The S&G Packaging Co., makers of kraft grocery bags, will close in Hodge, Louisiana, on May 11, ending 74 years operation in the Jackson Parish community, the Company reports.

The plant employs 275 workers, who will lose jobs barring a last-minute reprieve. Members of the political delegation from the area were searching for possible incentives to keep the plant and its jobs, but prospects appear slim.

The closing comes as a result of acquisition of its parent company, Gaylord Container Corporation, by Temple Inland, Inc.

The Hodge bag plant, located adjacent to the Smurfit-Stone paper mill, is a separate operating entity once jointly owned by Stone Container and Gaylord Container. When Stone Container was acquired by Smurfit in 1999, becoming Smurfit-Stone, that company then divested its interest in the bag plant, transferring ownership solely to Gaylord.

On March 1, Gaylord, a national company based in Deerfield, Illinois, was acquired by Temple Inland, Inc., whose home is at Diboll, Texas, about two hours north of Houston in the East Texas Piney Woods region. Temple, whose product line does not include the bags manufactured in Hodge, is selling the plant to Duro Bag Manufacturing, with facilities in Texas.

Sources close to the situation said that Duro does not plan to continue operating the Hodge plant because it covers the local bag market from other facilities in the region. Reports were that Duro would move the Hodge plant machinery to another location, but this could not be confirmed as yet with Duro.

The S&G plant closure was not expected to greatly impact operations at the Smurfit-Stone paper mill, which manufactures kraft paper and containerboard, since Smurfit-Stone had not been a supplier to S&G for almost a year. Smurfit-Stone's manufacture of containerboard is down due to general market conditions, with one of its machines idle.

Temple announced that it would divest several non-strategic Gaylord assets, beginning with the retail bag business. Other operations will be identified for sales during 2002 and 2003, the company said.

The paper and containerboard market in the U.S. has been increasingly affected by competition from plastic bag products, and from foreign imports made cheaper by the strong U.S. dollar, industry managers report.

Gaylord reported operating losses in each of the last two quarters, because of weak market conditions, lower prices and sales volume, according to CEO Marvin Pomerantz. The company operates three mills and 26 converting facilities across the country, including one at Bogalusa, Louisiana.

Temple-Inland stated that Gaylord operations will be integrated into its paper group, which consists of two containerboard mills, one unbleached kraft paper mill, 18 converting facilities, two multiwall bag plants, and five retail bag plants.

The combination of Temple-Inland and Gaylord will create the third-largest U.S. manufacturer in corrugated packaging, with approximately 12 percent market share. The top five manufacturers' market share has increased from about 45 percent in 1993 to about 72 percent in 2002, the company said.

Temple-Inland, Inc. operates three divisions, including paper and packaging, forest products, and financial services. The company owns 2.1 million acres of forestland, primarily in Southwest Louisiana and East Texas, managed sustainably under SFI rules of the AF&PA.

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