Sappi to close 2plants,lay off 245

Move is an effort to reduce costs and to save the company around $27 million a year

SAPPI yesterday announced its intentions to close two of its mills abroad and lay off 245 employees in an effort to reduce costs by the global leader in dissolving pulp and paper-based solutions, with the move set to save the company around $27 million (R460m) a year.

The diversified wood fibre company said the decisions taken were necessary as it would help the company to remove capacity, reduce costs, improve machine utilisation and increase competitiveness.

Sappi chief executive Steve Binnie said these steps demonstrated their commitment to taking decisive action to reduce costs and respond to market dynamics. “These mills will now be better placed to compete in the marketplace and deliver increased returns,” Binnie said.

Sappi would close its Paper Machine 2 (PM2) at its Stockstadt Mill in Germany and Paper Machine 9 (PM9) and the energy complex at its Westbrook Mill in the US.

The group said Sappi Europe had announced the initiation of a process in February to determine the future of PM2 at its Stockstadt Mill, in view of the continuing decline of the coated wood-free paper market.

The group had reached an agreement with the employee representatives after a consultation process to permanently close PM2, which had a coated wood-free paper production capacity of 240 000 tons a year.

The group expected production to cease at the end of September, with 170 employees expected to leave the company.

“The once-off restructuring charges amount to approximately €27m (R529m) and the estimated annual saving will be approximately €15m,” the group said.

Going forward, Stockstadt would now focus on its strong and growing uncoated wood-free offering.

Sappi said it had decided to permanently shut its Westbrook Mill in