Smurfit-Stone employees in Frenchtown notified of mill’s evaluation- Smurfit-Stone says 1,400 jobs to be cut

Smurfit-Stone Container’s Frenchtown mill has six to 12 months to improve its efficiency, safety record and teamwork and prove its worth to the corporation, general manager Bob Boschee said in a letter this week to the mill’s 500 employees.

By SHERRY DEVLIN of the Missoulian

"We should clearly recognize the seriousness of the challenge that we face, and the importance of the commitment we must make to improve," Boschee wrote, "but we have met this challenge in the past and we should expect to do so again."

In an interview Wednesday, Boschee said demand for corrugated packaging is down about 5 percent, primarily because so many American manufacturers have moved their plants – and, therefore, their demand for packaging – overseas.

Because the Frenchtown mill produces Kraft linerboard, which is used to make corrugated containers and linerboard boxes, it is affected by the shift in manufacturing overseas, he said.

"The manufacturing sector of our economy produces goods which need to be packaged and transported," Boschee said. "If those goods are not produced in the United States, then they are not being packaged in the United States."

Boschee said the leadership of Smurfit-Stone’s mill division visited the Frenchtown mill at his invitation earlier this month.

The purpose: "to allow us to share some of the achievements that we have accomplished in our mill during the past year or so, and to present some plans and proposals that we have been working on to improve our mill efficiency and productivity."

During the visit, Boschee said, the leadership team discussed the company and the Frenchtown mill.

Because of the continuing decline in demand for corrugated packaging, and because there is no positive change expected in the near future, Smurfit-Stone is developing a plan to address the overcapacity that exists within the company, Boschee told employees in his letter.

"Our division is considering various options that will put our overall system of mills back into balance," he wrote. "One of these options is clearly to reduce capacity by discontinuing operation of some of the division’s facilities."

The Frenchtown mill is part of that analysis.

"Based upon our high cash costs, compared to other mills in the division, and other issues facing our mill, we will be included in the options being considered to restructure our company for the future," Boschee wrote. "Therefore, we are again being challenged to examine our mill to seek opportunities to improve our overall operation and cost effectiveness."

Boschee would not provide a copy of the letter to the Missoulian, saying it was a private communication with his employees.

Employees were the source of the letter obtained by the newspaper.

The Frenchtown mill must improve in three areas over the months to come, Boschee said, both in the letter and in the telephone interview.

First, the mill must improve its safety performance, he said.

"Although we have improved our safety performance, we still experience numerous injuries that require treatment which is significant enough for them to be considered OSHA recordable incidents," Boschee wrote. "This is not acceptable. It is essential that we continue to explore the opportunities that we have to achieve an injury-free workplace at Missoula."

Second, the mill must improve its efficiency. The overall machine efficiency, which measures how effectively the mill operates, averages about 90 percent at Frenchtown, Boschee said.

But the average in Smurfit-Stone’s division is 93 percent, and an efficient mill of Frenchtown’s size producing Kraft linerboard should achieve an efficiency rating of 94 percent to 95 percent.

Thus Boschee’s call for every department to reach an overall machine efficiency of 93 percent.

Operating costs must drop as well, by about $15 to $20 per ton, according to the letter.

And, thirdly, the mill must demonstrate its teamwork and commitment to excellence, he said.

"Due to current circumstances, some of which may be out of our control and some of which are within our control, we are again in a position to determine our future as a mill in the Smurfit-Stone organization," Boschee wrote. "In the final analysis, our real challenge is to secure the future of the Missoula mill once and for all."

In the interview, Boschee said it would be inaccurate to characterize the Frenchtown mill as "a target for a shutdown, any more than it would be inaccurate to say that any mill would never be considered for some adjustment."

Already, the mill has shut down one of its three paper machines. Frenchtown’s 500 workers produce about 1,600 tons of Kraft linerboard per day.

In St. Louis, the corporation’s director of public relations said all of Smurfit-Stone’s mills face the same challenge.

"All the mills and all the packaging plants are going through the same exercise," said Tom Lange. "Where can we save costs? Where can we be more efficient? Where can we improve safety? Everybody is always challenged with that.

"More and more manufacturing is going overseas," Lange said, "and the packaging goes with it."

Smurfit-Stone intends to respond by becoming more creative in the packaging it provides customers, by aggressively seeking new customers throughout North America and by becoming ever-more efficient, he said.

The corporation intends to remain focused on North America, Lange said, but it may also be forced to look offshore.

"We might look into an option of some sort of presence in Asia, for example," he said. "We have to keep our eye on what’s going on over there, but right now the focus is still on the North American packaging market."

Lange did say that Smurfit-Stone’s challenges are "short term" – in the next six to 12 months.

"We have to address them right now," he said. "We can’t accomplish X, Y and Z in two years. It’s got to be in a few months. Manufacturing in general has slowed, so we have to address it right away to stay at a pace where we are a profitable organization."

Is the Frenchtown mill targeted for possible closure? "To say there is a list of plants or mills that are targeted would not be accurate," Lange said. "We don’t speculate about what mills might be closed. We are always evaluating all of our facilities."

Reporter Sherry Devlin can be reached at 523-5243 or at [email protected]

http://missoulian.com/articles/2003/10/23/news/local/news03.txt

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Smurfit-Stone says 1,400 jobs to be cut

Chicago Tribune staff, wire reports

Smurfit-Stone Container Corp., the nation’s largest packaging company, said Thursday that it plans to cut 1,400 jobs in Florida, Philadelphia and Canada over the next 18 months because of falling demand for its products and competition from overseas companies. The Chicago-based firm also said it’s recording a third-quarter pretax charge of $60 million, or 15 cents a share, to set aside money for potential legal judgments related to price-fixing lawsuits. It also expects $100 million more in expenses for the fourth quarter related to the job cuts.

Copyright © 2003, Chicago Tribune

http://www.chicagotribune.com/business/chi-0310240234oct24,1,5801364.story?coll=chi-business-hed