Verso to idle two mills in Upper Midwest

The company is indefinitely idling paper mills in Duluth, Minnesota, and Wisconsin Rapids, Wisconsin.

Verso Corp., a Miamisburg, Ohio-based North American producer of graphic and specialty papers as well as packaging and pulp, has announced plans to indefinitely idle its paper mills in Duluth, Minnesota, and Wisconsin Rapids, Wisconsin, in an effort to offset “unprecedented market decline due to the COVID-19 pandemic.” 

In January, the company had reported that it was considering ways to dramatically increase the recycled-content board and kraft paper production at the Duluth mill. In a Verso Securities and Exchange Commission (SEC) filing section on its mill strategy earlier this year, the company says it had “started a conversion into recycled packaging and kraft paper grades, of which we will be producing 90,000 tons [per] year starting in January 2020. A full conversion to make 375,000 tons is being considered.”

Verso reports that it is exploring alternatives for both mills, including restarting if market conditions improve, marketing for sale or closing the sites permanently. The company says its decision to reduce production capacity is driven by the accelerated decline in graphic paper demand resulting from the COVID-19 pandemic.

“The stay-at-home orders have significantly reduced the use of print advertising in various industries, including retail, sports, entertainment and tourism,” Verso says in a news release about the idled mills. 

In addition, Fastmarkets RISI has reported that North American printing and writing paper demand fell by 38 percent year over year in April, and operating rates for printing and writing paper are expected to drop below 70 percent in the second quarter of 2020. 

“It is critical that we maintain a healthy balance sheet and focus on cash flow, while balancing our supply of products and our customers’ demand,” says Verso President and CEO Adam St. John. “After a comprehensive review of postpandemic demand forecasts and capacity, we made the difficult decision to idle the Duluth and Wisconsin Rapids mills. We expect the idling of these facilities to improve our free cash flow. The sell-through of inventory is expected to offset the cash costs of idling the mills.”

Verso reports that it expects to idle the Duluth mill at the end of June and the Wisconsin Rapids mill by the end of July, resulting in the layoff of about 1,000 employees. Verso will continue to supply graphic and specialty papers in roll and sheet form, as well as packaging papers and pulp. 

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“Decisions to idle facilities are always difficult because they impact employees, their families and communities,” St. John says. “Verso is committed to treating all of our affected employees with fairness and respect. As always, safety is our highest priority and will be our primary focus during this difficult time.”

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