Kruger Products freezes the location of its new TAD plant amid trade uncertainty

Strategic pause in North American tissue expansion

The North American tissue sector is witnessing a strategic pause from one of its major players. Kruger Products has officially deferred the final location decision for its highly anticipated Through-Air Dried (TAD) facility in the western United States. The move, confirmed during the presentation of the company's third-quarter 2026 results, pushes the project's startup date beyond the originally scheduled 2028.

The decision highlights the growing impact of macroeconomic variables on heavy industrial investments. According to Dino Bianco, CEO of Kruger Products and KP Tissue, the delay is directly tied to the need for greater certainty in the economic and trade environment, particularly concerning potential tariff structures. Building a greenfield tissue mill requires massive capital deployment and complex infrastructure planning involving water, permitting, and financing. Committing to a specific US location without a clear view of the cross-border trade landscape poses an unnecessary risk for the Canadian manufacturer.

Capacity growth versus capital discipline

Originally outlined in 2025, the new TAD plant was designed to add approximately 75,000 metric tonnes of annual production capacity. This facility was intended to serve as a new pillar in Kruger's premium network, operating alongside its existing Memphis, Tennessee plant and nine Canadian facilities to capture growing demand in the ultra-premium segment across the western US.

Paradoxically, this industrial delay comes at a time of robust financial health for the company. For the third quarter of 2026, Kruger Products reported revenue of CAD 589.7 million, a 5.1% increase compared to the same period in 2025. Adjusted EBITDA rose by 9.1% to reach CAD 93.5 million, while net income nearly doubled year-over-year to CAD 27.7 million. The consumer business, particularly in the US with the White Cloud brand and premium private labels, remained the primary driver of these results, benefiting from favorable selling prices and higher sales volumes.

However, the company is not immune to market pressures. Management acknowledged softness in the Canadian market, with share pressure in bathroom tissue and paper towels potentially limiting domestic growth. To mitigate costs, Kruger is evaluating productivity initiatives and pricing adjustments.

By freezing the TAD project timeline, Kruger Products is prioritizing balance sheet protection over aggressive capacity expansion. While the delay may slow the company's long-term volume growth in the western US, it reflects a disciplined capital allocation strategy in an era where trade policies can fundamentally alter the return on investment for cross-border manufacturers.