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Montreal, Maine & Atlantic cuts pay, temporarily lays off workers to counterbalance lost business

Talk about bad timing. No sooner had the ink dried on a Rail World Inc.-led consortium's contract to purchase the Bangor and Aroostook Railroad System when the former railroad's largest customer filed for Chapter 11 bankruptcy protection and shut down paper mills in Millinocket and East Millinocket, Maine.

Great Northern Paper Inc. represents $800,000 in monthly revenue — or 25 percent of total business — for the consortium's new start-up railroad, Montreal, Maine & Atlantic Railway Corp. (MM&A), which began operating Jan. 9. The railroad had planned to move wood chips, pulp and other paper-making products to Great Northern's mills, and finished paper from the mills to the papermaker's customers.

To compensate for the lost business, MM&A plans to cut executives' salaries 40 percent and most of its other 300 workers' pay 25 percent, said MM&A President and Chief Executive Officer Robert Grindrod in a Jan. 16 letter to employees.

"We regret having to take this action, but there is no realistic alternative, other than larger-scale reductions," Grindrod wrote. "We feel it is better to continue to provide jobs and health-care coverage to a larger number of our extended family, although at a reduced salary."

MM&A also plans to temporarily lay off an undetermined number of workers but provide them health benefits up to six months.

Because the railroad will be moving fewer cars, MM&A also expects to adjust train schedules and yard operations.

Contact Progressive Railroading editorial staff.

More News from 1/20/2003