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Louisiana-Pacific Announces Shutdown of Ketchikan Pulp Mill

October 7, 1996 GMT

KETCHIKAN, Alaska (AP) _ Louisiana-Pacific Corp. said it will close its money-losing pulp mill here, throwing approximately 500 people out of work and costing the company $188 million.

The company blamed the mill’s continuing losses and a dispute with the Clinton administration, resulting in the government’s refusal to restore the original terms of its timber supply contract.

The mill, run by Louisiana-Pacific subsidiary Ketchikan Pulp Co., gets its timber supply from the Tongass National Forest. The company had sought a 15-year extension and some adjustments to its long-term Tongass timber contract _ a proposal rejected by the administration.

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``In addition to current operating losses of between $5- and $10 million a month, we were required to spend more than $2 million a month to accomplish environmental and productivity upgrades,″ said Mark Suwyn, chairman and chief executive officer.

Louisiana Pacific said it will reserve $188 million in the third quarter to cover the anticipated costs of the shutdown including severance pay.

Louisiana Pacific initially had hoped that Congress would rewrite terms of the timber contract to provide a better and less costly timber supply and extend it to 2019 so as much as $200 million could be invested to for environmental and safety improvements at the plant.

Target date for the closure is March 24.