PT mill lays off 14, cites rising cost of energy, materials
By Erik Hidle, eninsula Daily News
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"If the price of oil keeps going up, then we have to do something to manage it," said Chuck Madison, vice president of human resources.
Five full-time salaried employees were told they were laid off on Monday, and immediately left the Port Townsend mill.
Nine hourly mill workers were informed on Monday that their jobs would be cut on Aug. 31.
The company also announced that retiring employees' positions would not be filled for the remainder of 2008.
The layoffs — the first since the company reorganized under Chapter 11 bankrupty protection in 2007 — are part of a larger restructuring of the mill's operations, the company announced.
Several employees are to be reassigned within the mill.
Madision said the company would not identify the employees who were laid off, citing their privacy.
Quarterly review
Madison said that the decision was based on a quarterly review of the budget, which showed rising costs in both energy and raw materials.
"Those demands are requiring us to make some pretty tough decisions," he said.
"We will continue to reevaluate on a quarterly basis, and adjust up or down based on the market demand.
Madison said the decision was made a couple of weeks ago.
"It's not something you do overnight. You look at it. You study it. You look at all the options and make a decision."
Since new management came on board earlier this year, the mill has reduced oil consumption by 40 percent, and savings of 8 percent annually on raw materials are expected, Madison said.
Roger Loney, general manager, said the decisions were made to control costs.
"We're hopeful that the new energy saving plan, improved fiber utilization and efficiency will help us better control our costs and power our future growth," Loney said.
"We plan on facing these challenges directly and will continue to evolve over the coming years."
Loney and Chief Executive Officer Charlie Hodges began work at the mill in June, installed by a new board of directors that took over in 2007.
Reorganization
A New York firm, GoldenTree Asset Management, acquired the company as the primary bondholders during Chapter 11 bankruptcy protection reorganization in 2007.
The company cut $50 million in debt from its balance sheet as the bondholders forgave the debt in return for control of the company.
The company's Chapter 11 exit in August was funded by a $60 million loan, which was backstopped by hedge funds, GoldenTree Asset Management and Thales Holding Ltd.
The board of directors now consists primarily of members of GoldenTree.
No layoffs occurred during the reorganization, the layoffs announced this week being the first since the company continued under new management.
Hodges has continually said that he would make the decisions necessary to make a profit and keep the mill profitable for years to come.
Hodges also has said that he expects the mill to change some of the kraft product it produces to increase profits in the coming years, but he has yet to elaborate on any specific decisions.
The mill produces more than 320,000 tons of unbleached kraft pulp, paper and linerboard annually.
Port Townsend Paper, which is owned by PT Holdings Company, also operates two BoxMaster plants and three Crown Packaging factories in Canada. The Canadian operations produce corrugated cardboard boxes, cartons, and displays.
The company was founded in 1927.
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Reporter Erik Hidle can be reached at 360-385-2335 or erik.hidle@peninsuladailynews.com.
Last modified: July 23. 2008 9:00PM