North Country Economic Update

Some folks are interested in whats going on in the North Country of New Hampshires economy, so here is a quick update.

Patriarch Partners is now in the running to buy the Gorham Papermill with plans for a restart of the mill within 60 days. The prior potential purchaser was outbid by Patriarch but still is interested. Patriarch Partners also owns the Old Town Fuel and Fiber Plant in Old Town Maine. Their CEO is Lynn Tilton who has a rather "interesting" reputation. If Patriarch cant get financing, I expect the prior purchaser will step up, so it looks positive for the papermill.

The Berlin Station Biomass Power Plant got conditional PUC approval yesterday meaning that project is progressing. The PUC gave them 30 days to revise the Power Purchase Agreement so its not a done deal. The plant is now rated for 75 MW which is going to be the largest on the East Coast. It will be pulling in low grade wood for a 100 mile radius and is supposed to be complying with Sustainable Forestry Initiative standards. This may provide incentives for some landowners to do timberstand improvement work, so hikers may see more forestry operations occuring in the region but less intensive than the Dillon operations (although they are still active). Once construction starts, expect that accomodations in the area may be harder to get as its a union job and given the low number of union members in NH, most of the workers will be from out of town and staying at local facilities.

The new federal Prison (250 million +) was not funded for 2011 even though its ready to go . There is a small staff at the site. At this point, I dont think its open for overnight stays . This is disapointment for the area as there are 300 employees that ultimately will be employed.

The Brookfield windfarm project is ramping up in the Millsfield area, very large equipment is coming into town and some speciality contractors have been advertising for employees. As Groveton, Errol and Colebrook are the nearest towns to the project, hopefully there will be at least some short term stimulus to the area.

I'm one of those interested people that Peakbagger was talking about...

So this is all good news, thanks for posting. I think you posted something else about the Dillon operation. I have no idea what that is. Can you give me some details about it?

Dillon is the logging firm that bought a large amount of the former James River timberlands in the area and clear cut them. They recently were in the news as they sold approximately 5 miles of frontage along the AT in the Mahoosucs to the government. If you look on Google Earth its pretty obvious what lands they cut. In theory the sustainable forestry initiative SFI , certification would not apply to Dillons cutting operations. A conseravtion organization has an option buy the development rights of the Dillon holdings in Success when he done cutting them.

peakbagger said:

The new federal Prison (250 million +) was not funded for 2011 even though its ready to go . There is a small staff at the site. At this point, I dont think its open for overnight stays . This is disapointment for the area as there are 300 employees that ultimately will be employed.

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The paper says that you need to be under 37 and have a credit score of 750 to get a job there and most locals don't qualify although there is a local program to encourage applications. But regardless of who gets the jobs there will be more spending locally, and selling 300 houses to out-of-staters will help the real estate market.

Some recent good news articles about Northern Country projects

Berlin Biomass plant

http://www.conwaydailysun.com/node/486124/18661

Gorham Papermill - wall street journal articles (these werent behind the paywall when i grabbed the links but that may change)

http://online.wsj.com/article/SB10001424052970204062704577222942113965390.html?mod=googlenews_wsj

A short slide show for someone who wonders whats inside the Gorham Mill

http://online.wsj.com/article/SB100...5270639178492.html?mod=googlenews_wsj#slide/1

I worked with the millwrigths in the photos, they are great folks but getting near retirement.

The papermill is now using natural gas which cuts down on pollution in the region. They will be burning landfill gas as soon as the pipeline is complete which will reduce their natural gas input.

Add in the federal prison staffing up and things are better than they were with the exception of the upcoming bankruptcy auction of Issacsons Structural steel which is a casuality of the building bust. There are hopes that a new owner will buy the facility. In the short term the employees will probably be able to support the biomass project in town but in the long run its a loss to the area.

Another decidely optimistic update on the activities in the Berlin Gorham Area of NH

http://www.laconiadailysun.com/files/pdfarchivenew/BerlinPDF/2012/02_February/ select the February 28th edition


All is not as rosy as the lead article describes in the short term as Issacsons Steel on RT 110 that folks drive by on the way to Cabot is shut down and the assets could be liquidated within a few days.

The other change folks will most likely notice is a significant change in downtown Berlin (for folks heading north on RT 16). Rite Aid had bought a large block of buildings 10 years ago for a new store, then decided not to build it. They drove out the tenants and let the buildings deteriorate. The city forced them to take the buildings down so there is now a big wide open spot on Main street.

Ups and downs are so frustrating. The North Country deserves more.

From my own experience, I would sadly say that working and living in the North Country is not all it's jacked up to be. The Mount Washington Valley, while offering some wonderful lifestyle benefits, also has its major downside. Most of the folks I know have multiple jobs just to stay afloat. Serious professional money is not $13 per hour, despite what living there for more than 5 years would have me believe (and let me add here, that I never expected to be rich as an educator, but I did expect to be able to pay my bills and not worry constantly about how much my heating bill was going to be every month). I don't know the answer, but I do know I couldn't figure out how to make it work, and businesses can't seem to either. Very, very sad state of affairs, in my opinion.

Thanks for the up north update. Sounds like we'd be doing the local economy a favor by going on a federal crime spree to help stimulate the construction of that new hotel. Otherwise, is there any chance at acquiring 40 acres and a mule for under $100K? And hey! we're not doing the paper industry any favors with these damn electronic messages. Let's start writing letters again.

Gaiagirl

Conway unfortunately is a microcosm of what a tourist based economy really is. There are lots of high end seasonal homes that give the area the image of prosperity and many high end shops along the strip to capture tourist dollars.The demand for seasonal homes also tends to drive up the cost of real estate in general in the area including rents, so that further impacts the workers in the area. It also attracts folks who want to live there because of the recreational opportunities and are willing to work for cheap and as the surrounding area is depressed the area draws in a lot more potential employees than there is reasonable demand for. The majority of the work is seasonal and most of the seasonal jobs are low pay with no benefits. For a new teacher, they are competing with other candidates who want to live there for the environment and are willing to take lower pay. The vast majority of taxpayers are retired with no children and given that the majorty of the property tax bill is for schools, there is always an effort to cut the school budget to keep the taxes low and that keep teachers salaries low. I emphasize with your experience and depressingly I have run into many great people who have worked for AMC, the forest service and school systems that all have not been able to figure out a way of making it work. A friend who used to work at the North Conway branch of NH unemployment used to specialize in counseling couples who walked in the door and decided that they wanted to live in the area no matter what the sacrifice. Her usual statement was plan to work twice as long for half as much as where they came from. For someone thats single I dont see how they can pull it off.

If you note, the jobs refered to in the article in Berlin Gorham area are not seasonal, they are year round with benefits. Most dont require a 4 year degree (usually a 2 year technical program) The cost of housing is much lower than Conway with a pretty good number of subsidized apartments (as well as plenty of tenements) in berlin for those just starting out. The area doesnt have the resort vibe that Conway does as it hasnt been a resort area for over 100 years and always had an industrial base, so it doesnt attract as many young workers as the lifestyle of North Conway is just down the road. There are still plenty of unskilled workers so the unskilled jobs are just as low pay.

Stan

As for buying large blocks of cheap land, there arent a lot of big lots available in the north country and they go for far more dollars than equivalent properties in ME or VT due to the current use rules in NH and the presence of very large industrial landowners. Currently even cut over land is going for over $1000 to $1,500 per acre and since the return on timberland is at best less than $500 an acre long term, living off the land is difficult unless someone brings ther nest egg with them and accepts a negative return on equity until they start selling camp lots at $10,000 an acre. The biggest buyers are recreational property buyers and land conservation groups.

The papermill hasnt done writing paper for awhile. I think their market is colored specialities for things like corporate reports and lightweight opaques for specialized applications like pharmaceutical instructions (those folded up papers that come with prescriptions. The new tissue machine is reportedly slated for three ply napkins so best way of supporting the place is own stocks, take prescriptions and eat out at restaurants.

I have family in the Bath area and they make a living wearing 3 or 4 hats. Surveying, septic design, forestry, firewood, Christmas trees, etc. They have to drive 2-3 hours to get some items that just aren't available locally. I would love to live up there, but to make a high-tech salary, it's just not feasible. Even southern New Hampshire has only 10-25% of the jobs that exist at the 495 beltway, which itself is probably 50% of those at the 128 beltway. The very fact that it is uncrowded and unspoiled is what makes it attractive for recreation, but impractical for many to live. I can see retiring up there, but that has problems too as Peakbagger mentions.

Tim

From reading the WSJ article, it sounds like the paper mill will specialize in tissue. (Face & Bath) Because of the bulk & light weight, it's not a good product to stuff into containers and ship from overseas. For ships you apparently pay by the number of containers so heavy paper, writing/copy, etc. is more economical to ship.

Mike P. said:

For ships you apparently pay by the number of containers so heavy paper, writing/copy, etc. is more economical to ship.

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For anything shipped in quantity, you have to consider both the weight and volume of the product whether on ships or trucks. Too much weight and the ship sinks or the springs break, but you only have so much cargo space so a load of ping pong balls or marshmallows will not use the full weight capacity.

Sea freight tends to be uni-directional here because the US imports a lot more than it exports, hence the rates going out tend to be cheaper since the ship isn't full and is going back anyway. That helps to get materials sent elsewhere for recycling, and might be good for tissue paper makers if there wasn't so much subsidized forestry elsewhere.

Living in the North Country is a long term commitment if you are going to be successful. Although I do agree with some of the challenges already cited it is what it is. Many move to the North Country expecting the Fame ,Fortune and success that is to be found in more urban areas. Not happening for most folks. Yes most of us wear multiple hats, work some long hours, and get low wages. Again that's what it is; but it is a good quality of life. Thirty years ago when I first moved to the North Country the folks including myself moved here for what was here because that's what we wanted. It seems a lot of folks who move here now and try to make it have the mentality that they will eventually live the life that they would have had down south. Again not happening for most. IMO it takes a certain rugged individualism to want to truly live "up north" and alot are not willing to make that sacrifice. Although I do consider myself lucky to have been able to make it in the North Country I think it really is a lot harder now than it was when I moved here thirty years ago. In a nutshell the cost of living has gone up. Also the number of people trying to make it is much larger with the same number of employment opportunities.

An update on the Gorham Papermill. The major piece of the new tissue machine is scheduled to be driven up from Portland Maine next week (May 14th to 15th). The equipment is called a Yankee. Its about as big and heavy as can be sent over the open road. They need a 500 ton crane to set it in place. With a scheduled startup date for this fall its going to be boost to the area.

Here is a periodic update for those who have interest

For those who haven't been up through Berlin lately, the new biomass plant is definitely quite impressive. The wood handling system reminds me of one of those gumball machines in restaurants that make a spectacle of delivering a gumball. Given the fairly small staff, everything that can be automated will be. Here is a recent update on the Berlin NH biomass project with some pictures and details http://www.berlindailysun.com/index...wood-delivery&catid=103:local-news&Itemid=442. I expect that they will go commercial late this year so the loggers and suppliers will probably be ramping up cutting in the region this winter. The plant is required to buy sustainably sourced wood so the days of Dillon's clear cuts will most likely slowly recede. Many forest owners have delayed doing timber stand improvement due to a lack of local markets so I expect that folks will be seeing more logging in the woods as the stands get thinned. Unfortunately the market for hardwood sawlogs is still depressed and there are few if any hardwood sawmills left in the region, so the biggest impact will be in softwood stands as there are still a few stud mills in the region.

The impact to the local tourism economy had been significant, hotels and restaurants have been seeing steady long term business and a few new businesses have opened up, although they have been offset by the decline of other non tourism businesses that had been hanging on for several years hoping they could cash out. It will be interesting to see how the tourism businesses survive after the various major projects wind down. Unfortunately Berlin is unable to compete for tourist businesses with Gorham so the main street is still quite empty. One good sign in the area is the continued success of the Berlin Farmers market which is currently one of the larger ones in the region and has actually spawned a few local businesses. The ATV park and recent opening of the coordinated region wide ATV trail system brings a lot of folks into the area and on most weekends the various local access points are full or trucks and trailers

The developer of the Berlin biomass project has been attempting to collocate other businesses on the Berlin Biopower site. They hired George Bald the former state development director who had great success with Pease tradeport and a few other major development projects. The area finally has access to reasonable high speed internet due to several new fiber trunks being routed in the last few years so that isn't a hurdle that it once was.

The RT 110 relocation project though Berlin is starting to ramp up, but I expect it will be far more active next year. When complete I expect it will bring joy to those who have gotten lost trying to find their way through Berlin to get to the Cabot trailhead at York Pond off of RT 110. The new alignment will be a big improvement.

The berlin federal prison has impacted the area positively to date with numerous younger families moving into the area without the "mill mentality" that has been a detriment in getting the area to recognize that the "mill" as most folks remembered it is not coming back. Given its location, few folks visiting the area can even guess where it is. They still are having a tough time recruiting local folks to work there, the standards to work for the federal prison service are higher than the military so many potential candidates elect to go with the services.

Northern Pass is heating up in the Berlin Gorham Area, previously it was more of an issue in the RT 3 corridor but given the current routing and the Berlin mayor being a Coos County Commissioner, NP is starting to be of more interest to the locals. The recent development initiative announced by PSNH (starting to be referred to as the "Northern Bribe" by some), is most likely going to be targeted to the RT 3 corridor. The proposed 200 MW + wind farm that has been on the books north of Dixville Notch is starting to be back in the press. It was put on hold due to lack of transmission capacity in the north country. Given the current limits that are forcing the Millsfield Wind farm to curtail production and the expected significant issues with capacity once the Berlin plant goes on line, it is expected that soon there will be another major transmission line expansion in the news in the north country and another large windpark in the industrial timberland north of RT 26 visited by few but valued by many.

The Balsams sadly is not going anywhere these days, the developer tore down enough of the facility that they don't qualify for historical credits and in general are basically out there with hat in hand trying to get tax credits and hand outs to finish the project. The plans for the rehab are ready but the developers need other folks with deep pockets to invest, unlike northern VT, the north county of NH does have access to the "buy a visa" program.

The Gorham Papermill tissue machine is on line and various reports are that although the machine is successful, the general decline in the paper market has its impact on the paper mill. The paper mill is also going through a major retirement stretch with many of the long term employees who have stuck it out now at retirement age. Its going to be hard to replace the talent.

As usual with the exception of the biomass plant, to someone driving though the area, its hard to see the improvements to the area, but in general it took a 100 plus years to evolve into a mill town and its going to take awhile for the area to evolve into whatever it awaits it.

I like that they've finally taken my idea of tearing down a few of the tenements. It leaves more open space, and there are still plenty of places for rent. With the population declining, there were may more apartments than necessary. More on the West side than the East. On a personal level, it was sad to see my wife's grandparents old place be one of those units, but overall, it's a good thing.

Downtown Main St seems to be coming along as well. Some good enough shops around...hoping they can make a buck and stay.

erugs said:

Ups and downs are so frustrating. The North Country deserves more.

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Why, what did the North Country ever do to deserve more? Seems to me there is little more than forests and low wage workers to exploit and they have a tough time even getting takers on that.

I've got family up there, Chugach, and I happen to agree with you. They don't "deserve" anything. And, my family would agree with that as well. Now, they have a warped feeling on basically how things are there vs. "down country", but that's what makes my Holidays all the more interesting

I also live in a similar place so have sympathies. There is clearly a deep difference between the tourist towns and the ones that aren't. The running joke is; "who says there are no jobs in Vermont, heck most people I know have 2 or 3".