Fortress Paper Ltd. (TSX:FTP) is slashing costs to save money at its Swiss mill, which makes, of all things, paper currency.
An across-the-board 10% pay cut that will be implemented at the Landqart mill starting in June will save the North Vancouver-based company an estimated $1.6 million a year as part of a plan aimed at cutting Fortress' annual costs by more than $5 million.
Fortress has eliminated one of four shifts to reduce production at the mill, where one machine churns out passport, visa and other specialty papers .
The company said personnel and overhead costs will also be cut because of weak market conditions in its specialty paper business.
However, a second machine that prints paper for the Swiss franc, among other currencies, will continue at 100% capacity as Fortress said its order book remains full and demand continues to be strong.
Earlier this month, it said it may spend $40 million to triple security paper capacity as governments pump billions of dollars into their economies to stimulate growth.
Meantime, cost savings of $1.1 million are expected at Fortress' second mill. The Dresden, Germany, facility produces coated and uncoated paper for wallpaper manufacturers.
Mill orders dropped in late 2008 as the global economic crunch began to take hold.
Fortress reported net income of $3.6 million for 2009's first quarter on sales of $46.6 million.
For 2008's first quarter, the company reported net income of $4.2 million on sales of $49.8 million.
On the Toronto Stock Exchange, shares in Fortress were trading at $7.34 by press time.
Over the past year they were as high as $11.98, but also as low as $4.62.