WACO, Texas (From news reports) -- A local diaper-making plant that employs 145 people and is the ninth-largest taxpayer in Waco has announced it will shutter its plant on Texas Central Parkway as a cost-cutting move, probably by June of next year.
Domtar Personal Care occupies the sprawling 303,000-square-foot building on Texas Central Parkway and pays property taxes to the city of Waco, McLennan County, the Midway Independent School District and McLennan Community College, according to the McLennan County Tax Office.
Company representatives met with Domtar employees Thursday morning to break the news about the closing, Domtar spokeswoman Tammy Waters said. The employees will receive severance packages and opportunities to work in other Domtar-owned facilities, Waters said.
"We have a great team here in Waco and we hope to provide as much assistance as possible during this difficult time of transition," she said. "We're closing due to what has become a challenging business environment that includes the rising cost of raw materials and a falling infant birth rate. We've had to adopt a margin-improvement plan."
Domtar, which has corporate offices in North Carolina, South Carolina and Canada, employs 10,000 people worldwide, operates 13 pulp and paper mills and 10 "converting" mills in North America and six personal care plants in North America and Europe, including the Waco facility, according to a company fact sheet. Personal care products for adults and infants make up 12 and 6 percent of its business, respectively, and it ships almost 5 billion units to customers in more than 50 countries each year.
Domtar's pulp and paper businesses "will enter 2019 in the best position in recent years," but its personal care line is hurting, President and CEO John Williams wrote in a press release on the company's third-quarter financial report.
"Escalating raw material costs continue to compress our margins in adult incontinence and baby diapers," Williams wrote. "As a result we are accelerating the pace of actions that will improve margins ... with a plan that is expected to generate annual benefits of approximately $25 million to $30 million, with full effect by the end of 2020. This will include headcount reductions, the permanent closure of our Waco, Texas facility, and commercial and operational initiatives."
Domtar enjoyed total sales of $5 billion last year, according to the fact sheet.
Domtar in 2013 bought out Georgia-based Associated Hygienic Products, which occupied the facility at 2101 Texas Central Parkway. Associated Hygienic Products, which employed 250 at the time, entered the Waco market in 2009 and had received tax breaks and $1.7 million in economic development funds from Waco and McLennan County to expand the plant on two occasions.