ASHDOWN -- Domtar is permanently shutting down its A62 paper machine at the Ashdown Mill and will solely be producing pulp.
About 109 jobs will be lost, according to a news release from Domtar.
"The COVID-19 pandemic and resulting economic slowdown continue to negatively affect demand for communications paper grades. Some recovery in demand for communications paper has occurred as the economy has started to re-open. But unfortunately, Domtar has not seen enough demand recovery to justify restarting operations on the A62 paper machine at the Ashdown Mill. Therefore, we have decided to permanently idle the A62 paper machine to maintain a balance between our production needs and our customer demand. With this line closure, the mill will now solely produce pulp," said Tammy Waters, manager for communications and government relations for Domtar's Ashdown mill.
The machine was put on idle in April of this year.
Waters said Domtar will continue to assist and care for employees and their families during this time.
In a financial report released by the company Friday, Domtar reported operating income of $14 million for the second quarter of 2020. Its operating income for the first quarter of 2020 was $19 million.
Compared with the first quarter of 2020, manufactured paper shipments were down 32% and pulp shipments increased 10%.
In a release from Domtar's corporate office, John D. Williams, president and chief executive officer, said the company has been proactive in reducing risk and safeguarding the ability to weather the pandemic crisis.
"We are taking the appropriate steps to optimize our operations and to remain an agile, reliable partner to our customers," Williams said. "Despite the significant challenges we faced in pulp and paper markets, we have been able to manage costs while initiating cash and cost conservation initiatives across the network."
Domtar will complete the conversion of the Ashdown mill to 100% softwood and fluff pulp, which will require $15 to $20 million and will take 12 to 14 months.
"Ashdown will be a world-class market pulp mill with annual production capacity of 775,000 tons of fluff and softwood pulp," after the conversion, Williams said.
As part of a cost-savings program, the company will also permanently close facilities at Kingsport, Tenn.; Port Huran, Mich.; and Ridgefields, Tenn.
"In line with these goals and current market conditions, we are implementing a significant cost savings program to streamline operations, maximize productivity and improve margins. This program will create a stronger, leaner organization aligned to meet the needs of the business and our customers in a post COVID-19 era," Williams said.