PAPER INDUSTRY NEWS - JULY 2009

This page contains pulp and paper industry news for July 2009


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NEWS JULY 2009

Albany International Announces Plans to Reduce Manufacturing Capacity and Personnel in Europe and U.S. 
 

July 01, 2009, Albany International Corp. (NYSE:AIN) announced today plans by two if its European affiliates to reduce manufacturing capacity and personnel and also announced a plant closure in the United States.

Albany International France S.A.S. announced a proposed plan to discontinue operations at its press fabric manufacturing facility in Ribérac, France, and Württembergische Filztuchfabrik K. Geschmay GmbH announced plans to further reduce personnel at its press and dryer fabric facility in Göppingen, Germany. These planned actions would be the result of the continuing consolidation of paper industry customers in Europe and the need to balance the Company’s paper machine clothing manufacturing capacity in Europe with anticipated paper mill demand. The Company does expect Göppingen to remain an integral part of its long-term capacity plan, and to continue to be its primary press fabric operation for central Europe.

The Ribérac and Göppingen proposals would be subject to applicable local law and would be implemented in accordance with such law and in consultation with the Works Councils.
Albany International Corp. also disclosed that it will discontinue operations at its process belt manufacturing facility in Tumwater, Washington. As with the European plans, similar steps have been taken by the Company over the last few years in North America, as the global paper and paperboard industry continues to shift capacity from traditional paper markets to new emerging markets.

The Company’s process belt manufacturing will now be centered at its operations in Bury, England, as of August 31, 2009. The Bury capacity will be maximized to accommodate additional production; technical and manufacturing from Bury and Tumwater will work closely together to ensure continuity of customer supply.

The Company anticipates that with these planned actions, its PMC manufacturing capacity in Eurasia will be, for the foreseeable future, as follows: forming production for Eurasia will be centered in Sélestat and Chungju, with some specialized production continuing in Halmstad; press production will be centered in Halmstad, Göppingen, and Hangzhou; dryer production in Panyu and Göppingen, and global process belts in Bury. The Company will continue to provide customers throughout Eurasia with world-class expertise in Product Application, Sales and Marketing, Service, and Research and Development.
 
The proposed actions in Europe and the Tumwater, Washington, plant closure in no way reflect on the performance of the affected employees; they are a business necessity, driven by the existing and anticipated market conditions.

Albany International is a global advanced textiles and materials processing company. Its core business is the world’s leading producer of custom-designed fabrics and belts essential to the production of paper and paperboard. Albany’s family of emerging businesses extends its advanced textiles and materials capabilities into a variety of other industries, most notably aerospace composites, nonwovens, building products, and high-performance industrial doors. Additional information about the Company and its businesses and products is available at www.albint.com.

BASF to Sell or Close 23 Former Ciba Facilities

July 8, 2009 - BASF said that it plans to sell or close 23 of 55 former Ciba Speciality Chemical production sites worldwide as it integrates its acquisition of the Basel, Switzerland-headquartered chemical producer.

BASF plans to cut 3,700 jobs as part of the process as it seeks to generate annual cost savings of EUR 400 million ($560 million) a year from 2012.

Savings of about EUR 300 million a year were expected by the end of 2010 when most of the job cuts will have been made, BASF said.

Tembec announces curtailment of Kapuskasing newsprint and sawmill operations

Temiscaming, Quebec, July 9, 2009 – Tembec today announced a temporary curtailment of its newsprint and sawmill operations in Kapuskasing, Ontario. The shutdown will run from July 24 to August 10, and is directly related to the ongoing challenging market conditions for newsprint and lumber. Approximately 510 employees at all levels of the newsprint, sawmill and forestry operations will be affected.

“Market and operating conditions remain challenging for North American newsprint and lumber producers. The recent extremely low newsprint pricing and the continuing low demand for newsprint and lumber, coupled with the related need to manage inventory levels and working capital, make this curtailment unavoidable,” said Chris Black, Executive Vice President and President, Paper Group.

The curtailment is expected to result in lost production of 11,000 tonnes of newsprint and 3 million board feet of lumber. Tembec indicated it will continue to monitor market conditions closely and will adjust operating rates accordingly.

Employees have been advised of the Company’s decision.

UPM and Metsäliitto sign a letter of intent on new ownership structure of Botnia

(UPM, Helsinki, 15 July 2009 at 14:00 EET) – UPM and Metsäliitto Cooperative have today signed a letter of intent to restructure the ownership of the pulp company Oy Metsä-Botnia Ab (Botnia). Currently the shareholders of Botnia comprise UPM with a holding of 47%, M-real with 30% and Metsäliitto with 23%.

In the proposed transaction Metsäliitto's and Botnia's share of the Fray Bentos pulp mill and the eucalyptus plantation forestry company Forestal Oriental in Uruguay would be transferred to UPM.

Post transaction, Botnia's operations would consist of its current operations in Finland, with Metsäliitto acquiring incremental shares to move to a position of majority. Metsäliitto's holding would be approx. 53% and M-real's holding approx. 30%. UPM's ownership in Botnia would decline to approx. 17%, which corresponds to UPM's use of Botnia's pulp produced at the Finnish mills. Botnia would continue to act as the sales channel of UPM's market pulp.

Following the proposed transaction, UPM's share of pulp capacity of Botnia's Finnish mills would decrease from 1.1 million tonnes to 400,000 tonnes. At the same time, UPM's share of eucalyptus pulp would increase by approx. 500,000 tonnes and UPM would have the direct ownership of the Uruguayan plantations.

In addition, UPM would also acquire 1.2% of the energy company Pohjolan Voima Oy (PVO) from Botnia.

UPM's interest bearing net debt is estimated to increase by approx. EUR 400 million including the debt of the Uruguay operations with minor effect on UPM's gearing level. The net cash effect of the transaction on UPM would be an outflow of approx. EUR 90 million. The transaction is expected to have a positive impact on UPM's results in 2010.

The proposed transaction, as detailed in the letter of intent is in line with UPM's strategy to grow in cost competitive pulp and emission free energy. Last year the company formed a market driven Business Group out of its three modern pulp mills and significant energy assets.

"Clarification of Botnia's ownership structure provides a good basis for developing UPM's pulp operations further. The Uruguay mill would increase UPM's own pulp capacity to 3.18 million tonnes and strengthen its position as a reliable partner in market pulp. The mill would also reinforce the company's presence in the emerging markets," says Jussi Pesonen, UPM's President and CEO.

Negotiations on the details of the agreement continue. Prerequisites for a definitive agreement include a due diligence and finalising negotiations with Botnia's lenders as well as the required regulatory approvals.

The proposed transaction is expected to be closed during the last quarter of 2009. UPM will communicate about the completion of the agreement upon signing.

For more information, please contact:
Mr Tapio Korpeinen, President, Energy and Pulp Business Group, UPM, from 18:30 to 19:30 Finnish time, tel. +358 40 730 0030

Albany International Announces Closure of Portland, Tennessee, Facility 
 

Albany, New York, July 27, 2009 – Albany International Corp. (NYSE:AIN) announced today that it will discontinue operations at its forming fabric manufacturing facility in Portland, Tennessee. The plant closing is the result of the continuing consolidation of customers in the U.S. and Canada, accelerated by the economic recession, and the need to balance the Company’s paper machine clothing (PMC) manufacturing capacity in North America with anticipated paper mill demand. Similar steps have been taken by the Company over the last few years in both Europe and North America, as the global paper and paperboard industry continues to shift capacity from traditional paper markets to new emerging markets.

This planned action is a business necessity, driven by existing and expected market conditions, and in no way reflects on the performance of the 156 affected employees, who will be offered severance and outplacement assistance.

Transition of forming fabric manufacturing from the Portland area to other facilities in North America will begin at once and will be supervised by technical and manufacturing personnel to ensure continuity of customer supply. The transition is expected to be completed by June 2010.

The Company expects that, with this action, its PMC manufacturing capacity in the Americas will be, for the foreseeable future, as follows: forming production for the Americas will be centered in Perth, Ontario, Canada; Menasha and Kaukauna, Wisconsin; and Indaial, Brazil; press production will be centered in St. Stephen, South Carolina; Cowansville, Québec, Canada; Indaial, Brazil; and Cuautitlán, Mexico, and dryer production in Cuautitlán.

Albany International is a global advanced textiles and materials processing company. Its core business is the world’s leading producer of custom-designed fabrics and belts essential to the production of paper and paperboard. Albany’s family of emerging businesses extends its advanced textiles and materials capabilities into a variety of other industries, most notably aerospace composites, nonwovens, building products, and high-performance industrial doors.

Additional information about the Company and its businesses and products is available at http://www.albint.com.

KRUGER INC. TO TEMPORARILY REDUCE PRODUCTION AT ITS QUÉBEC PAPER MILLS

Montréal, Québec, July 31, 2009 – Kruger Inc. today announced that it will temporarily cut back production at its Québec paper mills this August and September, by interrupting production for periods of one to three weeks depending on the paper machines involved.

The Company came to this decision to rebalance its order book in light of a significant drop in demand for various paper grades and unfavourable economic conditions, particularly the high value of the Canadian dollar against the US currency.

Production Interruptions:

Brompton Mill (Sherbrooke):

Newsprint production will be interrupted from August 21 to September 8, 2009. Approximately 350 employees will be affected.

Trois-Rivières Mill:

Coated and supercalendered paper production will be interrupted from August 26 to September 16, 2009, affecting some 450 employees.

Newsprint production will be interrupted from September 1 to 13, 2009. All of the mill’s paper machines will be shut down during this period and approximately

250 additional employees will be affected.

Kruger Wayagamack Mill (Trois-Rivières):

Directory paper production will be interrupted from August 31 to September 8, 2009, affecting some 80 employees.

Coated paper production will continue during this period. With this decision, Kruger Inc. will cut its total production by 26,500 tonnes of newsprint, 7,500 tonnes of coated paper, 4,500 tonnes of supercalendered paper and 2,000 tonnes of directory paper.

Founded in 1904, Kruger Inc. is a major producer of publication papers, tissue, lumber and other wood products, corrugated cartons from recycled fibres, green and renewable energy and wines and spirits. The Company is also a leader in paper and paperboard recycling in North America. Kruger operates facilities in Québec, Ontario, Alberta, British Columbia, Newfoundland and Labrador, in the United States and the United Kingdom and has 9,000 employees.


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