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Fraser Papers Shuts Down Two Paper Machines

Wednesday, February 13, 2008

Press release from the issuing company

TORONTO, ONTARIO - Feb. 11, 2008 - Fraser Papers Inc. announced today it plans to curtail production of commodity freesheet paper grades on paper machines #13 and #14 at its paper mill in Gorham, New Hampshire for an indefinite period starting April 13, 2008. Production on paper machine #12 was suspended late in 2007. Fraser Papers expects to continue operating two of the five paper machines (paper machines #11 and #19) in Gorham that produce specialty printing papers (principally light-weight opaque papers) and industrial towel. The three machines to be curtailed represent annual production capacity of 109,000 tons.

"The impact of rising input costs, particularly oil and market pulp, has resulted in significant operating losses for certain of the grades produced at the Gorham mill," said Peter Gordon, President and CEO of Fraser Papers. "Increases in the selling price of commodity freesheet products have not been sufficient to offset these rising costs," noted Gordon.

The Company will fulfill all of its existing commitments to customers and expects to operate at current production levels until April 13, 2008, depending on demand. If cost pressures ease and the profitability for the grades produced on these machines improves before April 13, 2008, the Company may cancel or defer the curtailments.

The State of New Hampshire has been working with the Company on alternatives to address increasing costs at the mill. During this temporary shutdown, Fraser Papers will continue to work with the State to explore various initiatives to reduce the mill's reliance on oil as a fuel source.

As a result of the production curtailments, 167 affected employees at the Gorham operations will be laid off indefinitely. The Company has given employees 60-day notice under the Workers Adjustment and Retraining Notice ("WARN") Act. Under the provisions of the WARN Act, affected employees will be paid through the notice period, even if the production cuts are implemented earlier.

 

 

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