Neenah Paper to close Massachusetts fine paper plant

Neenah Paper on March 7 announced plans to close permanently one of the fine paper plants acquired in the recent purchase of Fox River Paper. The Housatonic mill, located near Great Barrington, Mass., has annual production capacity of approximately 15,000 tons per year and is expected to cease manufacturing operations by the end of the second quarter. Housatonic was the smallest of four fine paper plants Neenah acquired as part of the Fox River acquisition.

"This is a necessary part of our plan to integrate Fox River in a manner that will result in a competitive long term cost structure for our combined operations. The Housatonic mill was not profitable due to its small size, cost structure and pricing of many of the grades made there. Closing the mill allows us to eliminate costs and improve margins while still serving the needs of key customers," said Sean Erwin, chairman and chief executive officer. "Selected products made at Housatonic will be produced at our other sites, where we have available capacity and the ability to make these grades at a lower cost. We realize this decision will result in hardship for our employees at Housatonic and the local community and will be working to assist them through this difficult transition."

The company said it expected to incur one-time cash costs of approximately $3 million for severances and other charges related to the closure. Ongoing annual savings of approximately $5 million are expected from the elimination of fixed costs and increased manufacturing efficiencies, although these savings would not be realized immediately due to product transition costs expected to be incurred in 2007.

Neenah Paper manufactures and distributes a wide range of premium and specialty paper grades, with well-known brands such as Classic, Environment, Starwhite, Esse, Kimdura and Munising LP, Gessner and varitess. The company also produces and sells bleached pulp, primarily for use in the manufacture of tissue and writing papers. Neenah Paper is based in Alpharetta, Ga., and has paper manufacturing operations in the United States and Germany, and a pulp mill and related timberlands in Nova Scotia, Canada.