Bangor Daily News

Latest bid to revive shuttered Katahdin mill promises 100 jobs

Feb. 13, 2018

A North Carolina manufacturer plans to create more than 100 jobs by becoming Maine’s first producer of a composite wood strong enough to replace concrete and steel in high-rise buildings.

LignaTerra Global LLC of Charlotte announced plans at Bangor’s Husson University on Tuesday to build a $30 million, 300,000-square-foot factory to produce cross-laminated timber. Planning to build on a 35-acre portion of Millinocket’s 1,400-acre former Katahdin Paper Co. LLC site, the company hopes to break ground in July and start production in 12 months, said Nick Holgorsen, CEO and co-founding partner of LignaTerra.

One of two cross-laminated timber manufacturers in the country, LignaTerra aims to be the first investor to revitalize the site since parent company Brookfield Asset Management closed Katahdin Paper in 2008, laying off 208 workers and crippling a Katahdin region economy that had been home to world-class papermaking for more than a century.

The failure of a more recent effort — Cate Street Capital’s proposed pellet mill — left current site owner Our Katahdin, a nonprofit economic development group, about $1.5 million in inherited tax debt.

LignaTerra leaders declined to say how much of the $30 million they will provide. The project’s private investors will be announced in several weeks and the company is working to secure tax breaks, said Brien Walton, director of the Center for Family Business at Husson University, who helped broker the deal.

“The bottom line is that if they wanted to do it all cash, right now, that is something that could be done, but we are trying to get the right parties and the right partners and to aggregate something that will be beneficial to the region and also sustainable to the long term,” Walton said during Tuesday’s news conference.

LignaTerra leaders said they believe there’s a strong future for the timber, used in Europe for decades and more recently on the West Coast for buildings that are typically three to 12 stories tall. LignaTerra has used the wood to build an elementary school in West Virginia and a warehouse in Colorado, according to its website.

Besides being environmentally friendlier than concrete and steel, the composite woods are also easy to assemble — like Lincoln logs. Use of the wood can decrease construction time by a third, and the buildings can be disassembled and reused far more easily than can concrete or steel structures, Holgorsen said.

The 100 jobs will come gradually over five years. The Millinocket facility would act primarily as an assembly area for wood cut in area sawmills. The workers the company will be hiring will include machine operators, engineers, forklift operators and salespeople, said Ralf Meier, a founding partner of LignaTerra Global.

The plant will generate 10 million board feet of the timber the first year, 2019, and 50 million feet by the fifth, if production goes as projected. By the time the mill is ready to begin producing wood, the buildings in Newark, Brooklyn and other projects underway around the country will have helped prepare the market for LignaTerra products, Holgorsen said.

The factory will use low-grade softwoods, largely spruce, to make the composite — a good fit for Maine, as many of the state’s defunct paper mills used those trees for pulp, said Patrick Strauch, executive director of the Maine Forest Products Council.

The wood supply alone will create hundreds more jobs indirectly in forestry and affiliated industries, Walton said. Economic studies show that most manufacturing facilities create at least four jobs indirectly for every job directly created.

LignaTerra’s Maine corporation, LignaCLT Maine, decided to locate in Millinocket after months of negotiations with Husson, Eastern Maine Development Corp., and Our Katahdin leaders, according to Michael Aube, president of EMDC.

EMDC and other economic development agencies around the state had identified cross-laminated timber as a fledgling but good end product that Maine forests could sustain, Aube said.

A marketing study commissioned by the New England Forestry Foundation that evaluated the engineered wood product investment opportunities in New England concluded that CLT had the best potential in terms of market demand. A one or two-percent penetration into the mid-rise residential and commercial building markets would support at least one such factory, the study concluded.

Millinocket leaders who attended Tuesday’s news conference spoke with guarded optimism about the project. The Cate Street failure left many residents already suspicious of outsiders especially wary of potential investors, said Rick Angotti, a former Millinocket Town Council chairman who attended the news conference.

Angotti said he was most impressed by LignaTerra’s promise to break ground in six months. It reminded him, he said, of how the original founders of Millinocket built its first paper mill seemingly overnight.

“There’s the magic coming back to the Magic City,” Angotti said. “We have waited a long time for this to happen and this will be the anchor for a lot of things to come.”

by Nick Sambides Jr.