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Downtime a possibility at Clearwater Paper's Lewiston, Idaho mill

LEWISTON, Idaho (From news reports) -- Some of Clearwater Paper's tissue operations, including those in Lewiston, might be temporarily idled in upcoming weeks as the manufacturer works to match production with volatile demand.

That possibility surfaced Tuesday 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 on Tuesday in a conference call for stock market analysts broadcast on the internet.

"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," Kitch said.

Kitch didn't provide specifics such as how long any downtime might be or how many people might be involved.

"I don't have particulars to share," said Clearwater Paper spokeswoman Shannon Myers. "The downtime could be across our tissue sites, so that includes Lewiston."

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 from its folding carton customers and a recovery in the food service segment as it implemented previously announced price increases, Kitch said.

Clearwater's paperboard is made into packaging for goods such as food, medicine and cosmetics as well as paper dishes and containers.

The tissue side of the business has encountered a number of challenges as the COVID-19 pandemic continues, Kitch said.

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, he said.

"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."

Industry data, which was largely consistent with Clearwater Paper's order patterns, indicates that consumer purchases measured in dollars bottomed out in March, he said.

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.

Consumers, Kitch said, he 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.

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