Resolute Forest Products Inc. (formerly known as Bowater) announced this week the indefinite idling of pulp and paper operations at its Calhoun, Tennessee mill, according to a press release by the company. The company anticipates that the decision will directly affect 350 hourly and salaried positions.
Currently, 545 people work at Resolute Forest Products. The 350 layoffs represent a 64 percent reduction in the company’s workforce.
“We have taken the very difficult decision to indefinitely idle pulp and paper operations at Calhoun knowing how hard this is for the affected employees and their families,” Remi G. Lalonde, president and chief executive officer of Resolute Forest Products, said in a statement. “Success has proved elusive at Calhoun’s pulp and paper operations, despite the best efforts of our dedicated employees and significant investments of time, energy and resources over the last few years.”
The company said that pulp and paper operations will continue for up to 60 days in order to “ensure an orderly shutdown, to accommodate environmental safeguards and to transition customers.” Additionally, the company said it will work with union leadership and will apply the mill’s collective agreement and applicable federal and state laws as well as provide severance benefits to those directly affected. Resolute will also engage government officials and other local authorities in an effort to mitigate the impact of the indefinite idling, the press release notes.
“Our focus now will be to support our employees through this difficult time, to operate for the remaining period with the same degree of focus on safety and quality, and to facilitate a smooth transition for our customers,” added Lalonde.
Resolute Forest Products continues to accumulate significant financial losses at the mill, even with the current strong market conditions for both the pulp and uncoated freesheet paper it manufactures, the press release reports. On a trailing twelve-month basis ending September 30, the pulp and paper operations in Calhoun produced an operating loss of $62 million before corporate expense allocation, including a depreciation expense of $10 million. In addition to these financial losses, the Calhoun mill faced additional significant production upsets in November and December.
However, once the indefinite idling is completed, the company anticipates an improvement in its overall operating income, of approximately $35 million to $40 million, which reflects the lost pulp integration benefit with its tissue manufacturing of approximately $15 million and approximately $5 million from on-going costs associated with closed site maintenance, according to the press release.
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