Clearwater Paper might temporarily idle some of its tissue operations in upcoming weeks, including those in Lewiston, as the manufacturer works to match production with volatile demand. There is no specifics such as how long any downtime might be or how many people might be involved.
That possibility surfaced when the company reported its financial results for its third quarter, which ended Sept. 30. The business earned $1.9 million in the third fiscal quarter (July, August and September), compared with earning $21.4 million during the same time last year. In the first nine months of this year, Clearwater Paper has lost $37.6 million, compared with making $54.5 million in the same period in 2020.
Demand in the last part of this year is anticipated to be flat compared to the third quarter and there’s a high degree of uncertainty in consumer and retailer behavior heading into the holidays, said Clearwater Paper President and CEO Arsen Kitch. “We will continue to selectively take asset downtime as needed to manage inventories and our cost structure, particularly while pulp prices are at elevated levels”, said Kitch.
Reducing production with downtime is an approach that Clearwater Paper used in April, May and June, its second-quarter, when the company recorded a net loss of $52 million. What sites and the number of employees involved in the downtime then were not made public.
The company’s tissue operations that make store-brand toilet paper, paper napkins, paper towels and facial tissue are one of its two sectors. Its other sector, paperboard, experienced strong demand in the third quarter.
Typically, Clearwater Paper’s tissue is purchased by consumers who use it in their homes. Demand in that market slipped in the first half of this year when vaccines became available and pandemic restrictions loosened. “Consumers started to return to a more normal lifestyle”, Kitch said. “This led to a reduction of at-home tissue purchases and destocking of consumer pantries.”
There was a demand uptick in August related to the delta variant, followed by a return to more normal order patterns in September and another rise in late October. Kitch suspects customers are stocking up heading into the holidays after hearing about supply chain issues.
“This volatility is a reminder of the unpredictable nature of our market during COVID,” he said.