CHIP MILL SUSPENDS OPERATION AT PORT

Canal Wood Industries, operating as Missouri Fibre Corp. at its $13 million chip mill here, is shutting down the Cape Girardeau plant indefinitely.

The closing will affect as many as 30 workers, 15 at the plant, located at the Southeast Missouri Port Authority on the Mississippi River between Cape Girardeau and Scott City, and another 15 lumber buyers.

Plant manager Mike Gill's announcement Wednesday was short and to the point.

"Due to market conditions, we're suspending operations," said Mike Gill, plant manager. "We'll keep people here until we clean up the products we have on the mill site. We hope to be closed by Feb. 16."

Westvaco, which produces paper at its Wickliffe, Ky., mill, purchased some of the chips from the local plant, but Canal Wood exported the majority of its chips to overseas markets.

Dan Overbey, the port's executive director, said the mill's closure is a disappointing loss. Canal Wood has a long-term lease at the port.

"They have been a good client here," Overbey said. "Hopefully, the market will get better and the company will reopen. Canal Wood has been one of our largest customers at the port. They run a clean operation here."

Meanwhile, another chip mill in the state, not associated with Canal Wood, continues operation.

Willamette chip mill recently sent out letters to employees and wood suppliers that the company at Mill Spring, Mo., will remain open.

"There had been some talk that the company was planning to close," said spokesperson Cathy Dunn.

The Mill Springs operation has more of a domestic market.

Westvaco, a major producer of packaging, paper, and specialty chemicals, with customers in more than 70 countries, reports that a softening U.S. economy has resulted in reduced production. That caused the company to buy fewer wood chips, and a similar slowdown has been occurring overseas.

"We're seeing more than just a seasonal weakness in economically sensitive markets," said John A. Luke Jr., chairman and CEO of the New York-based company. "That includes printing and direct mail markets for coated papers, and certain folding carton markets we serve."

"The official earnings report is not due until late February," said Luke. "But we are expecting earnings to be in the range of 30 to 35 percent lower than the first quarter of last year."