Sappi to Suspend Operations at Muskegon Mill in MI

March 3, 2009 - Sappi Fine Paper North America yesterday announced that it will suspend all operations at its Muskegon Mill in Michigan, effective April 1, 2009.

The suspension will result in the furlough of approximately 190 salaried and hourly Muskegon employees.

Sappi also said it is taking other steps to cut costs, including the permanent elimination of approximately 70 additional salaried positions, effective immediately.

Sappi said the cost reduction measures are necessary in light of significantly lower global demand for coated fine paper products, an industry wide trend that has resulted from the continued weakening of the U.S. and global economy.

Earlier this month, Sappi Fine Paper North America posted its earnings for the first quarter of fiscal year 2009 with a loss of US$7M.

"As a result of the economic conditions and market demand, it has become imperative for Sappi to focus on good cash management and running our operations as efficiently as possible," said Mark Gardner, Sappi Fine Paper North America president and CEO.

"Reducing our salaried workforce and suspending our operations at Muskegon Mill was an extremely difficult decision but it was the only option that would enable Sappi to reduce costs and remain competitive in the industry, while continuing to meet the needs of our customers," Gardner said.

According to Sappi, employees impacted by the suspension of operations at Muskegon will receive pay and benefits through April 30, 2009, and will then be eligible for unemployment and other federal benefits. For those approximately 70 employees whose positions are being eliminated, the company will be providing separation benefits and job placement services.

Sappi said that if market conditions improve enough over the course of the year, a decision to restart operations at the Muskegon Mill would be made. However, current expectations are that mill production will be suspended for at least six months.

The Muskegon Mill is located on Muskegon Lake on the eastern shore of Lake Michigan. The mill operates one paper machine, PM5, which has an annual capacity of 170,000 tons, producing text and cover weight coated woodfree papers used in annual reports, brochures and catalogs.

SOURCE: Sappi Fine Paper North America

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