IP to Close Three Mills
PURCHASE, NY—International Paper has announced that three mills will be closed and another scaled back to help fulfill plans to reduce production capacity by 1.2 million tons annually in the uncoated paper, market pulp, unbleached Kraft paper and containerboard businesses.
Approximately 2,500 employees at the mills and related forestry operations will be impacted by the shutdowns. The affected facilities include mills in Mobile and Courtland, AL; Lock Haven, PA; and Camden, AR.
"International Paper's merger and acquisition activities over the past five years have given us the flexibility and low cost capacity that allows us to realign production more efficiently and reduce our higher-cost operations," says Chairman and CEO John Dillon. "Couple this with our on-going divestiture activities, and the result will be a stronger, more focused, more profitable IP."
"Quite frankly, this was not an easy decision to make. Terrific, hard-working people are hurt at times like this. But, we cannot continue to operate "business as usual" if we are to win in the tough, global business environment in which we operate today," Dillon adds. "We will do everything possible to help reduce the adverse impact on our employees and communities. On the positive side, we feel strongly that by taking this action, both our shareowners and employees will benefit from a stronger, more efficient, more focused IP."
Employees impacted by the decisions will have access to support services, including outplacement services and job counseling. International Paper and organized labor representatives were scheduled to meet to bargain the effects of the closures on unionized employees.
The shutdowns will result in reductions of approximately 820,000 tons, or 18 percent, of International Paper's U.S. uncoated papers, 120,000 tons (7 percent) of its North American market pulp, 230,000 tons (5 percent) of its U.S. containerboard and 50,000 tons of unbleached Kraft paper capacity.
At the Mobile mill, all employees will be released, and the machines will be prepared for indefinite shutdown. At Courtland, a fiber line and related paper machine and pulp dryer will be idled. Four more efficient paper machines will continue to operate at Courtland.
At Lock Haven, all five machines will be shut down. Two small machines that produce specialty paper products will continue to operate until the technical products can be successfully re-qualified and transferred to another IP facility.
The Camden mill, which makes unbleached Kraft and multi-wall paper, is being closed due to the decline of the Kraft paper market, excess capacity within International Paper's Kraft and containerboard system, and shrinking customer demand. Three machines will be shut down. Moving the unbleached Kraft paper production from Camden to mills at Savannah, GA, and Roanoke Rapids, NC, effectively removes 230,000 tons of the company's U.S. containerboard capacity and 50,000 tons of unbleached Kraft paper.
At the conclusion of the rationalization program, International Paper will have approximately 3.9 million tons in U.S. uncoated papers production capacity, 1.3 million tons in North American market pulp capacity and 4.7 million tons of U.S. containerboard capacity.
"Our actions will improve our earnings and ROI," points out John Faraci, executive vice president and CFO of International Paper. "This plan will improve our EBIT on an annual basis by more than $100 million vs. third quarter 2000, during which we took substantial downtime resulting in significant inefficiencies. We can improve the competitive position of our North American paper assets, sharpen our business focus and improve our profitability. Future capital expenditures will also be reduced as a result of these actions."