PORTLAND, Maine — Sappi Ltd. plans to spend $165 million on its No. 1 paper machine at its Skowhegan mill, which company officials said will increase the machine’s overall capacity and ability to produce consumer packaging products by April 2018.
The South Africa-based Sappi announced approval of the investment Tuesday as part of its long-term strategy during its fourth-quarter earnings call with investors.
The mill has primarily focused on declining printing and publishing markets while its Westbrook mill focused on textured paper that could be used to impress patterns on other materials.
Mark Hittie, director of the company’s packaging brands, said the investment is part of the company’s effort to have one quarter of its earnings come from packaging and specialty products — paper used for things such as soup can labels or folding cartons — by 2021.
“Clearly, $165 million is a significant investment,” Hittie said in a telephone interview. “It positions the mill for long-term success, and it creates a balanced portfolio of products in growth markets that the mill could support for the long-term.”
The company said the move is part of its Vision2020 strategy, which seeks to make it “a diversified woodfibre group” with an expanded portfolio of products.
The company wrote in its earnings report Tuesday that graphic paper markets remain weak in Europe and the United States, but prices were leveling off.
“Demand for speciality packaging grades remains robust, and we will be undertaking a number of significant projects over the next two years in order to increase our production capacity in these grades while maintaining our focus on being a leading coated paper producer in both North America and Europe,” the company wrote to investors.
Hittie said the investment decision is a “vote of confidence” in the mill that was once was the largest in the world.
The company said the investment will preserve the roughly 750 jobs at the Skowhegan mill and support a peak of about 500 construction jobs through the upgrade.
John Donahue, the company’s vice president of procurement, said that the investment will mean a short outage in December 2017 and a longer outage in March 2018 before the upgrade enters service in April 2018.
Sappi employs about 1,200 people between its Somerset mill in Skowhegan, its mill and research facility in Westbrook and its inside sales operation in South Portland.