Shelby, North Carolina, USA 26 March 2019 -- (From news reports) -- As Clearwater Paper's expansion in Shelby draws closer to completion, the project has come in at a much higher budget than originally anticipated.
The total cost of the project is expected to cost around $420 million, which is $80 million higher than originally estimated when the project was announced in 2017.
According to Clearwater Senior Vice President and Chief Financial Officer John D. Hertz, extra investments have been made in the project to overcome reoccurring challenges like inclement weather, the high cost of building materials and a tight construction labor market.
"As the project is coming to a close, our focus has been to make necessary investments to hold the timeline as best we could to meet our customer commitments," Hertz said in a conference call for stock market analysts last week.
The Clearwater facility will include the company's newest, state-of-the-art tissue machine.
Company officials expect to get the machine up and running sometime in the second quarter of the year, slightly behind its original estimation of quarter one in 2017.
Linda K. Massman, Clearwater president and CEO, said the slight difference stems from the semantics of how the company is starting up the machine.
"We're really taking a very thorough and thoughtful approach to methodically commissioning all of the systems and ensuring that they work well together before we begin up the machine," she said.
Clearwater implemented new leadership at the plant to ensure its strategy remains on track to meet customer commitments and service current customer volumes. Massman said all of the 2019 production from the new machine will serve its existing customers.
Clearwater has seen its share of the tissue market down in recent years, largely due to ultra-quality capacity constraints.
According to Massman, 2019 will be a transitional year for Clearwater as the company makes investments through ongoing headwinds and ramps up production in Shelby.
Officials with the company are optimistic about the impact the Shelby plant will have on its ultra-capacity constraints.
"We have been challenged by balancing our fixed ultra-quality capacity with growth in our existing customer base and the addition of new customers," Massman said. "So we are glad our new ultra-capacity in Shelby will come online shortly."
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