Boise Inc. announced it will permanently cease production on the company's one remaining paper machine (H2) at its St. Helens, Oregon, paper mill. The decision will reduce Boise's annual uncoated freesheet capacity by almost 60,000 tons and result in a loss of approximately 100 jobs, primarily at the mill.
"This is a difficult but necessary decision to focus our efforts and resources on the products and machines elsewhere in our system that drive the financial performance and cash flow of our paper operations," said Alexander Toeldte, president and chief executive officer of Boise Inc. "Despite the dedication and hard work of our employees, we have concluded the machine cannot compete in the marketplace over the long-term. We thank all of our employees, customers, suppliers, and the community who have supported this operation over so many years. We will work closely with our customers and suppliers to ensure a smooth transition."
The company expects to stop production on the machine by December 31, 2012. Eligible salaried employees will be offered severance packages and outplacement assistance. Negotiations will be scheduled with the Association of Western Pulp and Paper Workers Union (AWPPW) Local 1 to determine the effect for union employees.
In third quarter 2012, we recognized approximately $31 million of pretax costs related to ceasing operations at the mill. This includes approximately $7 million of employee-related and other costs, most of which we expect to pay in early 2013; approximately $10 million of cash costs for future site remediation, which the company expects to pay out over a longer term; and approximately $14 million in noncash charges related primarily to the impairment of property, plant, and equipment.
With this announcement, the only operating paper machine at the St. Helens mill is owned by Cascades Tissue Group. Boise continues to explore alternatives for the inactive portions of the mill site.