Kruger Products starts up $575M tissue plant, announces additional capacity

Kruger Inc., which turns renewable resources into high-quality, sustainable essentials for everyday life, announced three new developments for the tissue segment in the last week of February 2021:

$240M EXPANSION PROJECT

The first was about Kruger Products, which will expand operations in the Sherbrooke region with a $240 million project, where it will become a major production center for toilet paper in Quebec.

The plan to expand operations will be to add an LDC (light dry crepe) tissue machine which is one of the most widely used tissue manufacturing technologies in the world, and two converting lines to be built and commissioned in the next three years. Further into the future, new LDC machinery will increase annual production capacity by at least 30,000 metric tons of paper products for the Canadian and North American markets.

In addition to creating 169 jobs, including 141 at Kruger Products, the expansion project will bring significant benefits to the region in terms of direct expenditures estimated at $110 million and about 410,000 man-hours of construction work.

With this capacity it will be possible to expand product offerings and increase market share, including toilet paper, paper towel and facial tissue for home and out-of-home use. These are available to consumers under favorite brands such as Cashmere®, SpongeTowels®, Scotties® and Purex® in Canada and White Cloud® in the US.

KRUGER SPECIALTY PAPERS: $146.1M IN FINANCIAL CONTRIBUTIONS

The second announcement was about the Specialty Papers division which will receive financial contributions of $146.1 million.

Kruger Speciality Papers will receive a financial contribution of $88.1 million from its partners to maintain its assets during the pandemic.

These financial contributions totaling $146.1 million will allow Kruger Speciality Papers to explore future opportunities for the Brompton Mill, which has been partially closed since April 2020 due to unfavorable market conditions during the pandemic period. Also included in the plans is the resumption of the recycled pulp mill, which would result in the recall of 28 employees. Meanwhile, the Wayagamack mill continues its transition to specialty products, such as tissue paper for the labeling industry, high gloss paper, and single-sided coated paper used for various packaging and printing applications.

TAD TISSUE PLANT START-UP: MISSION ACCOMPLISHED

And the third announcement was about Kruger Products’ celebration that it has completed the successful start-up of its state-of-the-art manufacturing facility in the Brompton neighbourhood of Sherbrooke, featuring Canada’s largest and most modern tissue paper machine (TAD) after investments of $575M.

These investments and financial contributions total $961.1M and will lead to the creation and retention of 376 jobs in the Sherbrooke region and protect 267 jobs related to the Kruger Wayagamack plant in Trois-Rivières, Quebec.

The new investments total $386 million, which in part were financed by the Government of Quebec through Investissement Québec which: 1) provides $165 million in loans; and 2) contribute, as a partner, $34.8 million in the recapitalization of Kruger Speciality Papers LP.

“Our investment in Kruger will allow the company to modernize and strategically reposition the Brompton mill. The manufacturing complex will now focus on the rapidly growing toilet paper market. Part of our pulp and paper industry needs to modernize and renew its infrastructure in all of our regions. We need more projects like this to revitalize our pulp and paper industry and continue to promote economic development in Quebec,” said Pierre Fitzgibbon, Quebec’s Minister of Economy and Innovation.

Kruger Products also celebrated the completion of construction and successful start-up of its state-of-the-art plant in Sherbrooke, with the largest and most modern air-drying toilet paper (ADT) machine in Canada. The Sherbrooke facility also comprises three conversion lines that have been successfully commissioned.

“I congratulate everyone involved in the construction of our new plant in Sherbrooke,” said Dino Bianco, CEO of Kruger Products, “Considering the circumstances of the pandemic, it was an incredible feat to complete this major project on time and within budget. I am very proud to be part of this organization and to be surrounded by dedicated and resourceful people who thrive on innovation and are committed to excellence. On behalf of the entire team at Kruger Products, I would like to welcome and congratulate the 180 new employees who have joined our team.”

The TAD toilet paper machine will increase annual production by 70,000 metric tons of toilet paper and paper towels for the Canadian and North American markets.

The Quebec government, through Investissement Québec, also supported the construction of the new tissue plant by providing a $105 million loan to Kruger Products Sherbrooke Inc. in 2018.