Cascades restructuring tissue business, 300 employees in US affected

Cascades, a Kingsey Falls, Quebec-based paper and packaging producer, is restructuring its Tissue Papers platform, closing two underperforming plants as well as shutting down a virgin paper tissue machine in a move that will impact 300 employees in the U.S.

Beginning in July, the company will progressively close what it says are “underperforming” plants in Barnwell, South Carolina, and Scappoose, Oregon, and the virgin paper tissue machine at its St. Helens, Oregon, plant. The equipment slated for closure has a combined total annual rated capacity of 92,000 short tons of tissue paper and 10 million cases of converted product, but Cascades says it has been operating below capacity, producing 56,000 short tons of tissue and 5 million cases of converted product last year.

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“Today’s announcement lays the groundwork for a simplified and sustainable production model that will better meet both our customers’ and Cascades’ long-term growth aspirations,” Tissue Group President and Chief Operating Officer Jean-David Tardif said in a statement earlier this week. “This was not an easy decision to make, but it’s the right one for the company’s future.”

A portion of the production will be absorbed by open capacity at Cascades’ other facilities and by an increase in productivity at other sites, particularly in the U.S., and the company says it has the option to evaluate the possibility of redeploying the seven conversion lines impacted by the restructure to other sites at a later date.

Closure costs, including severance, are expected to be around $20 million to $25 million, and Cascades says it will work closely with the 300 affected employees to mitigate the impact.

More details about this announcement are expected when Cascades releases its first-quarter financial results May 11.

“With fewer sites, better resource allocation and a strong business strategy, we believe this decision will position Cascades to create more value for its shareholders and customers,” CEO Mario Plourde says. “I’m convinced the steps taken today will allow us to achieve our objectives for improving [the] Tissue Group’s performance.”

Cascades is the fourth-largest tissue producer in North America and its Tissue Group employs more than 2,000 people at 15 manufacturing and converting sites in the U.S. and Canada.