Kruger investing $107M to modernize Quebec operations as paper sales slide

The company plans to eliminate 200,000 metric tonnes of its annual newsprint manufacturing capacity by the time the project is complete

SHERBROOKE, Que.—Falling sales of newsprint and magazine paper are prompting Kruger Inc. to make major changes at three of its Quebec manufacturing plants.

The company, which makes paper, packaging and containerboard, said it plans to invest $107.5 million to retrofit facilities in Sherbrooke and Trois-Rivières, Que.

The investment will allow the company to increase capacity for specialty paper products while winding down production of certain types of publication paper.

Kruger has earmarked the $102.7 million for three separate production plants as well as $4.8 million for its Biomass Cogeneration Plant adjacent to its Brompton Mill.

The company’s Brompton Mill in the Sherbrooke suburbs will receive $47.5 million, while Kruger’s Wayagamack and Trois-Rivières mills will receive $32.9 million and $22.3 million respectively. The money will go toward buying new production equipment, modifying existing machinery and various energy efficiency measures.

To fund part of the investment plan, Kruger has partnered with the Quebec government’s Investissement Québec. The packaging company said Investissement Québec has agreed to contribute loans and loan guarantees totaling $59.8 million. It will also acquire an equity stake in a segment of the company’s business for $44.6 million.

Under the new agreement, Kruger will reorganize the Brompton and Wayagamack mills as well as the Brompton cogeneration plant into an entity known as Kruger Specialty Papers Holding L.P. The business unit will focus on specialty packaging, such as food packaging paper and e-commerce packaging, and be 37.5 per cent-owned by the Quebec government.

Kruger expects the investment project to safeguard 500 jobs across the four Quebec operations as it pivots away from paper.