Montreal-based paper products company Domtar Corp. said Wednesday it will invest $160 million to convert a paper machine at its Ashdown mill so it can produce "fluff pulp" used for items such as diapers and other absorbent personal hygiene products.
However, the move will result in the loss of 142 jobs. The mill employs 937 people and is Ashdown's largest employer.
"The decision is the result of the decline in demand for uncoated free sheet, which is like copy paper," said Tammy Waters, a spokesman for the Ashdown mill. She added that imports of paper products from other countries also played into the decision to develop a new line at the plant.
Waters said work on the conversion will begin by the second quarter of 2015 and will take 18 months.
Domtar's board of directors approved the move Tuesday, she said. The company began talking about the layoffs Wednesday morning.
Ashdown Mayor James Sutton said he got word of the expansion and job cuts Wednesday, calling it a mix of bad and good news.
While job losses at any time can hurt a community, Sutton said Domtar's investment represents a commitment to both Ashdown and Little River County to keep the plant open.
"We're sorry to see that part of it [job losses] happen, but we're also happy that they're going to revamp their mill and keep them here for another 30 years or so," Sutton said. "If they didn't change the direction they were going, there is the possibility that they would close the plant."
Becky Heflin, a spokesman for the state Department of Workforce Services, said the Governor's Dislocated Workers Task Force has been in contact with Domtar about its looming layoffs. Heflin said the task force can help with services such as job training.
The company expects the conversion to be complete by the third quarter of 2016, enabling the mill to produce about 570,000 tons of fluff pulp annually once in full production. The company said it will spend about $40 million in 2015, followed by $120 million in 2016 to complete the work.
John Williams, Domtar's chief executive officer, said in a statement that the new fluff pulp line at Ashdown and an existing line at a Domtar mill in Plymouth, N.C., will give the company more than 1.1 million tons of production capacity. He said the conversion is part of the company's goal of generating $300 million to $500 million in new revenue from growth businesses.
"We are expanding our presence in a growing business that will allow us to support our top‐tier supplier position with some of the world's largest producers of absorbent hygiene products," Williams said.
The changeover will reduce the mill's annual production of uncoated freesheet paper by 364,000 tons. Two paper machines at Ashdown will continue making paper, producing about 370,000 tons annually, Waters said. Part of the investment will include a pulp bale line to allow it more flexibility to produce paper grade softwood pulp to meet market demand.
"The conversion of the paper machine in 2016 will further help balance our supply with our customers' demand," Williams said. "In the interim, the flexibility of the two remaining paper machines at the Ashdown mill allows us to take measured steps to adjust our paper production while selling papergrade pulp."
Scott Hardin, a spokesman for the Arkansas Economic Development Commission, said in an email Wednesday that the commission is aware of Domtar's expansion project but hasn't determined whether it will qualify for state incentives.
Domtar Corp., which bought the Ashdown mill from Georgia-Pacific Corp. in 2001, produces a wide variety of wood fiber-based products, including office paper, specialty and packaging paper, as well as absorbent hygiene products. The company reported sales of $5.4 billion in 2013 in about 50 countries and employs about 10,000 people world-wide.
Business on 12/11/2014