Warmer weather, cheaper oil force northern Maine pellet manufacturer to cut back
Northeast Pellets LLC in Ashland has cut its production in half due to one of its largest buyers switching to a Canadian supplier and decreased demand from warmer weather and cheaper oil.
Matthew Bell, president of Northeast Pellets, said in a news release Tuesday morning that the company would be curtailing its pellet production immediately to avoid a complete closure.
Bell said he was optimistic the company could withstand the impact of low oil prices, warmer-than-expected temperatures and a competitive Canadian exchange rate, but the loss of one of its largest customers forced the company to reduce production.
The customer, the University of Maine at Fort Kent, according to the Bangor Daily News, accounted for 15% of the mill’s total output. Northeast Pellets still supplies the University of Maine at Presque Isle and Northern Maine Community College.
“I wish to thank our employees and our countless customers for their continued support,” Bell said in a statement. “We ask our employees for their patience as we try to sort through this market situation.”
Bell developed the idea for the pellet plant as a student at Husson University, and opened the plant, the state’s first wood pellet manufacturer, with his father in 2006, according to the BDN. Three other pellet plants have opened in Maine since then.
“Since the beginning of our pellet operations, we have invested great time and effort as well as financial resources to promote the conversion of the region’s energy source to wood pellet fuel,” Bell said. “We partnered with many interests in the area to create this transition and aid local businesses, but now find our operations at risk in this difficult market.”
Over the past year to 16 months, the company invested nearly $500,000 into increasing the mill’s capacity and efficiency, as well as its bulk storage and loading facilities, to better accommodate the increased demand the company saw last winter, Bell said.
Until recently, the Ashland mill operated 24 hours per day, five days a week, but production has now been cut to three days a week. The change has resulted in a reduction of hours and positions for the company’s 13 full-time employees, Bell said.
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