By Tom Kelly
Editor and Publisher

International Paper company sent a chill through the Middle South region with its announcement on July 19 of plans to "realign" its operations nationwide, including the sale, closure or downsizing of three major mills in Louisiana and Arkansas.

Under consideration for closure is the 400,000 ton-per-year linerboard mill at Pineville, shutdown of up to 300,000 tons of uncoated paper capacity at Bastrop, and "evaluation of strategic options," including sale or spin-off of the Beverage Packaging Business, including the Pine Bluff, Arkansas mill.

A worst-case impact for these major events could take out as many as 1,000 or more manufacturing jobs in the two-state area, and affect timber utilization from IP's major timberland holdings in the region. The company currently owns 650,000 acres in Louisiana, most of it in the North Louisiana region.

The company said the restructuring aims to wind up with two key "platform" businesses, uncoated papers and industrial and consumer packaging.

International Paper's plan involves selling $8 to $10 billion in manufacturing and resource assets, including 6.8 million acres of forestland, located mainly in the American south. By state, timberlands total 650,000 acres in Texas, 650,000 in Louisiana, 400,000 in Mississippi, 1.2 million acres in Alabama, 240,000 acres in Florida, 570,000 acres in Georgia, 600,000 acres in South Carolina, and 600,000 acres in North Carolina.

In its public announcement, International Paper listed the following operations to be considered for sale or spin-off into separate entities:

- IP's 50.5 percent stake in Carter Holt Harvey, a New Zealand forest products company in which it currently owns controlling interest.
- Coated and supercalendered Papers business including coated groundwood mill and associated assets in Brazil.
- Beverage Packaging business, including the Pine Bluff, Arkansas mill.
- Kraft Papers business, including the Roanoke Rapids NC mill.
- Arizona Chemical.
- Segments or all of its 8.6 million acres of U.S. forestlands.
- The Wood Products business.

Realignment in the uncoated paper and packaging manufacturing, IP lists seven locations under scrutiny for closure, downsizing, and realignment. Manufacturing is expected to be transferred to the newest, most efficient mills.

In the uncoated paper division, IP lists these potential realignments:
- Conversion of the 350,000 ton-per-year uncoated paper machine at Pensacola, Florida, to high-value 500,000 ton-per-year lightweight linerboard. The $100 million conversion will take place over the next 24 months.
- Evaluating options to shut down up to 300,000 tons at Bastrop, LA. Evaluation is to be complete by year-end.

Part of the volumes lost by downsizing at Bastrop and conversion of the Pensacola mill may be offset by investment in IP's best, lowest-cost mills.

In the packaging division, the following is planned:
- Closing Ft. Madison, Iowa 100,000 ton-per-year corrugating medium mill by the end of third quarter this year.
- Evaluating plans to close the 300,000 ton Pineville, LA mill or equivalent capacity in other mills.
- Evaluating options to sell or close the Terre Haute, Indiana 190,000 ton corrugating medium mill, and divest IP's interest in the 60,000 ton Groveton, New Hampshire corrugating medium mill.
Realignment in packaging will result in no net capacity increases, the company said.

Local business groups in Louisiana rallied immediately upon the announcement, to determine how the shock of closures or downsizing could be minimized.

While the loss of about 300 direct jobs, and the related services and timber utilization will hurt, Pineville is part of the larger Central Louisiana metro area including its larger neighbor of Alexandria. The region's economy is diversified, including significant agriculture, a variety of manufacturing and service firms, and the nearby military activity at Ft. Polk in neighboring Beauregard and Vernon parishes. The Central Louisiana community absorbed the shut-down of the U.S. Air Force base at Alexandria about ten years ago, and effectively turned that facility into a thriving industrial park serving commercial and military aviation and a variety of other entities.

Bastrop, while enjoying a significant agribusiness economy, is more a "company town," and the impact of the total loss of the IP paper mill jobs would, in the words of some local business and political leaders, be devastating at least in the beginning.

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