Domtar Closing Mill, Paper Machines

Continuing the trend of paper mill closures, Domtar Corp. announced it would permanently close its mill in Gatineau, Quebec, along with its converting center in Ottawa, Ontario. What’s more, Domtar plans to permanently close two paper machines, one located at its Woodland mill in Baileyville, ME, and another at its Port Edwards, WI, mill.

The Gatineau mill has an annual production capacity of 125,000 tons of coated and uncoated paper. The mill and the Ottawa converting center together employ approximately 250 people. These facilities are expected to cease operations by Oct. 27, 2007. The Woodland paper machine has a yearly production capacity of 125,000 tons of uncoated paper. The immediate permanent closure of this machine will reduce the mill’s workforce by about 150 jobs.

Meanwhile, the Port Edwards No. 5 paper machine has an annual capacity of 34,000 tons of uncoated paper. Its immediate permanent closure will reduce the mill’s workforce by approximately 30 jobs. In total, these closures will eliminate approximately 284,000 tons of Domtar’s annual production capacity and reduce its total workforce by about 430 people. In March Domtar merged with Weyerhaeuser Co.’s fine paper business and related assets, creating the largest manufacturer and marketer of uncoated freesheet paper in North America and the second largest in the world.

David Goldschmidt, vice president of marketing, catalog division for paper brokerage Strategic Paper Group, says the announcement is more bad news for catalogers. “This takes away one more option,” he says. “Also, any capacity reduction could always cause prices to go up, so from the catalogers’ standpoint, this is not a good thing.”

Already this year catalogers took a substantial hit with the postal increase in mid-May. With mill closures and paper capacity reductions, when will this trend end? “I think the trend has certainly continued, not sure if it will be ongoing or not,” Goldschmidt adds. “The Canadian mills continue to be challenged by the exchange rate and higher fuel/freight costs.”

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