Paper Cuts: Major Arkansas Delta Employer Slashes Jobs, Reduces Timber Mill Production

By The Arkansas Delta Informer Staff

Arkansas City, Ark. – April 13, 2026 – One of the largest employers in Desha County in the Arkansas Delta has laid off 20% of its workforce and slowed paper mill production to reduce costs amid economic headwinds in the paperboard packaging industry.

In a new release announcement after the close of market on Thursday (April 9), publicly traded Clearwater Paper Corp. announced a restructuring of its Cypress Bend paper mill in Arkansas City, resulting in the reduction of approximately 20% of salaried and hourly roles at the facility. The Spokane, Wash.-based paperboard manufacturer said it plans to operate the Desha County mill at about half of its production capacity.

“We are faced with a supply-driven downturn in our industry that is pressing margins and cash flows. We’ve made this difficult decision to improve our operating rates and reduce costs,” said Clearwater Paper CEO Arsen Kitch. “Our Cypress Bend mill is well invested and cost competitive, and we intend to return the mill to full production in the future when SBS industry conditions improve or through an investment in swing CUK capabilities.”

Clearwater is an independent manufacturer and supplier of Solid Bleached Sulfate (SBS) paperboard packaging products. Today, SBS accounts for nearly 50% of the paperboard and pulp market, with Coated Unbleached Kraft (CUK) and Coated Recycled Board (CRB) making up the remainder.

According to Kitch, the job cuts and production slowdown will save the company $8 to $12 million in annualized costs without affecting shipment volumes. The independent paperboard manufacturer said it will provide severance packages, healthcare subsidies, and outplacement services to affected employees and will work with the union through “effects bargaining,” which applies when layoffs occur.

As of Dec. 31, 2025, approximately 1,260 of Clearwater’s 2000 employees were covered by collective bargaining agreements. Unions represent all hourly employees at the company’s manufacturing sites, including the Cypress Bend plant, which had more than 310 salaried and hourly employees before layoffs were announced on April 9.

Clearwater spokeswoman Virginia Aulin, vice president of human resources and corporate affairs, told the Arkansas Delta Informer that the Arkansas City plant will now have about 250 total employees after the restructuring and production slowdown.

When asked how long the production pause will last, Aulin replied, “Until SBS industry conditions improve or through an investment in swing CUK capabilities.”

Aulin said Clearwater’s manufactures  SBS paperboard and bleached Kraft pulp, which are used to produce folding cartons, commercial print paperboard, carded packaging, and paper and cup stock used by the restaurant industry.

According to industry analysts, the domestic and global paperboard market is experiencing a downturn driven by weak demand, overcapacity, high input costs, and structural shifts in consumption patterns amid high inflation. SBS paperboard is a premium-grade product.

In its fourth-quarter and year-end earnings report, Clearwater reported that net sales rose 12% to $1.6 billion in 2025, compared with the previous year. However, the Washington State paperboard supplier still posted a net loss of $53 million from continuing operations, despite the successful completion of the Augusta, Ga., paper mill integration, which the company purchased in May 2024 for $710 million, and the decision to exit the tissue business.

Looking ahead, Kitch said that in early 2026, severe weather disrupted production and increased operating costs at the company’s two largest paper mills, Augusta and Cypress Bend. To date, these events have cut profits by an estimated $20 million, he said.

“Current industry oversupply and the resulting operating rates are leading to margins that cannot sustain long-term investments in our industry’s capital-intensive assets,” Kitch said in a statement.

“We believe that a combination of demand growth, lower imports, and changes in domestic supply will lead to a recovery in the medium term and put us on a path towards cross-cycle margin levels and cash flows.”

For the full year of 2026, Clearwater, in its quarterly securities filing, projected annual revenue of $1.45-$1.55 billion. Company officials said new productivity initiatives and carryover from 2025 productivity are expected to offset roughly 2% to 3% of inflation costs.

Clearwater Connections

Clearwater Paper was created in 2008 as a spin-off from Potlatch Corp., also based in Spokane. In 2018, Potlatch acquired the south Arkansas forestry giant Deltic Timber in a $3.3 billion deal, forming PotlatchDeltic. Murphy USA and Deltic, both based in El Dorado, were spun off from Murphy Oil Corp., which has since relocated to Houston.

Earlier this year in late January, in a move that reshaped the South’s forestry landscape, Rayonier Inc. and PotlatchDeltic shareholders officially approved the two timberland real estate giants’ $8.2 billion merger. The so-called “merger of equals,” created the nation’s largest timber-focused real estate investment trust (REIT)  powerhouse with deep roots and massive acreage across Arkansas.

PotlatchDeltic now manages approximately 4.2 million acres of timberland nationwide. Crucially for the Arkansas Delta and surrounding regions, nearly 3.2 million of those acres are located in Arkansas and other southeastern states.

Before this merger, PotlatchDeltic was already a dominant force in Arkansas, owning approximately 935,000 acres in the state. The company’s presence is vertically integrated, with timber harvested from Arkansas lands feeding its sawmills in Warren, Waldo, and Ola.

PotlatchDeltic is also the owner of Chenal Properties Inc., the property developer of some of the most exclusive and sought-after master-planned communities in Central Arkansas, including Chenal Valley, Fletcher Valley and Wildwood Place in Little Rock and Red Oak Ridge in Hot Springs. 

At the close of business Monday on the New York Stock Exchange, Clearwater’s shares were up 11 cents at $14.99. The Spokane paperboard manufacturer’s stock is well off its 52-week high of $30.96, and is down nearly 40% over the past year.