Fraser Papers Plans to Idle Two Paper Machines in NH

Feb. 12, 2008 - Fraser Papers late yesterday said that it plans to curtail production of commodity freesheet paper grades on paper machines #13 and #14 at its paper mill in Gorham, New Hampshire for an indefinite period starting April 13, 2008.

Production on paper machine #12 was suspended late in 2007.

The company said it expects to continue operating two of the five paper machines (paper machines #11 and #19) in Gorham that produce specialty printing papers (principally light-weight opaque papers) and industrial towel.

Machines nos. 12, 13, and 14 represent annual production capacity of 109,000 tons.

"The impact of rising input costs, particularly oil and market pulp, has resulted in significant operating losses for certain of the grades produced at the Gorham mill," said Peter Gordon, president and CEO of Fraser Papers. "Increases in the selling price of commodity freesheet products have not been sufficient to offset these rising costs," noted Gordon.

Fraser said it will fulfill all of its existing commitments to customers and expects to operate at current production levels until April 13, 2008, depending on demand.

Fraser added, however, that if cost pressures ease and the profitability for the grades produced on these machines improves before April 13, 2008, it may cancel or defer the curtailments.

Fraser said it has been working with the State of New Hampshire on alternatives to address increasing costs at the mill and is currently exploring various initiatives to reduce the mill's reliance on oil as a fuel source.

The idling of the machines will affect 167 employees, who will be laid off indefinitely. Fraser has given the employees 60-day notice under the Workers Adjustment and Retraining Notice ("WARN") Act. Under the provisions of the WARN Act, affected employees will be paid through the notice period, even if the production cuts are implemented earlier.

SOURCE: Fraser Papers

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