Sappi will permanently shut paper machine No. 9 (PM9) and major components of the energy complex at its Westbrook, Maine mill, impacting approximately 75 employees. The move is designed to improve the mill's overall cost structure and enable the company to operate more cost effectively in today's global marketplace. The company's product offerings will not change.
Sappi plans to shift all of PM9's base paper production to its mills in Cloquet, Minnesota and Skowhegan, Maine. This carousel of base paper leverages Sappi North America's premium paper making assets and continues to provide an integrated solution to our global Release Paper customer base.
"As a global manufacturer of innovative wood fiber products, a good cost position is important to our long-term success," said Mike Haws, President and CEO of Sappi North America. "Unfortunately, the Westbrook Mill's earnings have been under pressure as a result of widespread commoditization in the marketplace and legacy mill costs. This restructuring will enable Sappi to compete more effectively and allow the Westbrook facility to focus on its core competencies of specialty coating, texture application and customized product designs, restoring the site as a healthy financial contributor."
The mill's remaining assets, which support Sappi's Casting and Release Paper business, will continue to operate and produce a variety of release papers and films to meet the business' full range of customer needs. As a result of these actions, a restructuring charge of approximately US$14 million (US$11 million cash; US$3 million noncash) is expected during Sappi's fourth quarter, in addition to approximately US$8 million of accelerated depreciation to be recorded during the second half of calendar 2020.
The reconfiguration at the Mill will impact approximately 75 employees. The company will work closely with the impacted employees, local unions and various agencies to provide information, support and outplacement services. Sappi will also support all efforts to help affected employees find new employment.
The impacted assets are expected to close by end of calendar year 2020.
