Pulp and paper company Sappi has announced the closure of the Paper Machine 2 (PM2) at its Stockstadt Mill, in Germany, as well as Paper Machine 9 (PM9) and the energy complex at its Westbrook Mill, in the US.
This will cumulatively remove capacity, reduce costs, improve machine use and increase competitiveness, the company says.
The closure of PM2 follows an “exhaustive consultation process”, wherein an agreement was reached with mill employees to permanently close PM2, which has a coated woodfree paper production capacity of 240 000 t/y.
Stockstadt will now instead focus on its growing uncoated woodfree offering.
About 170 employees will leave the company and production is expected to cease on September 30.
The one-off restructuring charges amount to about €27-million and the estimated yearly saving for the company will be about €15-million.
In the US, Sappi will shift PM9’s base paper production to its mills in Cloquet, Minnesota and Skowhegan. About 75 employees will be impacted by the closure, which is expected to be finalised by the end of this year.
As a result of these actions, a restructuring charge of about $14-million is expected during Sappi’s fourth quarter results, in addition to about $8-million of accelerated depreciation to be recorded during the second half of the year.
The estimated yearly saving will be about $10-million.
CEO Steve Binnie says these steps “demonstrate Sappi’s commitment to taking decisive action to reduce costs and respond to market dynamics”.
He believes these mills will “now be better placed” to compete in the marketplace and to deliver increased returns.