Domtar to slash 625 jobs as it cuts production

By Jonathan Spicer

TORONTO (Reuters) - Domtar Corp said on Thursday it will cut about 625 jobs at mills in Wisconsin and northwestern Ontario as it reduces annual production capacity by about 342,000 tons.

About 500 jobs will be slashed at its Port Edwards, Wisconsin mill, which will close, and another 125 at its Dryden, Ontario mill, where operations will slow.

The fine paper maker said in a statement the consolidation was aimed at improving "competitiveness in the North American market, given continued unfavorable economic conditions and a softening of demand for fine papers."

Spokesman Michel Rathier said the company made some cost estimates for the cuts, but had nothing to provide now.

"All of these numbers will be firmed up as we come closer to the quarterly reporting season," he said.

The Port Edwards mill, which produces uncoated freesheet paper, has annual production of 165,000 tons. It will shut in the second quarter of 2008.

The uncoated freesheet mill in Dryden will undergo "a reorganization of its operations," Domtar said.

The larger paper machine in Dryden will close December 22, while a smaller one will be restarted in January, 2008.

In October, Domtar unit Domtar Inc said it received a notice from Conifex Inc seeking to end a June agreement on the C$285 million ($279 million) sale of its forest products business.

Shares of Montreal-based Domtar dipped 1 Canadian cent to C$7.61 by afternoon on the Toronto Stock Exchange. They were down 11 cents at $7.48 in New York.

($1=$1.02 Canadian)

(Reporting by Jonathan Spicer; editing by Janet Guttsman)