FutureMark Plans to Indefinitely Idle Its Alsip, IL, Coated Paper Mill; Impacts 170 Workers

ALSIP, IL—August 22, 2014—FutureMark Alsip (Alsip Acquisition LLC) has announced that, due to increasingly challenging market conditions in the North American coated paper market, it will indefinitely idle its mill in early September. Alsip is the only facility in North America making coated publication and printing papers predominantly from recycled materials.

“This is an extremely difficult decision for us given the exceptional achievements of the Alsip mill in producing coated papers with unmatched levels of recycled content and the dedicated work of all of our employees,” said Stephen L. Silver, CEO of Alsip. “We explored many options to avoid this action, but the brutal reality for all coated paper manufacturers today is that falling demand and pricing pressure from lower-quality uncoated substitutes has driven prices to near historic lows. Combined with massive increases in energy costs over the winter, this pricing pressure has made it impossible for us to continue our Alsip operations at this time.”

The coated paper market is under increasing pressure as coated mechanical paper prices continue to decline and energy prices remain high following a winter with record cold weather. Aggravating an already weak market, the Canadian government’s estimated $200 million subsidy of the previously bankrupt Port Hawkesbury paper mill in Nova Scotia in 2012 enabled that mill to reopen and flood the market with 40,000 tons per month of low-cost supercalendered paper, creating an overcapacity that has most U.S. coated players operating at a loss.

Alsip will remain open for up to two weeks to fulfill orders and support customer efforts to transition to new suppliers. The mill presently employs 170 workers, and the announcement will affect all positions at the mill. After running out customer orders, a closure team will remain on site for a period of time to shut down the machine, maintain the facility and infrastructure, and support customers in the smooth transition of products and services.

FutureMark Alsip participates in joint marketing activities with a separate and independent company, FutureMark Manistique (MPI-Acquisition LLC) under the FutureMark Paper Group brand. FutureMark Manistique will continue to operate.

Alsip explored all alternatives for avoiding this shutdown, including expanded debt facilities, attempts to locate new investment and possible sale of the company. Alsip also received cooperation from its union and salaried employees in the form of wage concessions, however, some recent operational issues on top of continued poor market conditions led to a severe liquidity crisis.

“We appreciate the tireless efforts of all of our Alsip employees and the warm support the community and local government has extended to us throughout our many years of operation in this region,” said Silver. “We deeply regret the impact this will have on all involved. We fought as long and hard as we could.”

The company is currently working with an investment bank with an extensive background in the paper industry to assist in evaluating alternatives for maximizing the value of Alsip in a sale—including converting the facility to a standalone de-ink pulp mill for the sale of recycled fiber; using the site to manufacture tissue; converting the mill for the manufacture of packaging papers, or continuing its current line of coated papers. The company is actively engaged in a number of conversations with interested parties to explore these options with the ultimate goal of finding the best value for this facility for the creditors and recalling the workforce as soon as possible. At this time, the company has received expressions of interest from several potential buyers.

Source: FutureMark.

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  • Larry Edwards

    I lived in the day when certain brands of paper were specified by advertising agencies and graphic designers. However, now all they tell printers is to print on a gloss, dull, silk or matte coated paper. Printers will often purchase off shore papers at much lower price levels anywhere from $43/cwt to $56/cwt. In fact, when I sold for APP, I only wrote up two mill claims in two years, both of which were caused by a pressman who did not know what they were doing. It was very common to have 1 to 5 mill claims per month when selling domestic brands. American paper mills caused their own problems by caving into labor unions and trying to please their stock holders. As a result, they have not purchased new paper machines for 25 to 30 years to keep pace with Asian paper manufactures. APP for example has paper machines 2 times wider and 3 times faster than U.S. paper manufactures. It boils down to cost per unit. When APP was sued for dumping paper into the U.S. market at below marketing pricing, they were generating 30% profit margins. U.S. paper manufacturers were on the other hand lucky to generate 5% profit margins. The only printing markets that are still thriving are located in third world countries. However, once the majority of their population owns a computer, they too will shift to the internet to market their companies and the paper and printing industry in those countries will collapse just like is happening in the United States. I predict 90% of all printed publications and books will only be available in digital format within the next 10 to 15 years. What will be printed will be produced on only digital equipment.