"The purpose of this restructuring is to optimize productivity in our corrugated product plants in Ontario and enhance customer service. These steps are in line with our regional development strategy, which includes the recent acquisition of three Bird Packaging plants," explained Marc-André Dépin, president and CEO of Norampac.
As part of the strategic plan set in motion by Cascades, this consolidation aims to improve the group's profitability in an increasingly competitive market. This decision is another step in a series of initiatives taken over the past years that seek to modernize the company's assets. With this goal in mind, Cascades announced in June 2011, the construction of Greenpac Mill LLC, a lightweight containerboard mill located in Niagara Falls, N.Y., USA.
With this investment of more than $30 million, Norampac aims to modernize manufacturing equipment in the four Ontario plants and increase production capacity, profitability, as well as productivity.
"We are investing for the future by taking the necessary measures to strengthen our leadership in the market and demonstrate our commitment to our clients," Dépin said. "The Vaughan, St. Mary's, Etobicoke, and Belleville plants have the ideal infrastructure in which to incorporate new equipment with cutting edge technology, ranking them among the most competitive in Canada. These investments will enable us to provide clients with a wider variety of packaging products, increase the speed of execution, and improve the quality of our products and services," he added.
In a competitive packaging market, which is strongly influenced by the strength of the Canadian dollar and enhanced competition from U.S. manufacturers, Norampac has no choice but to reduce its operating costs through the closure of three corrugated product plants in Ontario, the company noted.
"The decision to close the OCD, North York, and Peterborough plants can be explained by a decrease in demand in the Canadian and North American corrugated products industry dating back to the beginning of the recession, as well as the large number of Norampac converting plants in Ontario. These factors, combined with adverse economic conditions, have forced us to restructure our assets to be more competitive," Dépin noted. The three operating units are scheduled to close at the end of 2012.
The OCD, North York, and Peterborough plants are specialized in converting corrugated products. In preparation for the closures, production from these plants will gradually be redirected to other Norampac converting plants in the province, which will continue to supply the plants' clients with the same quality and services. Many of the 200 employees from the three plants will have the opportunity to transfer to other Norampac plants in Ontario.
"As was the case in Québec in 2010 and in the northeast of the U.S. in 2011, the consolidation of our Norampac operations in Ontario, to which we are adding significant investments to modernize our facilities, will allow us to optimize our assets in this region and improve Cascades' performance," Dépin said.
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