Clearwater Paper Corp (NYSE:CLW) has confirmed plans to lay off upwards of 100 employees this spring at its Lewiston, Idaho tissue converting mill. The company blamed industry competition and said the operations are being restructured to “align with current market conditions.”
A number of the cuts, between 80 and 100 positions, will come through attrition or by not filling open positions. The layoffs are expected to start in May.
In a statement, Donnie Ely, the Lewiston Mill manager, said “We are taking this important and necessary step to address the reduction in conventional tissue volume, which is a result of increased competition in the consumer tissue industry.”
The company is currently working with the union and said it will provide more details at a later date.
Union officials actually met with Clearwater Paper on Tuesday to begin bargaining on a new contract. But instead were told that was not going to happen. The union was told that the company is expecting lower production levels at consumer products (CPD) converting in 2019 and beyond. “Converting” is the part of the Clearwater Paper plant where giant rolls of tissue are cut into individual paper napkins, facial tissue, and rolls of paper towel or toilet paper.
Consumer Goods Companies Suffering
It’s not just physical retailers getting hit by online shopping. Consumer goods companies are seeing an increasing number of shoppers turn to online stores. On top of that, Clearwater is competing with new factories that have sprung up and come online. And that’s been eating into the company’s bottom line.
In the third quarter of 2017, total sales were $426.5 million, a two percent drop from $435.3 million recorded in the same prior-year period. Third-quarter net income was flat at $0.9 million, or $0.05 per share.
Year-to-date revenue was $1.29 billion, a one-percent drop from the $1.30 billion recorded in the first nine months of 2016. Net income for the first three quarters of 2017 plunged 60% year-over-year to $16.4 million, or $0.99 per share from $40.2 million, or $2.33 per share, in 2016.
Clearwater Paper has more reason than weak third-quarter results to tighten its belt. After the third quarter ended, the Spokane, Washington-based company lost its exclusive contract with its largest customer: Kroger, the national grocery store chain. Kroger has begun to use a mix of suppliers instead of buying all of its store-brand products from Clearwater Paper.
Clearwater’s Lewiston facility is the only location that has experienced layoffs at this time, but the company hasn’t ruled out layoffs at other facilities.
Shannon Myers, a spokesperson for Clearwater Papers said, “We are always looking for opportunities to ensure the company is more competitive.”
“Clearwater Paper to Restructure Tissue Mill; Layoffs Expected to Begin in May According to Documents,” Daily Fly, January 10, 2018.
“Clearwater Paper Reports Third Quarter 2017 Results,” Clearwater Paper Corporation, October 19, 2017.
“Clearwater Paper plans to downsize this spring,” The Lewiston Tribune, January 11, 2018.