Verso Corp., which operates a mill in Jay, is consolidating its administrative offices and restructuring the paper company into two divisions as it continues to seek ways to trim costs.
The company intends to consolidate its corporate offices in Miamisburg, Ohio, the site of its former rival NewPage’s headquarters, early in 2017. Verso acquired NewPage in January 2015.
It also said it would reorganize its network of seven mills into two divisions: one for graphic paper and the other for specialty paper.
Memphis-based Verso has been seeking to reduce expenses since it emerged from bankruptcy in July. Two weeks ago it announced it would lay off about 190 of its 580-person workforce at the Androscoggin Mill in Jay as it temporarily idles one paper machine that makes publishing papers. The move reduces the mill’s capacity for print-grade papers by about 200,000 tons annually to deal with softening global demand. Once the shutdown takes effect, the mill will have an annual capacity of about 285,000 tons, split between publishing-grade papers and specialty papers, such as those used for labels, food wrap and flexible packaging.
The Androscoggin Mill will be managed under the specialty paper business division, said Kathie Rowzie, spokeswoman for the company.
“The primary focus going forward will be specialty papers,” Rowzie said.
There is increasing demand for specialty papers worldwide, while the market for coated and uncoated printing papers – the bread and butter of Maine’s paper industry for decades – continues to decline as fewer people read print publications. More than 65 percent of Maine’s production capacity was in publishing-grade papers in 2015, according to a Fisher International analysis presented at the annual Paper Days conference in Orono earlier this year.
Other mills, including Madawaska’s Twin Rivers and Rumford’s Catalyst, are incorporating specialty grade papers into their mix. At the Androscoggin Mill, one paper machine makes only specialty paper, while another makes specialty paper and printing-grade papers. The third machine could be restarted to make printing papers if there’s renewed demand, said Rowzie.
Verso anticipates that the changes announced Monday will reduce overhead by 10 percent.
“We expect that the strategic initiatives announced today will enable Verso to be more agile in adapting to an evolving marketplace, more responsive to our customers, more efficient and cost-effective in our operations and ultimately more financially successful,” Robert M. Amen, Verso’s chairman of the board, said in a news release.
Verso announced the business unit restructuring after the release of its third-quarter earnings report, which showed the company trimming its losses from $111 million in the third quarter of 2015 to a loss of $40 million over a slightly abbreviated, post-bankruptcy third quarter this year. Net sales were down about 14 percent, to $578 million, which the company attributed to a 10 percent decrease in total sales volume, a 4 percent price decrease for coated papers because of weak demand and capacity reductions at the Androscoggin Mill taken last year, and the closure of a Verso mill in Wickliffe, Kentucky, this summer.
Verso laid off about 300 people in 2015 after shutting down two paper machines.
Veteran paper executive Jason J. Handel will lead the specialty division. Handel now serves as group vice president of technical sales and product development. In the new organization, Handel will have the title of president of the specialty paper business unit and report directly to Allen J. Campbell, Verso’s chief executive officer.
“If we can achieve these results while consistently maximizing Verso’s manufacturing efficiency and cost effectiveness, we will make great strides toward enhancing Verso’s profitability and success for a long time to come,” Handel said in the release.
Carol Coultas can be contacted at 791-6460 or at:
ccoultas@pressherald.com
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