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W W W. M A I N E B I Z . B I Z 17 N OV E M B E R 3 0 , 2 0 1 5 LLC's mill, which is Washington County's largest employer with approximately 320 jobs. New Brunswick and Maine Railways, a short line railroad subsidiary of J.D. Irving Ltd. that took over an endangered network of branch lines northern Maine, has increased the number of wood fi ber trainloads transported on its lines from zero in 2006 to 10,000 loads in 2015. Since a freight train can move a ton of freight using far less fuel than truck transportation, that's helping to reduce shipping costs. Paper in 2014 was Maine's top export, valued at $484 million, surpassing fi sh and other marine products ($434 million); oil and gas ($278 million); computer and electronic products ($260 million); and transportation equipment ($209 million). Innovation and investment may be keys to success, as the summit's organizers repeatedly emphasized, but they were careful not to sugarcoat that message by ignoring the economic realities behind the recent news stories — which, in the very week of the summit, include Verso Corp. considering the sale of its Androscoggin Mill in Jay, which already faces layoff s of 300 of its 865 workers by year's end due; and a bankruptcy judge's approval on Nov. 20 of a $5.95 million bid for the bankrupt Lincoln Paper and Tissue mill by a group led by a Boston-based liquidator of industrial sites. "Challenging times call for diff erent approaches. at's why we're all here today," says Donna Cassese, wood resource manager for Sappi Fine Paper in Maine and chairwoman of the Maine Pulp and Paper Association. " ese are challenging times and we mean to change." Benchmarking Maine Eric Kingsley, vice president of Innovative Natural Resource Solutions, a consulting fi rm with an offi ce in Portland, set the stage for understanding the economic challenges all Maine paper mills, even the successful ones, now face in a global marketplace. Hired by the state to compare Maine's pulp and paper industry costs against other leading states, the fi rm's benchmarking report makes a factual argument that across the board Maine costs are higher than competing pulp and paper states in the Midwest, Southeast and Northwest. Based on 2013 data, Maine's industrial electricity cost of $83.40 per megawatt hour is almost double its lowest competitor (Washington, $42.30/MWh) among the other leading pulp and paper states of North Carolina, George, Louisiana, Mississippi, Michigan, Wisconsin, Minnesota and Washington. [See charts on Page 19]. Its natural gas cost of $10.32 per million cubic feet is almost triple the lowest competitor (Louisiana, $3.86). Comparing Maine's wood fi ber costs is more complicated, Kingsley says, since it involves a number of variables, including hardwood versus softwood percentages, distances traveled and acreage under private ownership. Perspectives vary too. Typically, he says, the mill owners' perspective is "Why are the costs of wood in Maine so high?" e landowners' perspective is, "Why do I get paid so little?" And the logger wonders, "Why am I $1 million in debt?" CONSULTING | AUDIT | TAX | VALUATION Our team of CPAs and consultants can help you gain control of risks, costs, and governance. We provide audit, tax, information technology, and management consulting advice that gives you traction in a changing environment. Know where you stand, with advisors who dig deep. Learn more at berrydunn.com or call 800.432.7202. GAIN FIRM FOOTING Learn more. Visit us at berrydunn.com or call 800.432.7202. C O N T I N U E D O N F O L L OW I N G PA G E »

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