Packaging Corp. about to close Windsor plant

WINDSOR – A longtime Windsor employer is shutting its doors, apparently a victim of the economic slowdown in general and the shrinking presence of nearby Kodak in particular.

Company officials at Packaging Corp. of America, 1201 Cornerstone Drive, declined to comment on the closure of the corrugated cardboard box manufacturing site that once employed about 130 people. Multiple phone calls seeking comment from PCA’s corporate office in Lake Forest, Ill., were not returned.

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The company did send a letter to Windsor Mayor John Vasquez notifying the town that it would “permanently close in its entirety” the box plant and that final cleanup of the 146,000-square-foot facility would take place by Nov. 30.

The letter said the company would provide severance pay to all hourly and salaried employees at the Windsor plant. About 50 employees were still working at the plant in mid-summer, but there are now only a handful still at the site as the final cleanup continues.

Kelly Arnold, Windsor town manager, said he spoke to a company official in Illinois who said the plant was underused and was being closed in a nationwide consolidation effort.

PCA has four paper mills and 68 corrugated product plants in 26 states, including two others in Commerce City and Northglenn.

“When I talked to their headquarters as to the reason for closing, they said it was the level of work with Kodak, which was their primary client,” Arnold said. “They are consolidating throughout the country.”

Survived 2008 tornado

The PCA facility, located about a mile west of Kodak, was built in 1986. The plant was seriously damaged by the May 22, 2008, tornado that struck Windsor but continued to operate while repairs were made.

The facility, which sits on 13 acres just north of Water Valley, supplied cardboard boxes for Kodak and a host of other clients, including New Balance shoes, Motorola cellphones and Hallmark decorative shipping boxes. As recently as 2007, the facility added $5 million in new equipment in anticipation of new contracts totaling $12 million.

But Kodak’s declining manufacturing output due to the shift from film to digital photography meant a declining workload for PCA over the last few years.

During its peak in the 1980s, Kodak employed about 3,500. In 2007, Kodak spun off its health-products business into Carestream Health Inc., with each company employing about 800.

Carestream now employs about 450 while Kodak is down to about 360 workers. Earlier this year, Kodak announced it would sell three buildings on its Windsor campus and consolidate its operations in the remaining buildings.

With no buyers for the three vacant buildings, Kodak is now planning to demolish them and a fourth building in a cost-saving move, according to Chris Veronda, a Kodak spokesman. Veronda said the demolition is under way.

“We’re looking to demolish them over the next three to four months, finishing early next year,” he said.

$9.4 million sale price

The PCA facility is for sale at $9.4 million, or $64.50 per square foot, according to CB Richard Ellis, the Denver commercial broker handling the sale.

As a company, PCA has been having a good year, with Forbes Magazine recognizing it as one of the Top 100 Most Trustworthy Companies in the nation in April.

In May, the company was recognized as one of the safest places to work by the Fibre Box Association and the Association of Independent Corrugated Converters, with the Windsor plant cited as one of 14 PCA plants out of 138 that had zero safety incidents in 2009.

In July, PCA reported its net sales for the second quarter of 2010 were $615 million, up 12 percent over the same quarter in 2009. PCA is the fifth-largest producer of containerboard and corrugated packaging products in the U.S. with sales of $2.15 billion in 2009.

On Sept. 1, PCA (NYSE: PKG) announced its board had approved a quarterly dividend of 15 cents per share on its common stock, which would be paid on Oct. 15.

The Windsor PCA plant saw its employee numbers steadily decline since 2007, when it had about 130. That declined to 80 in 2008 and 53 by mid-summer this year.

“We definitely hate to see them go,´ said Michal Conners, Windsor Chamber of Commerce director, said of PCA. “They’ve been a great partner in the community and involved in many things, and you always hate to see an employer like that go away.”