Moment of truth

As first reported on this blog last Thursday and then front page in The Berlin Daily Sun on Friday, Fraser Papers announced it was filing for bankruptcy in both the US and Canada under chapter 15. This morning Fraser also announced it was closing the Cascade Mill for at least a week due to lack of orders. Although many North Country residents have had a notion that Fraser Papers was in trouble, the announcement of bankruptcy gives us all pause since it has a familiar ring, that of another company, American Tissue, who went down this same road a few years ago. Going back in history and during another economic dark hour called the Great Depression, International Paper closed its doors in Berlin and it can be argued that that's when Berlin's economic decline began. After better than 100 years where the pulp and paper industry was the economic engine that drove the North Country economy, we are now facing the economic "moment of truth". Silly notions that things will bounce back as if by magic or that some Fortune 500 company will open a factory here employing hundreds are all myths we've heard for years and, you might as well believe in the tooth fairy. Those who believe that building biomass plants is the answer are also kidding themselves. You'd have to build 20 to 30 Laidlaw size biomass plants to come close to what the mills employed back in the 50's and 60's and we know that's not going to happen, building just one such plant is a long shot at best. So the million dollar question is NOW WHAT?  It's the question that some have been asking for a long time, but that most have ignored because the question was very troubling with no easy answer. However not addressing the issue did not make it go away, it made the problem grow in severity and urgency as our housing problem demonstrates. We are spending thousands today tearing down abandoned buildings because we failed to address the old failing economy and we did next to nothing in developing a new economy. Now with a failed paper industry and the manufacturing sector leaving for China and India on a daily basis where are our new job opportunities going to come from? It's a question that should be keeping us awake at night! Time waits for no one and events march on with or without our input or influence. Look around town and compare what you see with was here 20 to 30 years ago. Look at our neighborhoods and tell me that not dealing with reality was the best course of action. Look at the mill site and tell me that not dealing with that reality and using a hands off policy was the smart thing to do. Do we continue going down this blind path where we leave our future to chance or do we set a course with some clear goals and objectives?  If we like the way things have been going then lets keep doing the same thing, chances are we'll get more of the same.

Comments

[Jonathan Edwards]

To convince a judge that you mean business in trying to salvage a company while you're filing for protection, immediate moves you would make would be to cut costs to prove to the judge that you are trying to make things more profitable. The timing of this "break" is also historic for a shut down (around the 4th of July) Let's not jump to conclusions here. This company has defeated the odds against them more than once due to local talent and local perseverance second to none. If anyone doesn't need a tooth fairy miracle it would be Berlin's work force. The news we're hearing locally for some time is that Gorham is performing well and much of the reason for this bankruptcy to be a restructure rather than a permanent shut down.

[Jonathan Edwards]

Pete, I really appreciate your straight forward responses and respect your experience in the field. Obviously I need to rely on people within the public that are very concerned with the impact these huge issues have on all of us. I count on these individuals to provide technical information that I can count on when it come to appropriate decision making on subject matter. So Pete, in your last post you stated the following:

"re diesel

Let me rephrase- The amount of diesel fuel consumed by a chip truck carrying 30 tons of chips, making a 200 mile round trip to the mill is equivalent to 1% of the energy (HHV) contained in the chips being transported.

one-two cha cha cha..."

Here's an answer to my quest that I'd like your input on also, Pete, as this is The reason to grant a biomass plant vs. not granting a biomass plant RECs, isn't it?

"First of all, the use of HHV is generally accepted to be inappropriate for biomass energy facilities. This is due to the fact that in order for HHV to be valid, it would be necessary to have the flue gases exhaust at the same temperature as the incoming draft air. That, of course, is not achievable in real life, especially in a cold winter climate like Berlin. The reason for that is the fact that the energy used in heating and vaporizing the water in the wood is a latent heat. Thus, that heat is consumed in producing the steam that goes up the stack and achieves to practical value.
Wood chips as they are cut and transported are in the range of 55-60% moisture content. Thus, when the latent heat factor is removed, the actual net BTU gain per pound is in the range of 2,000-2,600 BTU/lb. This means that a ton of chips contains about 4,600,000 BTU’s of recoverable heat and a 30 ton load would then total 138,000,000 BTU’s of recoverable heat. Based on a boiler efficiency of 20%, that 30 ton load of chips would produce an effective output of 27,600,000 BTU’s, or 8,089.1 kwh’s.
As to the diesel being burned, an average chip truck (I’m told) will get about 4.5 mpg. So, over a 200 mile transport, the truck will burn 44.4 gallons of diesel. At 139,500 BTU’s per gallon of diesel, that totals an expenditure of 6,193,800 BTU’s to transport the 30 ton load. Or it could be viewed as expending 22.4% of the net energy derived from the load of chips. In addition, the 200 mile round trip will release ¼ pound of fine particulate matter, 7.1 pounds of NOx, 3.4 pounds of CO and 230 pounds of CO2."

[Timothy Gordon]

Jon,
Like GM, the paper plant plans to attack the pensions and benefits it is carrying/paying out. By cutting the benefits to its pensioners, it will save huge dollars for the corporation, thus being more competitive in its market place.
It is interesting to me how this has not been challenged in a court of law, as a breach of employement contract, that in exchange for working 20 to 25 years for the company, we will agree to pay you a monthly salary and medical benefits at the same level that you receive at time of separation, just a point of view.

[Jonathan Edwards]

Tim, It all boils down to whether the company can stay afloat. Sometimes union demands and court rulings in favor of breaches of employment contracts end in the demise of the business which not only places a damper on the pensions and medical benefits but also the weekly pay check. Having never worked for any company offering medical benefits, pension plans or weekly pay checks I look at the benefits offered by unionized companies as the reason why many have failed over the years and why our country, in general, is shifting away from offering so many benefits that depend on future performance decades into the future.

[Timothy Gordon]

No Jon,
They just have to show that but cutting these dollars, they will be in a better position to pay down their debts. They also get to renegotiate interest rates on loans and leases, extend payments to lower monthly payments.
From what I have seen and read, this union has not fought a single plan from any paper company trying to go through reorganization.
A lot of companies have learned from their mistakes in the late 70's early 80's that by cutting cutting benefits and forcing the employee to purchase their own insurances, has created a transient work force that is only after the most money they can get and the loyalty to a company is gone.
Unions had their time in history, and for the most part they raised working condition and compensation for employees, but for some reason they have become a lead weight for their lack of evolving has cost them any power. Remember in the 70's it was that one union would talk of a strike, other unions across the country would also threaten to support the strike, and refuse to cross their picket lines? Which would bring the owners to the table to talk, because of the pressure. But then again, the people that ran companies back then, knew what they were doing.

[pete]

jon, whoever is feeding you information is pretty good...

[ralph]

Does anybody really believe that the Cascade mill will survive?

[Jonathan Edwards]

TSX Delisting Review - Fraser Papers Inc. (FPS)

TORONTO, June 23 /CNW/ - DELISTING REVIEW - Fraser Papers Inc. (the
"Company") - Further to TSX bulletin No.2009-0776 dated June 18, 2009, the
common shares of the Company (Symbol: FPS) have been suspended from trading
effective immediately. The Company's common shares will be delisted at the
close of market on July 22, 2009 for failure to meet the continued listing
requirements of TSX.

About TMX Group
---------------

TMX Group's key subsidiaries operate cash and derivative markets for
multiple asset classes including equities, fixed income and energy. Toronto
Stock Exchange, TSX Venture Exchange, Montreal Exchange, Natural Gas Exchange,
Boston Options Exchange (BOX), Shorcan, Equicom and other TMX Group companies
provide trading markets, clearing facilities, data products and other services
to the global financial community. TMX Group is headquartered in Toronto with
offices in Montreal, Calgary and Vancouver. For more information about TMX
Group, visit our website at www.tmx.com.

[Lea]

Get a load of this article folks. It seems the people living across the river from the PSNH biomass plant in Portsmouth don't like the noise.

http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20090619/NEWS/906190394/-1/NEWSMAP

[Lea]

In case the link doesn't work. Laidlaw is going to be one hell of lot closer to the people of Berlin than Schiller is to the people in Maine. Public Service can't cure the problem and we expect Bartoszek to? PSNH plant is 40 MW and Laidlaw wants to build a 64 MW plant. Maybe part of his $100 million financing scheme to to give everyone in Berlin ear muffs.

By David Ramsay
news@seacoastonline.com
June 19, 2009 6:00 AM
ELIOT, Maine — Standing outside across the river from the Schiller Station power plant in Newington, plant manager Richard Dispins listened carefully as Eliot resident Dan Bogannam and 16 neighbors told him that the noise from the plant wakes them up at night and makes it difficult to converse outside.

Bogannam set up the meeting so that Schiller Station owner, Public Service of New Hampshire, can "understand the human element of their operation on people." And in the end, Dispins said PSNH is committed to working on a solution.

PSNH invested $75 million in the state-of-the-art wood pellet burning boiler, which went online in December 2007, touting the environmental benefits of the 50-megawatt green power plant, according to Dispins.

Neighbors told Dispins and Public Service of New Hampshire representative William Smagula that the noise across the Piscataqua River increased after the wood burning unit was first installed.

Last October, the situation improved after PSNH installed silencers on several fans in air ducts that were designed to reduce the turbulence and noise. That decision was made in part after Bogannam commissioned a private noise study that found the noise levels exceeded the noise limits for Portsmouth.

Dispins told the group a silencer was removed in April from the 'induced draft' fan because it impacted operations and reduced the plant's ability to measure emissions. Since then, the noise level has again been objectionable, said Bogannam.

"We talked about numbers in the past and we talked about numbers today — decibel ratings and zoning ordinances — but the reason I had them come here was for them to listen for themselves. They can't just rely on numbers to make decisions," he said.

One neighbor acknowledged that the Piscataqua is an industrial river and that "you were here first," but said that the "wood-burning plant made things worse."

State Rep. Sarah Lewin, R-Eliot, asked if Eliot was invited to meetings when the wood-fired power plant was in planning stages. Despins said town selectmen and the town administrator had been involved in feasibility study meetings.

"We want to be sensitive to folks in Eliot," said Despins. He said PSNH has spent tens even hundreds of thousands of dollars on controlling the noise problems which were identified from noise studies.

"We're going to commit to replace that silencer and review other options," he said.

Not everyone was appeased by these words, however. Resident Sheila Ghamami said she "would feel better if there was a concrete action plan with dates and steps."

[Jonathan Edwards]

Great find Lea. Thanks. I've been waiting for confirmation of this for months. Notice PSNH takes it upon themselves to simply remove a silencer when it creates problems for them. Just another piece of the puzzle that paints a panorama of Berlin without that stack. There are so many negatives to the Laidlaw proposal that it is no wonder the value has settled to 3/100 of one penny per share. That value, by the way, is the value Laidlaw stock was when I first started researching this penny stock traitor back in November of 2007. PSNH will have their hands full if they or Laidlaw think they can do a buy out or take over a fledgling company to save the day. Way too many negatives and a major risk to it's ability ever to go on Power is looking better by the day.

[Lea]

Tip-a-hat to the Nashua Telegraph's "Granite Geek" blog on this one Jon.

[Jonathan Edwards]

I think Granite Geek needs to chat with byte and chew... Thanks Lea.

[Lea]

I've been told that this type of burner (PSNH and Laidlaw) wastes a lot of energy to run the oversized fans required to force combustion air up through the bed media to produce the bubbling action and to circulate the media for ash removal, therefore plant efficiency will be lower than the alternatives. It is subject to a lot of unscheduled maintenance and therefore downtime or lower availability of the plant on an annualized basis. The oversized fans for this application always prove to be very noisy and therefore should not be considered at locations with nearby housing. The distance for negative noise impact for people can be quite significant as the high frequency sound carries well. The main reason some developers want to utilize the fluidized bed technology is because it is perceived to provide more fuel type flexibility. This is important to those developers if part of their long tern strategy is to utilize many alternative fuels that may have significant potential to reduce the average annual fuel cost. This can lead to projects that are originally proposed as biomass fueled developments and approved by a community and regulating agencies coming back later during operations with an intention to burn fuels not originally accepted that may be of increased environmental concern. Such a strategy might include such fuels as construction debris, trash, shredded tires, cubed paper, plastic waste, or even coal.

[Rocky]

It would be a good idea to get the exact distance St.Regis and Northern Lights Housing units are from the recovery boiler. These are the two most densily populated buildings in Berlin which also happen to be the closest residential structures to the boiler. I also hope that City officials have an accurate count of residents in those buildings and that the information is being sent to the lawyer hired to represent Berlin in the FSEC process.

[Lea]

Incidently the people complaining about PSNH live about a 1/4 mile from the plant across the river. The fact that the boiler is in a bowl with hills on two sides could very well make the problem worse.

[Jonathan Edwards]

I've been told that PSNH and LLEG have installed silencers on proponents
mouths so as not to get the word out on this. Some individuals have pulled
theses silencers off because they were having trouble with inaccurate
emissions of facts misleading people with every breath they spoke. I hear a
few of them are joining a growing force in opposition to this bad plan for
NH, Coos County, and Berlin.

[Rocky]

Jon, do you know how many people live at St.Regis and Northern Lights?

[Jonathan Edwards]

St. Regis has 42 apartments and Northern lights has 64. That alone provides for over a hundred residential apartments within a stone's throw of the mill. The argument that the mill has always been there isn't a valid argument due to a change of use. Many of these folks living within this assisted living environment have mental and physical disabilities that could be substantially impacted due to noise, emissions, and many other issues. The community service center, I'm sure, will also intervene against biomass on the Burgess mill site to make sure these folks are protected.

[Rocky]

Thanks Jon. I've been told that the noise from the PSNH plant is somewhat like the sound of a jet taking off, it's a high pitch whining noise. You're right, the boiler will be significantly modified and will not operate at all like the old recovery boiler. The City should probably be testing and certifying the ambient noise level right now in order to have a baseline to work from.

[Lea]

I ran into a like problem a number of years ago. It's a difficult problem especially if the town you're in doesn't have a noise ordinance. You need to talk to a noise expert. Believe me, once the plant is operating there's nothing you can do. Been there, done that. You have to stop it before it happens.

[Jonathan Edwards]

It seems like a great time for the city to establish a noise ordinance. The question is whether or not it would enforced. Laidlaw has publicly stated that noise won't be an issue so an ordinance could be safely construed as a precautionary measure and not an ordinance to disrupt Laidlaw's proposal. Additionally, the subject of outside concerts, and heavy bass volumn in car stereos has come up more than once as a concern, and there's a guy that stands on the corner of Mason and Pleasant with a chilling voice who attempts to sing his favorite songs. I'm not sure if the dogs in our neighborhood that howl all night or the singer take the prize for being most obnoxious. Perhaps Laidlaw will use the argument that their noise level will eliminate other noise issues by overpowering them. You're up Tim.

[Timothy Gordon]

Yes Jon, I am up, keep trying to reinvent the wheel, how has that seemed to work so far?
These are state issues, right, all regulations regarding the operation of the plant, that it will be the State that sets the standard and polices it to make sure the standard is being met

[Rocky]

I can't believe that all and every impact of a facility is addressed in the permitting process and that the local community gives up all jurisdictions pertaining to that facility going forward. What about issues that were not recognized before construction and which arise after the plant is operational? What if an extra fan or other piece of equipment is added along the way, who grants those permits? What if they decide to install a chipper and run it at night, the City has no say? Doesn't seem to make sense to me.

[Lea]

They have to meet all local regulations. However FSEC can overrule what they feel is a law that is unreasonable, impossible to meet, or passed with the sole purpose of blocking the new plant. Don't take this as gospel but I'm 95% sure I'm right on this.