Dive Brief:
- Green Bay Packaging committed to investing more than $1 billion to expand its existing kraft linerboard mill in Morrilton, Arkansas. As part of the project, dubbed Project PowerPack, Green Bay also will purchase roughly 300 acres of land for future investments and expansion.
- The project involves replacing key components, such as the recovery boiler and biomass boiler infrastructure, in addition to installing an electric turbine generator to reduce scope 1 and 2 greenhouse gas emissions.
- The company plans to add 35 new jobs at the site as part of the multiyear expansion effort, including operators, mechanics, electricians and engineers. This increases the 620-person headcount at the company’s five facilities in that area.
Dive Insight:
The Morrilton mill produces kraft linerboard from virgin fiber sourced from Green Bay Packaging’s lumber mill, and the board supplies more than a dozen of the company’s corrugated converting plants in addition to external customers. The $1 billion investment has the potential to double the Morrilton mill’s capacity, the company said. That would put the enhanced capacity at more than 1.03 million tons, according to a June 4 note to investors from Truist Securities.
The move is prompting discussions among observers about the company’s timing strategy, considering the current supply and demand environment and the spate of closures already in 2025.
“While additional capacity is negative for containerboard supply/demand dynamics and pricing, normalized industry demand growth of ~1.0-1.5% annually implies that the industry needs capacity growth of ~400-600k tons per year,” said Michael Roxland, senior paper and packaging analyst at Truist Securities, in the note. The industry also is going through a “significant capacity reset” with approximately 2.3 million tons of capacity closures, about 5.5% of industry supply, already announced or completed in 2025, he said. Truist and other analysts anticipate more closures in the short to medium term.
Given the closures and Green Bay’s multiyear timeline for its expansion to be complete, “we believe the industry is better positioned today to deal with potential new capacity” than in previous quarters, Roxland said.
Green Bay Packaging held a groundbreaking ceremony at the Morrilton site on Tuesday to mark the start of construction on the expansion. Company executives joined Arkansas Gov. Sarah Huckabee Sanders and other community leaders for the event. Leaders said that this is the largest capital investment project in central Arkansas’ history.
Green Bay Packaging has made other expansion-related announcements in the last year, including a land acquisition in Arizona, a warehouse lease contract in Illinois and a packaging facility expansion in Germantown, Wisconsin. It also acquired Springfield, Missouri-based SMC Packaging Group in June 2024. Most of the privately owned, Wisconsin-based company’s footprint — which consists of mills, corrugated converting and production for folding cartons and coated labels — is concentrated in the Midwest and central part of the country.
