By Shereen Siewert
Verso announced this week the company will close mills in Wisconsin Rapids and Duluth indefinitely, leaving more than 1,000 workers without jobs.
More than 900 workers are employed at the Wisconsin Rapids mill alone, which will be shuttered by the end of July.
The mills could be sold or closed permanently, though company officials say they will explore “viable and sustainable alternatives” for both locations and could restart operations if marketing conditions improve. Verso officials say the decision was prompted by a decline in graphic paper demand, a result of the COVID-19 pandemic.
“The stay-at-home orders have significantly reduced the use of print advertising in various industries, including retail, sports, entertainment and tourism,” a notice on the company’s website reads.”
According to Fastmarkets RISI, North American printing and writing demand fell by 38% year-over-year in April, and operating rates are expected to drop well below 70% during the second quarter.
“It is critical that we maintain a healthy balance sheet and focus on cash flow, while balancing our supply of products and our customers’ demand,” said President and Chief Executive Officer Adam St. John. “After a comprehensive review of post-pandemic demand forecasts and capacity, we made the difficult decision to idle the Duluth and Wisconsin Rapids mills. We expect the idling of these facilities to improve our free cash flow. The sell through of inventory is expected to offset the cash costs of idling the mills.”
Verso expects to idle the Duluth Mill by the end of June 2020 and will continue to supply graphic and specialty papers in roll and sheet form, as well as packaging papers and pulp.
Wisconsin Rapids Mayor Shane Blaser, in a statement, called the news disappointing.
“And during a time when so many have so little, with COVID-19 impacting our health and wealth, this news is even more devastating,” Blaser said. “My heart goes out to each and every one of these employees and their families.”
The Wisconsin Paper Council also weighed in on the announcement, saying their organization is reaching out to state and local officials to coordinate response efforts.
State Rep. Scott Krug, R-Nekoosa, called the closure yet another “horrendous side effect” of the COVID-19 outbreak.
“Businesses big and small have been decimated from decreased demand and forced shutdowns and today, Verso in Wisconsin Rapids took the latest hit,” Krug said, in a prepared statement.
One of the largest employers in Wisconsin Rapids, the mill has been in operation since 1904 and became part of Verso in 2015. Verso, based in Ohio, filed for bankruptcy a year later but later reorganized, eliminating billions of dollars in debt.
In February the company turned ownership of two mills, one in Stevens Point and one in Maine, over to Pixelle Specialty Solutions, LLC in a $400 million deal.
The Wisconsin Rapids mill can produce about 540,000 tons of paper per year and makes graphic papers used in commercial printing, media and marketing applications.
Company officials say most Wisconsin Rapids mill employees will be laid off, but an unknown number will continue working after July 31 to continue limited operations or maintain the mill. No specific numbers have been released.