Domtar to Close Last Paper Machine at Ashdown Mill

FORT MILL, SOUTH CAROLINA – Domtar Corporation is implementing a cost reduction program, targeting $200 million in annual run-rate cost savings to be realized by the end of 2021, and that decision will have a major southwest Arkansas impact. According to the company, the goal of the program is to build a stronger business operation, enhance their cost efficiency, and improve operating margins and maximize productivity and cash flow. The cost saving initiatives include capacity reduction and asset closures, mill-level cost savings and “rightsizing” support functions. Domtar says the leaner organizational structure is also expected “to improve communication flow and cross-functional collaboration, leveraging more efficient business processes.”

As part of the cost savings program, the company will permanently close the remaining paper machine at the Ashdown, Arkansas mill.  Domtar says the actions, including at other mills, will reduce the company’s annual uncoated freesheet paper capacity by approximately 721,000 short tons, and will result in a workforce reduction of approximately 780 employees company-wide. The Ashdown paper machine, which have been idled since April 2020, will not recommence operations.

The Company will complete the conversion of the Ashdown mill to 100 percent softwood and fluff pulp, which will require $15 to $20 million of capital investments and will take 12 to 14 months to implement. The mill will produce additional market hardwood pulp until it converts the fiberline to softwood pulp. The conversion of the fiberline to 100 percent softwood is also necessary for an eventual expansion into containerboard. Following the fiberline conversion, Ashdown will have an annual production capacity of 775,000 tons of fluff and softwood pulp.

Domtar announced in April the temporary idling of its A62 paper machine at its Ashdown mill for three months in response to the “unforeseeable business conditions driven by the COVID-19 pandemic.” (See the previous article at https://hopeprescott.com/2020/04/domtar-covid-19-layoff-at-ashdown-mill/)

As a result of that announcement, Domtar also announced the layoff of 142 employees at its Ashdown mill. Uncertain at present is the impact on its timber suppliers and haulers in all of southwest Arkansas.