In connection with its ongoing strategic review, Weyerhaeuser Company (NYSE: WY) today announced that it is closing two operations in southwestern Washington: a specialty pulp mill in Cosmopolis and a large-log sawmill in Aberdeen. These closures are the result of poor markets, aging machinery, high operating costs and small-scale operations.
"Today's announcement is part of the ongoing effort to strengthen Weyerhaeuser's overall portfolio to enhance shareholder value," said Steven R. Rogel, chairman, president and chief executive officer. "As part of an ongoing strategic review of our businesses and against the backdrop of industry-wide market challenges, we have determined that these mills are no longer economically sustainable.
"The closure of these mills is a difficult decision, but the reality of difficult markets is compounded by the age, high cost and small scale of the mills," Rogel said. "Weyerhaeuser's employees have worked diligently to make the mills competitive, and today's announcement is a reflection of the challenging markets we face. We recognize the impact of these closures on the people of Grays Harbor County, and we will do our best to work with state and local leaders to assist in the transition."
Earlier this month Weyerhaeuser announced the indefinite closure of the Prince Albert pulp and paper facility in Saskatchewan due to fundamental challenges in the uncoated free-sheet paper and pulp markets, including excess capacity, declining demand, mounting inventories and weak prices.
The closures in Washington will affect approximately 342 hourly and salaried positions. Weyerhaeuser is supporting affected employees with transition benefits, severance pay, employment counseling and potential job opportunities at other Weyerhaeuser mills. The company also will be discussing with state and local officials ways of mitigating the effect of these closures on the community.
-- The 140,000 tons-per-year, 50-year-old Cosmopolis mill makes specialty pulp for plastics, photographic papers and cigarette filters, employing approximately 245 hourly and salaried people. As Weyerhaeuser's only specialty pulp operation, it is not competitive with other companies in this market and is not a strategic fit for the company. The capital needs of the mill combined with increasing operating costs -- particularly for energy and chemicals -- erode the mill's competitive position. The date operations will cease will be determined in 2006, based on customer contracts.
-- The 81-year-old Aberdeen large log lumber mill produces approximately 125 million board feet per year of softwood lumber used in residential and commercial construction and appearance-grade millwork. The mill employs approximately 97 hourly and salaried people. The shutdown was made necessary by its age, declining demand and prices and competitive position.
-- Weyerhaeuser will continue to operate the 185-million-board-feet-per- year Aberdeen small log mill with 140 employees.
"We recognize the impact of today's announcement for our employees, contractors, local communities and customers and we are committed to working constructively in the months ahead to prepare for the transition," Rogel concluded. "In a world of weakening markets and tightening economics we reached the point where we have no alternative."
Weyerhaeuser Company, one of the world's largest integrated forest products companies, was incorporated in 1900. In 2004, sales were $22.7 billion. It has offices or operations in 19 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities. Additional information about Weyerhaeuser's businesses, products and practices is available at http://www.weyerhaeuser.com/ .
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