Following a period of downward price pressure last year, the softwood pulp market stabilized in early 2016 and the outlook is now improving. As a result, a number of global price initiatives have already been announced. "We know from experience that the spring is typically characterized by stronger demand than the start of the year, and that this is also a time for maintenance stoppages in Europe. That's why we anticipate that the market will tighten even further", said Magnus Björkman, President of Södra Cell International.
Verso Corporation (NYSE: VRS) today announced it will permanently close its paper mill in Luke, Maryland, in response to the continuing decline in customer demand for the grades of coated freesheet paper produced at the mill, along with rising input costs, a significant influx of imports, and rising compliance costs and infrastructure challenges associated with recent environmental regulation changes. The closure, which is expected to be complete by June 30, will reduce Verso’s coated freesheet production capacity by approximately 450,000 tons, reducing total annual paper production capacity to approximately 2.7 million tons.
“It is unfortunate that we had to make the decision to close the Luke Mill, but the continuing decline in demand for the grades of paper manufactured there left us no choice but to close this facility that has struggled with profitability for a number of years,” said Verso Interim Chief Executive Officer Leslie T. Lederer. “The company explored the possibility of producing alternate grades of paper products but the conclusion remained the same – we could not achieve profitability at the mill in today’s market environment. Consistently matching the supply of our graphic paper products with customer demand for these products, reducing our costs and rapidly diversifying our product portfolio into growing markets remain essential drivers for Verso’s long-term success, and we continue to vigorously pursue these objectives.”
Most of the Luke Mill’s paper grades are already qualified to be produced on other Verso paper machines, and the company is working to assure all customer needs are met, according to Verso President of Graphic and Specialty Papers Michael A. Weinhold. “Because Verso is continually evaluating the best use of our highly flexible manufacturing system to assure we deliver the quality, reliability and value our customers depend on, our Luke Mill customers can remain confident in Verso’s ability to meet their needs now and in the future,” he said. “We will be working closely with our customers to assure they continue to receive the high quality products and exceptional service they have come to expect from Verso.”
Approximately 675 employees will be impacted by the closure of the Luke Mill. Employees were notified in accordance with the Worker Adjustment and Retraining Notification (WARN) Act that their last day of employment with Verso is expected to be June 30. Eligible hourly employees will receive a severance allowance in accordance with local collective bargaining agreements, and the company will begin effects bargaining with the local unions soon. Salaried employees will receive a severance allowance in accordance with Verso’s established severance policy. In compliance with the WARN Act, Verso sent notification of the decision to close the mill to the appropriate authorities in Maryland, West Virginia and Virginia, and will continue to work with state and local officials to help Luke Mill employees take full advantage of all available support resources.
“The decision to close this mill that has been in operation for more than 130 years was an extremely difficult one, and is in no way a reflection on the dedicated men and women who work there,” Lederer said. “We know that this will be an extraordinarily emotional and challenging time for our Luke Mill team, and Verso is committed to treating them with fairness, respect and dignity during this difficult time. We will also do our utmost to ensure employee safety during the transition. I want to thank each and every member of the Luke team for their hard work and dedicated service to the mill, to Verso and to our customers.”