FutureMark Alsip to Idle Mill
22 August 2014 - 2:34AM
Business Wire
News Summary
- FutureMark Alsip announces plan to
indefinitely idle its mill in early September.
- Decision driven by insurmountable
market conditions in the North American coated paper market
including historic low pricing in coated papers and unprecedented
energy costs.
- Two week notice given to customers to
run out critical orders.
- Company is currently working with an
investment bank with extensive background in the paper industry to
assist in maximizing the value of Alsip in a sale, with the
ultimate goal of finding the best value for this facility for the
creditors and recalling the workforce.
FutureMark Alsip (Alsip Acquisition, LLC) today announced that,
due to increasingly challenging market conditions in the North
American coated paper market, it will indefinitely idle its mill in
early September. Alsip is the only facility in North America making
coated publication and printing papers predominantly from recycled
materials.
“This is an extremely difficult decision for us given the
exceptional achievements of the Alsip mill in producing coated
papers with unmatched levels of recycled content and the dedicated
work of all of our employees,” said Stephen L. Silver, CEO of
Alsip. “We explored many options to avoid this action, but the
brutal reality for all coated paper manufacturers today is that
falling demand and pricing pressure from lower-quality uncoated
substitutes has driven prices to near historic lows. Combined with
massive increases in energy costs over the winter, this pricing
pressure has made it impossible for us to continue our Alsip
operations at this time.”
The coated paper market is under increasing pressure as coated
mechanical paper prices continue to decline and energy prices
remain high following a winter with record cold weather.
Aggravating an already weak market, the Canadian government’s
estimated $200 million subsidy of the previously bankrupt Port
Hawkesbury paper mill in Nova Scotia in 2012 enabled that mill to
reopen and flood the market with 40,000 tons per month of low-cost
supercalendered paper, creating an overcapacity that has most U.S.
coated players operating at a loss.
Alsip will remain open for up to two weeks to fulfill orders and
support customer efforts to transition to new suppliers. The mill
presently employs 170 workers, and the announcement will affect all
positions at the mill. After running out customer orders, a closure
team will remain on site for a period of time to shut down the
machine, maintain the facility and infrastructure, and support
customers in the smooth transition of products and services.
FutureMark Alsip participates in joint marketing activities with
a separate and independent company, FutureMark Manistique
(MPI-Acquisition, LLC) under the FutureMark Paper Group brand.
FutureMark Manistique will continue to operate.
Alsip explored all alternatives for avoiding this shutdown,
including expanded debt facilities, attempts to locate new
investment and possible sale of the company. Alsip also received
cooperation from its union and salaried employees in the form of
wage concessions, however, some recent operational issues on top of
continued poor market conditions led to a severe liquidity
crisis.
“We appreciate the tireless efforts of all of our Alsip
employees and the warm support the community and local government
has extended to us throughout our many years of operation in this
region,” said Silver. “We deeply regret the impact this will have
on all involved. We fought as long and hard as we could.”
The company is currently working with an investment bank with an
extensive background in the paper industry to assist in evaluating
alternatives for maximizing the value of Alsip in a sale –
including converting the facility to a stand-alone de-ink pulp mill
for the sale of recycled fiber; using the site to manufacture
tissue; converting the mill for the manufacture of packaging
papers, or continuing its current line of coated papers. The
company is actively engaged in a number of conversations with
interested parties to explore these options with the ultimate goal
of finding the best value for this facility for the creditors and
recalling the workforce as soon as possible. At this time, the
company has received expressions of interest from several potential
buyers.
CXO CommunicationSandy George,
617-413-6126sandy@cxocommunication.com