Longview, Washington, USA 20 August 2017 -- (From news reports) -- Norpac will slash its production capacity by nearly a third in October, idling one of three paper machines at the Longview mill in effort to remain competitive, the papermaker announced Wednesday. The capacity cut could lead to an unknown number of layoffs at one of Longview's major employers.
About 400 non-unionized employees work at Norpac, but the company said it was unsure how personnel changes could pan out in the coming months. Employees reportedly were told that possible layoffs could be based on a mix of seniority and mill needs, according to millworkers.
Workers there already faced a 10 percent wage cut and big reductions in retirement benefits in May. The changes come as the mill's new owner, One Rock Capital, struggles to make the facility more profitable after buying it out from Weyerhaeuser and Nippon in October.
"All of our employees have dedicated their careers to making Norpac what it is today -- one of the finest paper mills in the world known for quality, service and innovation. The closure of a paper machine has been a very difficult decision for everyone involved," said Craig Anneberg, Norpac CEO in a press release Wednesday.
"We will do everything in our power to make sure our teams of employees have a level playing field to compete in the future. As we move forward, we will engage our teams in transition planning, which will include transition resources for impacted Norpac employees," Anneberg said.
The soon-to-be idled Paper Machine No. 1 produces 250,000 tons of paper per year, about one-third of the plant's current paper output, according to the company. Shutting down the machine will leave the mill with a capacity of 540,000 tons per a year.
Mill workers were disappointed, yet not surprised, to hear the news.
"I guess we kind of expect it now. We know we're in a dying industry and more than likely at the rate we're going, we'll probably be shut down in a certain matter of time. All they're worried about is the bottom-line dollar," said one employee who has worked for Norpac for nearly 20 years.
Morale sank after wages were slashed this spring, millworkers said. Many employees are looking for other jobs. Some have left already.
"Constant turmoil for years on end. Nobody even likes working there anymore. So many people are leaving. Morale is the worst it's ever been," another worker said.
The production cuts could reverberate throughout the community, noted Ted Sprague, president of Cowlitz Economic Development Council.
"I'm sad for the employees and also for the other companies that support that machine. ... It's also going to affect suppliers and maintenance folks and so it's going to have larger impact. ... It's always disappointing and scary for families," Sprague said.
The company framed the production cuts as a response to competition from subsidized Canadian manufacturers. Last week Norpac petitioned the federal government to impose antidumping and countervailing duties against Canadian papermakers. Norpac said mills in Canada benefit from 65 different government subsidies that allow them to sell paper at prices 16 to 65 percent lower than what it normally would sell for.
"Our company is constantly working to improve both our products and operations to remain competitive despite unfair import pricing and Canadian government-subsidized competition," Anneberg said. "To keep our company competitive and protect our employees, Norpac will use all the tools at its disposal under the U.S. trade law to address and counteract the dumped and subsidized imports from Canada."
Idling a machine could help support Norpac's trade case by demonstrating injury from competition, noted Kevin Mason, analyst and managing director at ERA Forest Products Research.
"I think part of their hope is that if they're successful in that trade case it could block shipments from Canada and they could see some ability to restart the machine," Mason said. But how the international paper markets will react to potential new duties isn't clear. Even if Canadian competition waned, Norpac would still have to grapple with shrinking demand for newsprint, which accounts for half of its product mix.
Mason said subsidies aren't what's making Canadian paper more competitive. It's the relatively weak Canadian dollar that's to blame for cheaply imported paper, he said. The stronger U.S. dollar makes it cheaper for U.S. companies to import paper from Canada rather than buy American-made paper.
Norpac filing a petition for antidumping is in some ways like throwing a "Hail Mary pass to see if you're going to get those. There's no guarantee of what will happen."