Editor’s Note: A previous version of this story stated Domtar was closing its Kingsport plant. The company is re-purposing the facility.
KINGSPORT, Tenn. (WJHL) – The Domtar mill in Kingsport will be repurposed and will employ approximately 150 employees by 2023, according to a statement from the company.
The mill was idled in April due to the COVID-19 pandemic and was originally supposed to reopen after three months.
According to a statement from Domtar, the paper mill in Kingsport will not resume manufacturing of uncoated freesheet.
The mill will be repurposed to “enter the linerboard market with the conversion of the Kingsport paper machine.”
The statement says once it is in operation, 600,000 tons of recycled linerboard and medium will be produced annually.
Domtar says the mill will officially close on October 8, 2020 and conversion work will begin in the late second half of 2020.
Domtar expects conversion of the mill to take 24-30 months and hope to complete work by the first quarter of 2023.
The statement says 310 people will be permanently laid off while the mill is under construction, but Domtar hopes to recall eligible employees after operation begin.
“This subsequent conversion will enable us to balance our uncoated free sheet capacity with our customer demand and reposition Kingsport into a growing market with long-term viability producing sustainable packaging products,” Domtar representatives said in the statement.
“Repurposing the Kingsport mill provides Domtar with the best strategic entry point into a growing market with a very competitive, low-cost asset and represents a first step to building a large and cost-competitive business,” said John D. Williams, President and Chief Executive Officers, in the company’s quarterly report. “Kingsport is well positioned to be the go-to supplier to independent converters for quality, service and innovation as the mill is less than a day’s drive from over 60 customers representing an addressable 3.9 million tons of annual containerboard demand.”
At the beginning of July, Domtar announced the mill would remain idled through August.
Approximately 300 people worked at the Domtar mill in Kingsport in April.
According to the Tennessee Department of Economic and Community Development, Domtar will invest $300 to $350 million in the conversion of operations.
Domtar also announced that its mill in Port Huron, Michigan would also permanently close the same uncoated freesheet manufacturing operations. The company’s paper machine in Ashdown, Arkansas and its converting center in Ridgefields, Tennessee will also permanently close.
In total, Domtar says approximately 780 employees will be affected from the multiple closings.
“We remain disciplined in our efforts to manage our costs to improve profitability and further strengthen our balance sheet. 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.This important and necessary step is expected to reduce our annualized costs by more than $200 million, while significantly improving our free cash flow and return on invested capital. We have a talented and dedicated workforce at Domtar, and decisions that affect people are never easy. However, we are taking the necessary steps to better position our business for the future.”John D. Williams, President and Chief Executive Officer
You can read the full quarterly report below with information on the permanent closing:
This is a developing story. Stay tuned with News Channel 11 online and on-air for updates.