Smurfit-Stone Container Corp.’s recent decision to close its Frenchtown linerboard plant has resulted in 46 layoffs at Montana Rail Link.
The Missoula-based railroad company announced Wednesday that it has been forced to let go some of its employees and realign its business model because of the loss of its top forest products customer.
The layoffs are effective this week and include 36 Missoula-area positions and 10 other positions across the state.
“The announcement of Smurfit’s closure was a significant blow because they are a client that is very difficult to replace,” said Tom Walsh, MRL president. “Smurfit-Stone was not too long ago our No. 1 customer in terms of revenue, and even with all their reductions last year, they were our No. 4 customer and in 2010 we had hopes they would be increasing their business with us.”
Ever since the papermaking company said it was closing its Frenchtown plant, MRL’s top officers have been putting pencil to paper trying to find new ways to keep the company healthy and vibrant without having to lay off employees.
Despite their Hail Mary efforts, and faced with the closure of not just Smurfit, but the shutdowns of the Plum Creek mill in Pablo and the Stimson lumber mill in Bonner last year, the company must now cut its staff to 900.
“We have seen these turbulent times continue to plague our customers as our on-line customer traffic has dwindled from 82,000 loads in 2006 to 53,000 projected loads in 2010,” Walsh said. “At one point in our short history, forest products made up 34 percent of our total on-line loads; forest products in 2010 are expected to be less than 6 percent.
“As our customers close plants and reduce production, our need for rail cars also lessens,” he said. “Our freight car fleet of 2,200 not long ago is now in the process of being reduced to a mere 600 over the next several months.”
The 46 MRL employees affected by Wednesday’s announcement include administrators, train crews, mechanics and railroad maintenance experts, who on average earned a $50,000 salary, Walsh said.
“The reductions are not a reflection on any individual’s performance, but rather on our new business needs,” Walsh said. “This has been a very difficult thing for our company to do, and we don’t normally have these kinds of things happen.
“But the events around us are so real and so stark and so massive, they have a significant effect on our business, and unfortunately, it’s forced us to take some serious action.”
Reporter Betsy Cohen can be reached at 523-5253 or at email@example.com.