Dive Brief:
- Clearwater Paper announced Thursday it’s restructuring its solid bleached sulfate mill in Cypress Bend, Arkansas. It plans to halve production and reduce the salaried and hourly employee count by about 20%.
- Of the 320 people who worked at that mill, the downsizing affected about 70: Approximately 50 people were laid off, and 20 open positions will not be filled, a spokesperson said via email. The layoffs were slated for this week.
- The company expects the changes will result in $8 million to $12 million of annualized cost savings and won’t affect shipment volumes.
Dive Insight:
Demand for SBS has been under pressure for more than a year due to a market oversupply. Clearwater Paper cited those dynamics as the reason for curtailing production at Cypress Bend.
“We are faced with a supply driven downturn in our industry that is pressing margins and cash flows. We’ve made this difficult decision to improve our operating rates and reduce costs,” said President and CEO Arsen Kitch in a statement.
The shutdown is expected to remove from the market approximately 170,000 tons of SBS, roughly 3.1% of the North American supply, noted Michael Roxland, senior paper and packaging analyst at Truist Securities, in a Friday memo to investors. However, Clearwater’s statement that the curtailment won’t affect shipment volumes raises questions about how many tons of SBS actually will be removed from the market, he said.
Clearwater’s action follows Smurfit Westrock’s February announcement that it would permanently close down one of the machines at its SBS mill in La Tuque, Quebec, and an extrusion facility in Pointe-aux-Trembles, Quebec, that converts material produced on the La Tuque machine. Roxland said that while Clearwater’s Cypress Bend curtailment should further help rebalance the SBS market, the action is said to be temporary and the lost tons therefore might return unless permanently cut or switched to another substrate.
“Our Cypress Bend mill is well invested and cost competitive, and we intend to return the mill to full production in the future when SBS industry conditions improve or through an investment in swing CUK capabilities,” Kitch said in the statement.
While Kitch flagged the possibility of investing in swing capacity for coated unbleached kraft at Cypress Bend, Clearwater paused that very plan in the fourth quarter of 2025. During multiple prior earnings calls, Kitch had discussed the company’s exploration of adding swing capacity at one of its SBS machines — likely at Cypress Bend.
But in November, Kitch discussed how the SBS oversupply was impacting other fiber substrates including CUK, and the company therefore wouldn’t move forward with a machine conversion for the time being.
“We may conclude in the future that this is a good investment, but we’re putting a final decision on hold at this time,” he said during the earnings call. “We remain focused on running all three of our SBS mills, vigorously defending our SBS market share and preserving the strength of our balance sheet.”
In May 2024, Clearwater completed the purchase of Graphic Packaging International’s SBS mill in Augusta, Georgia, for approximately $700 million. Later that year, it sold its tissue business to Sofidel for $1.06 billion. Executives explained that they made these moves to transform Clearwater into a paperboard-focused business, and the company intended to expand its product and substrate offerings beyond SBS.
In February 2025, Clearwater executives announced they would shrink the workforce by 10%, or approximately 200 salaried and hourly employees, throughout the year as part of a plan to cut between $30 million and $40 million in costs. In August, Kitch pointed to ongoing market concerns: “We believe that we’re in an industry down cycle, primarily driven by oversupply. It is difficult to predict when and how the industry will return to a mid-cycle utilization level.”
Regarding the new layoffs in Arkansas, Clearwater said it will work with the union representing employees via effects bargaining and will provide departing employees with severance packages, healthcare subsidies and outplacement services.
During an earnings call in February this year, Kitch reiterated the unfavorable market dynamics, especially for SBS, and the effects trickling to other paperboard substrates. But he cited industry forecasts for SBS demand to grow in 2026.
“We plan to balance Clearwater's supply with demand in 2026, which may include extended curtailments on our assets,” Kitch said. “We will look at our manufacturing assets to determine what actions we can take to reduce our costs further and improve our margins and cash flow.”
During that February call, Kitch also revisited the feasibility study for investing in CUK at Cypress Bend. He noted that the project could provide “an attractive return” but that the company had not made any final decisions.
“I remain confident that this cycle will turn,” he said. “That said, today's margins and cash flow levels are not tenable for us for an extended period. This is a capital-intensive industry, and adequate returns are required to reinvest in these types of assets over the long term.”
