New Domtar venture may have prevented permanent closure for Kingsport mill, economic leader says

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KINGSPORT, Tenn. (WJHL)- Domtar’s decision to convert its Kingsport mill to a recycled linerboard operation will impact over 300 workers who’ve been laid off since the plant was idled in April. But economic development leaders say the changes for Domtar are still something to celebrate, because the mill will be converted, and not permanently closed.

“I think this has everybody’s head spinning,” NETWORKS Sullivan Partnership CEO Clay Walker said Friday.

Walker said Kingsport may have been on the verge of losing Domtar for good.

“I can’t speak for the company. While they hadn’t made a final decision, I’m pretty sure all signs were indicating to a permanent shutdown,” said Walker.

According to statements from Domtar, the market for the sheet paper business has been in decline for some time, and the COVID-19 pandemic only hurt the industry more.

Instead, Domtar is converting its Kingsport paper-making operation to make recycled containerboard. Walker said around late May, Kingsport city and business leaders learned Domtar was looking for a location for this new venture. From there, members of NETWORKS, the Chamber of Commerce, and the city worked to have the Kingsport facility chosen for the project.

On a conference call with financial analysts on Friday, Domtar CEO and President John D. Williams explained the decision.

“We chose Kingsport as our first commercial location because of its scale, capabilities, and geography,” said Williams. “Looking at the scale, once fully operational, Kingsport will produce a market, approximately 600,000 tons of high-quality recycled linerboard and medium. Which will make it the second-largest recycled containerboard machine in North America.”

The mill officially closes October 8th. Then the conversion process may last into 2023 – with Domtar investing $300 to $350 million into the project.

“Companies don’t just throw $300 million around. They put it where it can pay off,” Walker said.

While Domtar said it intends to recall eligible workers once the mill is ready – it will still only employ 150 to 160 workers.

Domtar officials declined requests for interviews on Friday and only forwarded statements. News Channel 11 also reached out to a local union chapter for Domtar workers for comment, and did not receive a response.

NETWORKS, which serves to expand economic development in Sullivan County, will now use the large number of available skilled workers as a selling point for other companies to come to the area, according to Walker.

“So we’re calling those companies and saying ‘now is the time to get here,'” he said.

Walker said people can expect a lot of construction happening as part of the Domtar transition.
He said around 400 people will be employed to build the project. While these jobs aren’t permanent, Walker said the economic impact to downtown is expected to be $2-3 million.

“There’s going to be hundreds of people in there working every day now once they get the construction underway,” said Walker.

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