Clearwater Paper Corporation (NYSE: CLW) announced it will reduce production at its Cypress Bend, Arkansas facility to approximately half of its capacity and eliminate about 20% of salaried and hourly positions at the location.

The company expects the restructuring to generate $8 million to $12 million in annual cost savings while maintaining current shipment volumes, according to a company statement.

"We are faced with a supply driven downturn in our industry that is pressing margins and cash flows," said Arsen Kitch, president and chief executive officer. "We've made this difficult decision to improve our operating rates and reduce costs."

Kitch stated the company intends to restore full production at the facility when industry conditions for solid bleached sulfate improve or through investment in swing coated unbleached kraft capabilities.

The Spokane, Washington-based company will provide severance packages, healthcare subsidies, and outplacement services to affected employees. The company will also engage with the union through effects bargaining.

Clearwater Paper produces paperboard packaging products for North American converters, focusing on sustainable packaging solutions for consumer goods and food service applications.