Sartell Paper Mill to Lay Off 175 Workers in Dec.
Reduced demand and rising input costs have prompted Verso Paper Corporation to permanently shut down two paper machines and lay off 175 workers at its mill in Sartell-both of which will occur December 14.
The layoffs amount to roughly 40 percent of the Sartell mill work force. The two paper machines that will be shut down together produced 103,000 tons of paper each year.
Memphis, Tennessee-based Verso said Tuesday that it also will lay off 125 workers and shut down a “coated groundwood paper machine” at its mill in Bucksport, Maine, on October 23. Those cuts will trim paper capacity by 90,000 tons annually.
The Sartell and Bucksport layoffs are part of a plan to cut coated-paper capacity by 193,000 tons annually. Following the cuts at those two plants, Verso will have an annual production capacity of 1.7 million tons of paper.
“While improved from the recent lows of 2009, demand for coated groundwood papers continues to face headwinds,” Verso President and CEO Mike Jackson said in a statement, adding that “continuously rising input costs” also contributed to the company's decision to reduce its capacity.
Jackson said that the cost structure of the two machines that will be shut down in Sartell remains “unfavorable.”
Sartell City Administrator Patti Gartland told the Star Tribune that officials in her city are sad about the Sartell cuts-but they weren't surprised. She reportedly said that the Sartell paper machines were about 100 years old.
“You couple the age of the equipment with the status of the economy and the paper industry overall, and it just didn't make for a very good combination,” Gartland told the Minneapolis newspaper.
According to Gartland, Verso is a major employer in Sartell; she described the mill as the city's largest taxpayer and second-largest employer.
Verso reported $1.6 billion in net sales last year. The company said Tuesday that the upcoming paper machine shutdowns will result in a $22 million pre-tax charge to earnings, which includes $13 million for severance and benefit costs.