SUNBURY — SUNBURY — An Illinois company that purchased Knight-Celotex out of bankruptcy in November has begun moving some equipment from the former plant in Sunbury to others it will reopen.
The landmark plant, once wreathed in clouds of steam and smoke and a major employer in the city, has been idle for more than a year.
W.R. Meadows Inc., of Hampshire, Ill., formed a new subsidiary, Blue Mountain Fiberboard Inc., last month to resume manufacture of Celotex-brand fiberboard products. Knight-Celotex filed for bankruptcy protection in June.
H.G. Meadows, chairman of W.R. Meadows Inc., said in a statement that operations will resume at the Celotex plant in Danville, Va., this month and a facility in Lisbon Falls, Maine, will reopen as demand grows. No mention was made of the Sunbury plant.
Jim Dwyer, chief executive officer of W.R. Meadows, said by telephone Wednesday that Meadows purchased assets of Knight-Celotex from the bankruptcy trustee, as well as the Celotex trademark. He said some production equipment from Sunbury was included in that purchase, but not the property itself.
“We’re removing only a small portion of the assets from Sunbury,” he said. “The rest is still held by the trustee.”
Because the Sunbury plant has been closed for more than a year, Dwyer said, it be costly and time-consuming for it to become operational again. He said the Virginia plant had closed more recently and was Meadows’ first choice to restart.
“I’ve heard the trustee is negotiating with another firm for the Sunbury plant, but I don’t know that for sure,” Dwyer said. “I don’t know any of the details.”
He’s also heard the remaining equipment might be sold overseas or even scrapped, Dwyer said.
“It would take a big uptick in demand for Sunbury to reopen, I’m afraid,” Dwyer said. “There is a real problem with over-capacity in the business.”
Most of the 88 workers at the Sunbury plant were laid off in November 2008. Knight-Celotex said several times it would reopen the Sunbury plant when market conditions improved, but when managers were furloughed earlier this year, it was obvious that wouldn’t happen. At its peak, the plant employed about 135 people.
Local officials, including state Rep. Merle Phillips, offered to help the company seek state assistance to keep the plant going, but their efforts were rebuffed.
Knight-Celotex filed for Chapter 7 bankruptcy protection June 11 after it defaulted on a $34 million loan, and health insurance for employees was terminated June 30.
Remaining inventory at the plant was shipped out during the summer, and the hulking plant has been silent since then, until this week, when millwrights began removing machinery and equipment.
The buildings along North Front Street have a long history. Originally a textile factory, during World War II, the site was owned by the Westinghouse Corp. and made radios and other communications equipment for military use. Westinghouse left in the 1950s and Celotex moved in.
Kevin Troup, a city councilman and former employee, said he understands the plant will be stripped out and allowed to sit vacant.
“That place is a real landmark, and it employed a lot of people,” he said. “It’s just a shame. We made a real good product there.”
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