The COVID-19 pandemic has led to layoffs and furloughs across industries, with Verso Corporation and Managed Resource Connections, Inc. (MRCI) the latest companies to layoff people in Minnesota.
Verso, which supplies graphic and specialty papers, packaging papers and pulp, announced Tuesday it is taking action to offset "unprecedented market decline due to the COVID-19 pandemic and to reposition the company for future success" by indefinitely idling its paper mills in Duluth and Wisconsin Rapids, resulting in about 1,000 people being laid off, including 225 people who work at the Duluth plant.
"It is critical that we maintain a healthy balance sheet and focus on cash flow, while balancing our supply of products and our customers' demand," President and Chief Executive Officer Adam St. John said in a statement. "After a comprehensive review of post-pandemic demand forecasts and capacity, we made the difficult decision to idle the Duluth and Wisconsin Rapids mills. We expect the idling of these facilities to improve our free cash flow. The sell through of inventory is expected to offset the cash costs of idling the mills."
The Ohio-based company said it decided to reduce its production capacity due to the "accelerated decline in graphic paper demand resulting from the COVID-19 pandemic," noting the stay-at-home orders have "significantly reduced" the use of print advertising in industries such as retail, sports, entertainment and tourism.
"The decision to idle the Duluth Mill was an extremely difficult one, and we’re mindful that it touches many families in the community. As always, our employees and their safety is our highest priority and primary focus during the idling of the mill. Verso is committed to treating all employees with fairness and respect, and will make every effort to assist them as much as possible during this difficult time," Verso said in a media statement emailed to BMTN.
Verso says it is exploring viable and sustainable alternatives for both mills, including restarting if market conditions improve, marketing for sale or closing permanently.
MRCI lays off 300
MRCI CEO Brian Benshoof said in a WARN letter sent to the Minnesota Department of Employment and Economic Development (DEED) that after reviewing its options and the uncertainty of the ongoing pandemic, MRCI has decided it can "no longer guarantee the re-employment of the 300 staff who were laid off starting in mid-March."
Mankato-based MRCI has facilities in Chaska, Fairmont, Mankato, New Ulm, Owatonna, Rosemount and Shakopee. The company, which had a staff of more than 400, focuses on rehabilitation of adults through innovative employment programs, the company's website says.
"This letter will serve as our official notice that MRCI is engaging in a substantial layoff of many employees due to the unforeseeable business circumstances due to the coronavirus pandemic and the various executive orders resulting in the closure of the centers where MRCI provided services to its clients and individuals with disabilities," the letter states. "MRCI is doing so in an attempt to preserve its infrastructure and the ability for it to resume services for individuals with disabilities in our community when it is safe to do so."
Benshoof writes in the letter that MRCI has "experienced many unforeseeable business circumstances to the coronavirus pandemic" and despite exploring other options, the company's efforts have been "less successful than we had hoped."
In addition to that, MRCI said it learned "unexpectedly" that the Minnesota Department of Human Services and Minnesota Department of Health will be making a decision as to when it can resume licensed services, noting it expects that to resume "very slowly" but it's unclear when that could happen.
The unemployment rate in the United States jumped from 4.4 percent in March to more than 14 percent in April (the first full month of COVID-19 impacts) and it was 13.3 percent in May, the federal Bureau of Labor Statistics shows. The unemployment rate in Minnesota in April was 8.1 percent, up from 2.9 percent in March. Minnesota data for May has not been released, DEED statistics show.