A paper mill in southwestern Arkansas is having its last paper machine shut down in the wake of a cost-cutting effort.
Domtar is shutting down the A62 paper machine at the Ashdown mill permanently. This is one of several shutdowns the company is effecting to save $200 million in annual costs. The other shutdowns include uncoated freesheet manufacturing in Kingsport, Tenn. and Port Hurton, Mich. And a converting center in Ridgefields, Tenn.
The Ashdown paper machine has been idle since April 2020, when it was closed in response to the COVID-19 pandemic. At the time, it was announced there would be 142 layoffs. This is the second paper machine Domtar has shut down at the Ashdown facility; it closed down the first machine in October 2019.
In an earnings report, Domtar reported net revenue of $19 million for the second quarter of 2020 and total sales of $1 billion for the same period. In comparison, the company had earnings of $5 million for the first quarter of 2020 and $18 million for the second quarter of 2019.
Domtar’s operating income for the second quarter $14 million for 2020’s second quarter, while the operating income for the first quarter was $19 million. This decrease was attributed to “lower volume and unfavorable productivity” but were offset by lower costs, salaries and wages.
Manufactured paper shipments were reported as being down 32 percent while pulp shipments increased 10 percent.
Company officials said the outlook for the paper industry is “challenging” with the paper market being weak while the near-term pulp markets will be impacted by ongoing conditions.
“We have been proactive in reducing risk and safeguarding our ability to weather the current crisis. We are taking the appropriate steps to optimize our operations and to remain an agile, reliable partner to our customers,” said John D. Williams, President and Chief Executive Officer. “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 is working to convert the Ashdown mill to provide softwood and fluff pulp. This $15-20 million investment will reportedly require 12-14 months to complete and once completed, will generate 775,000 tons of fluff and softwood pulp every year.