International Paper announced plans to close its paper mill and associated operations in Franklin, Va., and its containerboard mills in Pineville, La., and Albany, Ore. The company also announced it would permanently shut down the previously idled No. 3 machine at its Valliant, Okla., containerboard mill. The Valliant Mill's other two machines will continue to operate.
These permanent shutdowns will reduce the company's North American paper and board capacity by 2.1 million tons.
"We recognize these are very difficult decisions affecting our employees, their families and the communities surrounding these mills," said Chairman and CEO John Faraci. "We have concluded that we have excess capacity in our North American paper and packaging businesses, and these decisions will better match our supply with our expected customer demand."
Since the onset of the global recession, the decline in demand for International Paper's uncoated freesheet in North America has accelerated, and consequently the company has decided to further reduce its uncoated freesheet capacity.
In its containerboard and coated paperboard businesses, International Paper expects demand to resume growth as the economy rebounds. However, the company's demand is not expected to return to 2008 levels in the near future. Therefore, permanent IP capacity closures are necessary.
The closures, which will impact about 1,600 employees, will result in permanent North American capacity reductions of the following: 600,000 tons of freesheet; 140,000 tons of coated paperboard; and 580,000 tons of containerboard.
Following these permanent shutdowns, IP will have about 10 million tons of North American containerboard capacity, 2.6 million tons of North American uncoated freesheet production capacity, and 1.7 million tons of North American coated paperboard capacity.