Following layoffs, Domtar Kingsport Mill closing, to be converted and reopen in 2023

KINGSPORT, Tenn. (From news reports) -- Domtar announced in a quarterly report that it is shutting down uncoated freesheet manufacturing at the Kingsport Mill. The mill has been idle since April 2020 and will not recommence operations. The layoff has impacted more than 300 people.

However, the company announced it is going to repurpose assets at the mill. Domtar plans to enter the linreboard market with the conversion of the Kingsport paper machine. The conversion is expected to be completed by the first quarter of 2023. The company expects the location will employ about 160 employees.

"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."

Domtar issued the following statement:

"Domtar has continued to closely monitor and evaluate its market conditions. Unfortunately, our uncoated free sheet paper business continues to experience significant decline due to unprecedented business conditions caused by the COVID-19 pandemic. We have seen some recovery in demand for communications paper as the economy has started to re-open. Unfortunately, we have not seen enough demand recovery to justify restarting operations at the Kingsport Mill. Following a multi-year disciplined and measured review of our manufacturing footprint, Domtar today announced its intention to convert the Kingsport, Tennessee, uncoated free sheet mill into a containerboard operation producing approximately 600,000 tons of recycled linerboard and medium per year. The mill will officially close on October 8, 2020. This subsequent conversion will enable us to balance our uncoated free sheet capacity with our customer demand and reposition Kingsport into a growing market with long-term viability producing sustainable packaging products. Conversion work will begin in the late second half of 2020. We expect the conversion will take 24 to 30 months, and we are hopeful it will be completed in the first quarter of 2023. We anticipate the mill to be very competitive in the industry. While the mill is under construction, approximately 310 people will be permanently laid off. We intend to recall eligible employees once the mill is ready to begin operations based on the recall process we negotiated with the union. The converted mill will directly employ approximately 150 people."

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