mill to make specialty paper used to produce labels and packaging.
Verso Corp. announced in 2017 that it would shut down the No. 3 paper machine at its Androscoggin mill, reflecting the dwindling paper market. The company's struggles were part of an ever-growing string of closures and layoffs that have plagued Maine's paper industry in recent years.
Five mills have closed in the last few years, including Verso's closure of its Bucksport mill in 2014, with more than 500 jobs lost; and the Madison Paper mill closure in May 2016, which put more than 200 people out of work. More than 2,300 Maine workers have lost their jobs since 2011 as the industry reels from declining global demand for paper.
Gardner said Sappi could continue to run just the coated paper production known for glossy magazines, but it looked years down the road and decided to "roll the dice" and invest in pulp production and packaging. He said the current investment is the largest the company has made since the No. 3 paper machine was built in 1991.
"The decision to go ahead and bring in $200 million worth of investment was great foresight as well as confidence in the team we have on site," he said. "The (Paper Machine No. 1) product not only increases the total production, but also the flexibility. We didn't lose the ability to make the graphics product. We could still be the best graphics mill in the world and we are going to be that, but now we have the versatility and flexibility to make the package products as well.
"It's unparalleled in this industry," Gardner said.
Noting the changing markets and the decline of paper sales worldwide, Gardner said diversification is the key to success.
Touching on the changing paper market, guest speaker Gov. Paul LePage said the paper industry is reinventing itself. He said he was around when the first paper machine came to Skowhegan in the 1970s and "now it's a new generation and the new future."
LePage remarked that the decline in newsprint was not all bad, taking a new jab at Maine newspapers.
"Here in Maine we've been saying for the last decade that the paper industry is struggling," LePage said. "Times are changing. In other words, it's no longer about newsprint anymore -- thank God. If you're a governor, news printers are not good."
He said the trend "is a good thing. I enjoy that transition."
The governor also took a swipe at state legislators for not following his lead in trying to keep and attract young people in Maine with incentives he has championed for years. The Legislature, he said, has been unwilling or not ready to make the investments in young people.
"We are getting old," he said. "We are the oldest state in the nation. We are losing too many of our youth. We have failed to attract young people to Maine. We should be investing in our youth."