Resolute Forest idles operations, lays off 350 workers at Calhoun, Tennessee, mill

Staff photo by John Rawlston/Chattanooga Times Free Press - Aug 19, 2014. A portion of the Resolute Forest Products plant in Calhoun, Tenn., is photographed after a groundbreaking ceremony for a new construction project in 2014.

Resolute Forest Products Inc. announced Thursday it will idle pulp and paper operations at its Calhoun, Tennessee, mill and lay off 350 workers.

The Canada-based company said the move is designed to cut ongoing losses at the Calhoun mill, which despite the strong market for its products still lost $62 million over the past year.

Resolute gave workers the required 60-day notice on Thursday under the federal Worker Adjustment and Retraining Notification Act of 1988, and the company said it will phase out production of its pulp products and unfinished freesheet paper over the next couple of months. Resolute will keep its tissue production in Calhoun and retain about 195 employees while it suspends the pulp and paper manufacturing process.

"We have taken the very difficult decision to indefinitely idle pulp and paper operations at Calhoun knowing how hard this is for the affected employees and their families," Remi G. Lalonde, Resolute's president and chief executive officer, said in a statement Thursday. "Success has proved elusive at Calhoun's pulp and paper operations, despite the best efforts of our dedicated employees and significant investments of time, energy and resources over the last few years."

The Calhoun site is the latest paper mill in the U.S. to cut production this year. Bloomberg News said North American mills have already cut more than 2.5 million metric tons of North American printing and writing paper capacity this year, or nearly one-fifth of 2019 levels. Resolute, which phased out its newsprint operations in Calhoun nearly a decade ago, has also cut back production of newsprint at other company facilities in Canada.

The Calhoun mill has an annual capacity of 147,000 metric tons of pulp and 149,000 metric tons of paper as well as 60,000 metric tons of premium tissue.

Resolute Forest Products took over what was originally built as the Bowater plant in 1954, once one of America's biggest producers of newsprint and one of the biggest landowners in Southeast Tennessee. At its peak nearly a half-century ago, the Calhoun plant had nearly 1,500 workers.

"This company has been part of the fabric of our community for nearly 70 years, and getting a job at Bowater or Resolute has been a game-changer for many people," said John Gentry, mayor of McMinn County, Tennessee, whose father worked at Bowater for 37 years before he retired. "The silver lining in this announcement today is that it comes at a time when many employers are trying to find more workers, and I know many of those getting notice of these layoffs at Resolute will be offered other jobs almost immediately."

Unemployment in McMinn County in October was 3.4%, and the jobless rate in neighboring Bradley County (where a majority of the Resolute workers reside) was 3.1% in October.

The layoffs at Resolute are the biggest in Southeast Tennessee since Beiersdorf Inc. announced in April it will shut down its plant in Cleveland, Tennessee, and idle 458 employees next year.

Bradley County Mayor Gary Davis said the layoff announcement Thursday "is particularly tough during the Christmas season" and he pledged to work with state workforce development agencies to find other jobs or retraining programs for displaced workers.

"This paper mill has played a vital role in bettering the lives of so many Bradley County families, and we as a community are better for all the contributions they have made," Davis said. "My thoughts and prayers go out to the 350 families that have been impacted by today's announcement."

Once the indefinite idling of the Resolute paper mill is completed, the company anticipates an improvement in its overall operating income of approximately $35 million to $40 million, which reflects the lost pulp integration benefit with its tissue manufacturing of approximately $15 million and approximately $5 million from ongoing costs associated with closed site maintenance.

"Our focus now will be to support our employees through this difficult time, to operate for the remaining period with the same degree of focus on safety and quality and to facilitate a smooth transition for our customers," Lalonde said. "As business conditions for our tissue operations continue to improve after a challenging 2021, our priorities remain focused on driving performance progress to leverage the full potential of our converting operations and the quality of the paper from the machine, together with the right customer mix, to seize the upside, even as the lost integration benefit will add to pulp costs."

Resolute said it will work with labor unions that represent hourly workers in Calhoun and will apply the mill's collective agreement and applicable federal and state laws to provide severance benefits to those directly affected. Resolute workers at mills in Calhoun, Tennessee, Augusta, Georgia, and Coosa Pines, Alabama, are represented by the United Steelworkers, International Brotherhood of Electrical Workers and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the U.S.

Resolute spokesperson Seth Kursman said the company is calling its action "an indefinite idling" and leaving open the possibility of using the production capabilities for other products or uses or to reactivate the line if conditions warrant. But he said the company has already made major investments to try to restore the profitability of the pulp operations and has yet to turn a profit from changes made over the past few years.

Resolute said it will record in its fourth-quarter results non-cash impairment and accelerated depreciation charges of approximately $135 million due to the idling of the pulp mill, reflecting the carrying value of the pulp and paper fixed assets as well as a write-down of inventory and a write-off of other assets.

Shares of Resolute Forest Products on Thursday rose 1.2%, or 16 cents per share, to close at $13.26 per share in trading on the New York Stock Exchange after the announcement.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.