To employ 160 making recycled linerboard by 2023
By Scott Robertson
Domtar announced August 7 it will cease freesheet production operations at its Kingsport, Tenn., mill and refit the facility to produce linerboard, the material used to make the boxes in which products sold via ecommerce are shipped. The move is part of a company-wide cost reduction strategy aimed at creating annualized savings of $200 million by the end of 2021, the company said in its quarterly review release.
Once in full operation by the first quarter of 2023, the Kingsport mill is expected to produce and market around 600,000 tons annually of recycled linerboard and medium.
Domtar estimates the conversion cost to be between $300 and $350 million. “Once fully operational, the mill is expected to be a very low-cost, first quartile recycled linerboard mill in North America,” the company said. The converted mill is expected to directly employ approximately 160 employees.
The company worked with city, county and state economic development leaders on an incentive package to help the company stay in Kingsport. “I am pleased that the City of Kingsport was able to reach an agreement with Domtar that will help enable them to smoothly transition to a new product line in a very competitive and turbulent business environment,” said Mayor Pat Shull. “Providing city assistance means that a long-standing community partner will stay in Kingsport and preserve a significant number of jobs. We greatly appreciate the assistance from the State of Tennessee as well as the local assistance of NETWORKS Sullivan Partnership. Finally, we look forward to sustaining this collaborative and productive relationship well into the future.”
“This will retain jobs in our community and help ensure Domtar is a partner with Kingsport and Tennessee in the future,” said Jon Lundberg, Tennessee State Senator. “I also appreciate the opportunity to partner with Governor Lee, Commissioner Rolfe and the many other state and local officials who have worked tirelessly to establish a business climate in Tennessee in which new and expanding businesses can flourish and grow.”
The company said that in addition to ending freesheet operations at Kingsport, it will also cease freesheet production at Port Huron, Mich., mills and at the remaining paper machine at the Ashdown, Ark., mill. The Kingsport and Ashdown operations have been idled since April because of COVID-19. Those closures will result in 780 job losses company-wide. The company said the moves are “designed to increase shareholder value as we adjust our paper capacity to align with our customer demand.”
“Repurposing the Kingsport mill provides Domtar with the best strategic entry point into a growing market with a very competitive, low-cost asset and represents a first step to building a large and cost-competitive business,” said John D. Williams, president and chief executive officer. “Kingsport is well-positioned to be the go-to supplier to independent converters for quality, service and innovation as the mill is less than a day’s drive from over 60 customers representing an addressable 3.9 million tons of annual containerboard demand.”
Opened in 1916, Domtar’s Kingsport pulp and paper mill is a stand-alone energy source, which reuses up to 100 percent of its manufacturing waste. The facility has an estimated regional economic impact of $714 million.
“Tennessee’s existing businesses are vital to the health of our state’s economy, and we’re pleased to support Domtar’s project as they invest more than $300 million in Northeast Tennessee,” said Bob Rolfe, Tennessee commissioner of Economic Development. “Domtar’s investment demonstrates the company’s continued commitment to Kingsport, and we look forward to the economic impact this project will provide to Sullivan County.”