Cascades, a Canada-based firm that produces paper from recycled fibers, will close its Kraft paper manufacturing plant in the East Angus, Québec, effecting around 175 employees.
The decision to close the plant, which will be effective from 3 October 2014, came as the company failed to come to an agreement regarding the plant's sale.
The company was also unable to handle the recent unfavourable market conditions.
Cascades purchased the plant in 1983 and made investment three years ago to shift production process from kraft pulp to recycled fiber.
Cascades Specialty Products Group president and chief operating officer Luc Langevin said with the arrival of new competitors that convert newsprint paper machines to produce kraft paper, and the ongoing weakening of market conditions for its products, the plant has not managed to maintain a competitive edge in the market despite significant investments and serious recovery efforts.
"After several months of ongoing efforts on the part of buyer Gino Lévesque, the Québec government and Cascades to come up with a financial package, the project was abandoned because of a lack of new investors. With the failure of the turnaround project and the loss of numerous key employees, today we are forced to announce the end of these activities," Langevin added.
Cascades president and CEO Mario Plourde said since the company's 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.
"Following today's announcement, Cascades will assume all of the plant's responsibilities, notably the employee pension plan," Plourde added.
Thanking the employees' provisional committee, the buyer and the Government of Québec for working towards the project, the company assured that the closure of the plant will not affect its coated boxboard manufacturing plant located in East Angus.