Georgia-Pacific said Tuesday that it will shutter equipment and processes supporting the bleached board operations at its Crossett facility as of October, a move that will affect more than 530 jobs.
The company said in a news release that the decision to shutter the operations "was based on an assessment of the mill's ability to compete effectively in the bleached board market." It also said it will close a particleboard facility in Hope, affecting another 100 jobs.
The move will permanently shut down the bleached board machines, as well as the extrusion plant, woodyard, pulp mill and "a significant portion of the energy complex at the Crossett mill," the company said. It also said it will shut down one of the mill's older tissue machines next month.
Another 25 business and sales jobs will also be affected by the closure at Crossett, the company said.
"Georgia-Pacific will continue to operate and invest in the Crossett mill to support its consumer tissue and towel business," the company said. "The Crossett facility has premium product tissue and towel machines and associated converting equipment, so it remains a key contributor to the success of the Consumer Products Group's retail business. The company will retain approximately 500 employees to manage those operations."
The company said employees will continue to operate the plant as usual until its shuts down in October. The company plans to begin talks with union leaders and workers about how the closure will affect them, including "the potential to transfer" to other company locations.
"Our Crossett employees have worked hard to safely and productively manage our operations there, and in recent years we have invested significantly in our operations," Monty Brown, senior vice president of the company's consumer products group operations, said in a news release.
"However, we have decided that the required investments needed for the bleached board machines, pulp mill and woodyard to sustain the operation long-term are not economically viable. We understand the impact this decision has on our employees, families and the community, and we will work cooperatively with the state and the community to minimize that impact."
King said the Crossett mill "is a more high-cost producer compared to some of the other G-P mills. So, ultimately, the decision was that continuing to invest in the bleached board operations didn't make any economic sense from a company perspective."
She didn't know why it costs more to produce bleached board at Crossett, but added that "it's something we've struggled with for the past several years." She said that the bleached board market is saturated.
Hope Fiberboard to Close
The company also said it will close two fiberboard plants, one at Hope and another in Monroeville, Alabama, and not rebuild its Thomson, Georgia, plant, which burned in a fire last week.
The company said about 100 workers at each plant will be affected. The closure will happen "over the next couple months," it said. The move will leave Georgia-Pacific with one particleboard plant in Diboll, Texas.
"Demand for particle board is stagnant," she said. "There are other mills that have opened up and they're large. They use state-of-the-art technology, and they're just much more efficient than our mill. So they're making it challenging for our mill there to compete going forward."
In a statement, Arkansas Economic Development Commission Executive Director Mike Preston said a number of groups — including Arkansas Workforce Services, the Governor's Dislocated Workers Taskforce — would work to help laid off workers "with resources to help position them for a new job in their current industry or train for a different field."
"Workers in the timber industry are highly skilled and employable, and we will work to ensure their livelihoods are impacted as little as possible," Preston said.
An AEDC spokesperson said Preston and Gov. Asa Hutchinson would speak to Georiga-Pacific's CEO this afternoon.
"Georgia Pacific has been a good partner with the state of Arkansas for a number of years, and I expect they will continue to be in the future," Hutchinson said in a statement to Arkansas Business. "Nevertheless, today's announcement is disappointing. This is a tough hit to South Arkansas and all the families impacted.
"I will be speaking later today with the President of Georgia Pacific in order to understand more fully the reasons behind this decision. I've already spoken with key cabinet officials, and we are focused on providing all available resources and necessary training to ensure that those who are losing their jobs later in the year are given every opportunity to secure new employment here in Arkansas."
Founded at the turn of the last century, the Crossett plant began as the Crossett Lumber Co. Georgia-Pacific bought it in 1962. It added a chemical facility in 1969. According to the company, the plant makes tissue, paper and paperboard products. It employed about 1,200 as of 2016.
In all, Georgia-Pacific claims 2,480 workers in Arkansas at eight plants. Based in Atlanta, the privately held company is owned by Koch Industries and has more than 35,000 employees.
Crossett, with a population of more than 5,500 people, is the largest city in Ashley County. The county's unemployment rate was 4.8 percent as of April.
Crossett Mayor Scott McCormick told The Associated Press that the closure is "devastating" for the city and said it would affect other businesses in town.
"Just about everything in town is going to be affected by this," he said.