DS Smith Recycling is consulting on closing its 200,000 tonne capacity materials recovery facility (MRF).
The paper recycling and waste management firm said the consultation follows a review of the business after the acquisition of SCA Packaging in July 2012.
In a statement DS Smith said the Southampton MRF, formerly owned by SCA, had made significant loses since 2011 due to volatile recyclate prices and the “highly competitive nature of the industry”.
The firm said is would focus operations on processing quality recycled fibre and would utilise established reprocessors across the country for dry mixed recycling services.
Performance of the facility, which opened in 2009 at a cost of £15m, remained poor and unsustainable, the company added, despite large investments from SCA.
“Under current and anticipated market conditions, the business expects this position to be exacerbated and this view is supported by unsuccessful attempts to find a potential buyer.”
It said closing the MRF created the opportunity to invest in a new, larger, source segregated recycling facility in the area.
CEO Peter McGuinness said: “We are conscious that this period of consultation provides for an unsettling period for employees, especially at the Southampton facility and provision has been put in place to support staff at this difficult time. We are extremely grateful for the staff’s dedication and ongoing commitment to delivering a high level of service to our customers.”
Earlier DS Smith announced the departure of group finance director Steve Dryden who is to step down in January 2014 to take up a role in a private equity backed business.
Last month the company was forced to respond to press reports that it was seeking to claw back up to €180m of the €1.6bn it paid for SCA’s packaging operation. DS Smith said the integration was “progressing well” and the companies were “continuing the process to finalise the completion accounts”.