This bit of odd news came out just as the country’s largest maker of magazine-quality paper was announcing the indefinite idling of its two-machine Port Hawkesbury mill in Nova Scotia.
The company earned the #3062 ranking on the magazine’s list by growing revenue from $2.17 billion in 2007 to $3.6 billion in 2010. What the magazine doesn’t mention is that the growth came solely from NewPage’s purchase of Stora Enso’s North American assets (including Port Hawkesbury) in late 2007.
NewPage’s sales dropped by 17% from 2008 to 2010 and are still declining because it has shut one-fourth of its production capacity. What was a 12-mill company in December 2007 is to become an eight-mill operation next month if the company follows through on its announced idling of Port Hawkesbury.
Making the Inc. 5000 list is typically a notable milestone for a growing American company, but the recognition seems like a cruel joke given what NewPage has already been through just this month, when it:
- Buried a reference to exploring “restructuring alternatives”, including a possible Chapter 11 bankrupt-protection filing, into a financial document, only to have some anonymous blogger spill the beans. (See NewPage Finally Says the B Word. ) The story has since been picked up by the the trade press as well as local news media covering the various NewPage mill towns. (Port Hawkesbury's mayor reportedly said last night that NewPage filed for Chapter 11 yesterday, but so far that claim cannot be verified.)
- Had to pay $600,000 in a settlement with former CFO David J. Prystash, whom the company said “has made certain allegations and threatened claims relating to or arising out of his employment and the termination of his employment with NewPage.”
- Ran into delays with asset sales that were supposed to generate much-needed cash.
- Had its credit downgraded once again.
- Announced the idling of Port Hawkesbury, which includes a world-class machine for making supercalendered paper. The move may be just an attempt to prevent an increase in the mill’s power rates, though every Canadian mill that sells primarily to the U.S. is on shaky ground these days because of currency rates. (For more about the mill's up-and-down fortunes, see Port Hawkesbury's Near-Death Experience.)
NewPage Corporation has proven to be one of the sleaziest companies that i have ever worked for. After members of the senior leadership team mentioned in "town hall' meetings that all of the mills, including the two paper machines in Port Hawkesbury, would be kept running even if bankruptcy was declared. They even referred to the machines in Port hawkesbury as the "crown jewel" of their organization. Now they've announced closure of the two paper machines here in Port Hawkesbury. So, we were basically lied to.
ReplyDeleteOn another note, there is a NewPage Severance Policy for salaried employees accessible from the NewPage home website. We were told during the meeting in which the announcement re closure was made that we would not be receiving severance...how ethical or moral is this? And in the meantime, salaried employees have been flooded with emails urging them to complete, as part of their conditions of employment, an ethical and morals agreement. When Newpage has to pay former members of the senior leadership team like David Prystash $600,000 to basically go away and keep quiet, then it would seem apparent to be that Mr. Prystash has inside information on the inner workings of the senior leadership team that prove that they are less than honest, trustworthy, ethical and moral in their dealings with customers and employees. I've read a previous artice on dead Tree Edition where a former customer was congratulated for finally becoming "NewPage" free....I can understand this now and wholeheartedly agree that all companies buying paper from NewPage should really take a long hard look at this company. You do not want to be doing business with a company that has been as dishonest and unethical as Newpage has proven to be.
It is real funny that the port hawkesbury mill had been making a low grade paper the last year.Fourty percent was B grade so it would not compete with there coated paper in there U.S. mills. Thats how you bury a world class super calander paper machine. Thanks for nothing newpage
ReplyDeleteAdd larry cannon to the list of sleazy suits at Newpage. It was he who orchestrated the give away "deal" of PM1 to Bill King of Graphic Comm in the states. Instead of actually working, he gave away the profits and allowed a yank company to make all the profits while he golf three times a week.
ReplyDeleteNew Page is a textbook illustration of what happens when a paper company gets taken over and run by a hedge fund. Watching these clowns buy up, slice,dice and sell off all of the assets of their portfolio of mills is like watching wall street version of Storage Wars.
ReplyDeleteI am from New England and I think within the next 10 years the only coated paper mill left in Maine will be Sappi in Skowhegan. Its run by a company whose only objective is to make paper profitably - they understand the industry.
While I am certainly no fan of paper companies being run by private equity groups (ruled by the quest for cash), there can be positives such as the case with Apollo/Verso. They continue to make balanced attempts to keep their assets profitable and relevant. Ideally they will come to the rescue for some of the New Page mills on the brink of closure. I have the same hope for Abitibi picking up Hawkesbury - the potential for that mill with focused leadership is huge.
ReplyDeleteThe leadership team at New Page has consistently made decisions at most sites based solely on cash flow and generating quick revenue for Cerebus with no plans for the long term - the results of that strategy are evident today.
With that said, the industry as a whole continues to shrink and mills will continue to close over the next decade. The recent UPM closures in Europe, the idling of Hawkesbury, and the recent printer closures and earnings reports are further indications of this trend.
Graphic's paper mill and printing plants will continue to close in Maine as well as the rest of the US. Survival will come to those spending focused capital for the future, maintaining their assets consistently, having versatile brand strategy, and maximizing customer satisfication. The level and timing of closures will be dependent on the demand of advertisers and consumers. Demand will continue to drop, but the rate of reduction is still the big question.
I feel for the employees of the recently shuttered mills and printing plants as well as those in the midst of uncertainty as New Page flounders in the mess they've created. For those mobile enough seek employment in other mills, the opportunities are there for those patient and persistent, as demographics drive the need for help at every level in most mills. Good luck to all affected by these ugly times.
Just have to say that it's unlikely the decision to sell out the machine capacity came from field sales (Larry Cannon). Credit or blame the former CEO, Rick Willet, with that idea.
ReplyDeleteSucker
ReplyDeleteThey told us Wed. $660MM operating loan was already a lock so we could operate Wed. forward as usual. Turns out they were a day ahead of themselves! What else won't be quite what they told us?
Went thru the Mead-Westvaco merger. Only the guys at the top come out better. It's all a good ole boys club where anti trust does'n mean squat!