Canadian recycled paper and packaging company Cascades has announced plans to shut down its kraft paper manufacturing activities in East Angus, Québec.

The company cited unfavourable market conditions and the failure of discussions concerning the plant’s transfer and turnaround as reasons for the closure, following which it plans to withdraw from the kraft paper sector definitively.

Set to come into effect by 3 October 2014, the move to shut down the plant acquired by Cascades in 1983 is expected to affect around 175 employees.

Cascades specialty products group president and chief operating officer Luc Langevin said that the company has been forced to announce the end of activities due to the failure of the turnaround project and the loss of numerous key employees.

"With the arrival of new competitors that convert newsprint paper machines to produce kraft paper, and the ongoing weakening of market conditions for our products, the East Angus plant has not managed to maintain a competitive edge in the market despite significant investments and serious recovery efforts," Langevin added.

Cascades president and chief executive officer Mario Plourde said that the company will assume all of the plant’s responsibilities, notably the employee pension plan.

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"Since our strategic orientations are focused on growth in the packaging, tissue paper and recovery sectors, it became impossible to keep the plant open with its inability to regain profitability," Plourde added.

In order to assist the employees affected by the closure, the company will relocate personnel to other units and also work with the union and governments to reduce the impact of the announcement on workers and the community.

The closure announcement does not concern the coated boxboard manufacturing plant located in East Angus.

Image: Following the closure of the kraft paper plant the company is withdrawing from the sector definitively. Photo: courtesy of Cascades inc.