SKOWHEGAN — Sappi North America will invest $25 million over the next year on new equipment in the paper company’s wood yard on Route 201 in Skowhegan, adding as many as 100 temporary construction jobs.

The investment, coupled with a $60 million capital investment in equipment and environmental safeguards already put into the Somerset plant since 2011, means the South African company is committed to the region for the long haul, mill managing director Tony Ouellette said Thursday.

A $25 million equipment upgrade at the Sappi North America mill wood yard in Skowhegan will create up to 100 temporary construction jobs over the next year. Contributed photo

Tony Ouellette

Vendor bid requests will be going out over the next two weeks and work is expected to begin in October during the annual mill shutdown and continue for most of 2017, with a conclusion date of November 2017. He said 50 to 100 temporary construction jobs could be added during construction and installation of the new equipment.

The investment will allow the company to modernize its wood debarking, chipping and chip distribution systems in the wood yard on U.S. 201 in the south end of Skowhegan. The changes will improve reliability, reduce white wood losses and costs, and add efficiency through increased wood chip production, according to a company news release.

“This is really positive news for both the Somerset mill and the community,” Ouellette said in a conference call Thursday. “It’s reaffirming our commitment and the company’s commitment that we’re going to be here for the long haul. It helps our efficiencies; it helps our ability to compete with a very difficult market and certainly is going to help us maintain our standing as the flagship mill in North America.”

Skowhegan Town Manager Christine Almand said news of the company reinvesting in its Somerset operations bodes well for the future.

“I’m delighted that Sappi continually invests in the mill,” Almand said. “Investment and innovation are the keys to staying viable. Sappi has a good grasp on this and has taken steps to position themselves as leaders in the paper industry.”

Sappi’s Somerset mill, built in 1976, has three paper machines and employs 750. The company also has a mill in Westbrook. The town and the company struggled over tax value as the mill’s revenue declined, but they reached a compromise in March that both sides said would save jobs while still helping the town’s tax base.

Megan Sanborn at the Maine Pulp and Paper Association did not immediately return messages Thursday asking for comment on the $25 million wood yard upgrade.

The announcement this week comes during a decline in Maine’s paper-making industry, including nearby Madison Paper Industries’ closing in May, putting 214 out of work.

Madison was the fifth paper mill in the state to close in the last two years, a situation that U.S. Sens. Susan Collins and Angus King called an “economic crisis.” There are six operating paper mills left in Maine, down from 11 in the 1960s.

Sappi and Skowhegan have worked to keep the mill a sustainable factor in the town of about 8,500, where it is a major employer and taxpayer.

The agreement capped the mill’s taxation value at $380 million, and Sappi agreed to withdraw tax abatement requests against the town for 2014 and 2015, putting an end to disagreements about the mill’s valuation that had lasted for months and reduced the mill’s taxation value for the coming fiscal year by $64 million. Under the agreement, the town will lose about $1.2 million in taxes for fiscal year 2016-17.

Town assessors will update the property valuation in coming years, but it’s not to exceed $380 million in 2017-18 and 2018-19. No abatement will be sought by Sappi, and there will be no supplemental assessments for taxation by the town.

Laura Thompson, the company’s director of sustainability, said in May that the company is committed to keeping jobs in Skowhegan. Sappi’s sustainability report released in May, said the company concentrates on environmental issues, social issues – including jobs – and economic issues.

Of the 750 workers at the Somerset mill, 180 are salaried employees. The rest are hourly-wage workers represented by four labor unions. The Somerset mill produces 795,000 metric tons of coated paper annually and more than 500,000 metric tons of pulp annually, according to Ouellette.

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