High Natural Gas Prices Force Gorham Paper and Tissue to Restructure, Layoff 20-50 Workers

Faced with soaring natural gas prices, Gorham Paper and Tissue, Gorham, N.H., USA, reports that it will run only one or two of its four paper machines on a regular basis the remainder of this winter. CEO Mike Cummings estimated between 20 and 50 employees will be laid off and others will incur intermittent week-long layoffs.

 

In an e-mail sent earlier this month, Cummings announced "a temporary restructuring of our papermaking operations in response to record-setting natural gas prices." Cummings said the sudden, extreme increases in New England's natural gas prices spurred the company's decision to curtail operations.

 

"This is a temporary move to get us through the winter, until natural gas prices come back down to their seasonal norms in the spring," Cummings said. He noted that it is unclear how many employees may opt to retire, and the exact number of layoffs won’t be known for a couple of weeks. "We can't run paper machines when production costs exceed prices for our products," he said. Cummings added that both hourly and salaried employees will be laid off. He said the company will re-evaluate staffing when gas prices return to seasonal norms in the spring.

 

New Hampshire Governor. Maggie Hassan called the news troubling and said she has instructed Department of Resources and Economic Development and N.H. Employment Security officials to provide every resource possible to assist and support 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," Hassan said.

 

Gorham Paper and Tissue uses natural gas to generate steam. Cummings said during the winter the mill purchases more than 3,000 decatherms of natural gas a day from Portland Natural Gas Transmission System. He said for the previous three Decembers, the daily average price on the spot market was $6.70 per decatherm. This past December, Cummings said the average daily price was $13.30 per decatherm with a high of $33. In December, the company shut the mill down for three days because of high natural gas prices. 

 

The Gorham mill is not the only paper mill affected by the increasingly competitive market for natural gas in New England. Several mills in Maine last month limited production or shut down parts of their operation. The price surge in New England is blamed on a lack of pipeline capacity in the region compared with other parts of the country where natural gas is cheap and plentiful. Currently there are two major pipelines in New England.