How A Chinese Company Plans To Revitalize 2 Struggling Maine Mills

May 21, 2019

A Chinese company is investing heavily to restore two Maine paper mills it bought last year and turn them into sustainable, long-term businesses.

The head of the company’s U.S. operations said his company, ND Paper, wants to improve efficiency and update operations at the former Catalyst Paper Mill in Rumford and the former Expera Old Town pulp mill, both of which ND bought last year.

To do so, the company is rolling up its sleeves, fixing oil leaks, repairing equipment and adding more efficient machinery.

ND Paper is investing close to $500 million in the four U.S. plants it has purchased in the past year. That amount includes the purchase prices.

Of the total, about $111 million is being directed toward upgrading the Rumford mill and another $40 million for Old Town.

“Our vision for ND Paper in the United States is to be diversified in paper, pulp and packaging,” said Ken Liu, CEO of ND Paper of Oakbrook Terrace, Illinois. “Right now, we are heads down to get our four U.S. mills running.”

Ken Liu, CEO of ND Paper, in the woodyard of the Rumford mill.
Credit Courtesy of Linda Pepin / ND Paper

Liu said ND Paper is not currently looking to buy more U.S. paper mills, but instead, to get the current ones in good operating condition. It owns mills in Maine, Wisconsin and West Virginia.

“We’d rather have four strong mills than 10 average ones,” he said.

ND Paper is a subsidiary of Nine Dragons Holdings of Hong Kong. Liu, 27, is the son of Nine Dragons’ co-founders. He sits on the board of Nine Dragons and runs the U.S. operation. He makes $400,000 in salary to do both.

ND Paper bought Catalyst Paper’s Rumford and Biron, Wisconsin, mills last May for $175 million.

It bought the Old Town mill from OTM Holdings LLC, a subsidiary of CVG Inc., last October for an undisclosed amount.

That mill is scheduled to be operating again this summer, though Liu said he could not be more specific about timing.

Last November, ND Paper completed the purchase of Resolute Forest Products Inc.’s recycled bleached kraft pulp mill in Fairmont, West Virginia, for $62 million in cash.

Ken Liu, CEO of ND Paper, talks to a group of workers near an R15 paper machine in Rumford.
Credit Courtesy of Linda Pepin / ND Paper

“The Old Town mill was idle for nearly three years,” Liu said. “Three Maine winters can be damaging. We have a round-the-clock effort to repair it.”

There are 400 contractors on site now to replace different parts of equipment and to test the thousands of motors on machines. Liu said most of them are from Maine and they will leave when their work is completed.

The mill is expected to employ more than 100 workers when it is back in operation.

Prior to its idling in the fourth quarter of 2015, the Old Town mill manufactured and distributed about 155,000 air-dried metric tons annually of bleached hardwood kraft pulp.

Plans call for ND Paper to produce 275,000 air-dried metric tons annually of unbleached kraft pulp.

ND Paper is reconfiguring the mill to operate at substantially lower manufacturing costs compared to the company that previously owned it.

To cut costs, ND Paper will move the production mix from hardwood kraft to softwood kraft pulp, because the latter is abundant locally.

The Old Town mill on Route 2 in Old Town in 2018.
Credit Linda Coan O'Kresik / Bangor Daily News file

It also will eliminate the bleaching operations and focus on unbleached softwood pulp. And the mill will share several management and administrative functions with ND Paper’s Rumford division, lowering overall overhead costs.

The pulp raw material that the mill will produce could be used to manufacture cardboard or tissue. The pulp will be sold in Europe, the United States and Asia.

The Rumford mill, which continues to operate, has 650 employees. It makes magazine catalog paper and label paper for items such as water bottles that have a paper-coated wrapping with the product’s name around them. More than 80 percent of the sales are domestic.

“We’re focused on finding opportunities to improve our paper-making operations,” Liu said.

The company added a shoe press to its R15 paper-making machine last fall. The shoe press helps pull water out of the paper more efficiently to increase production capacity by about 20 percent.

It also plans to construct a greenfield recycled pulp facility, with the goal of increasing the plant’s manufacturing capacity.

Both additions will help support 50 new jobs in Rumford, which has round-the-clock shifts.

“Our priority is to get the mills to a healthy, competitive foundation,” Liu said. “For the foreseeable future, we will work to increase efficiency and make the mills sustainable. We’re looking for a good run in Maine.”

Because ND Paper can switch its focus to different export markets, Liu said it can mostly avoid tariffs, though it does pay extra to export pulp to China.

ND Paper and Nine Dragons will be receive the Maine International Trade Center’s foreign director investor of the year award on Friday, May 24.

This story appears through a media partnership with the Bangor Daily News.