International Paper on Thursday announced a slew of changes to its North American operations, including exiting the molded fiber market entirely and closing or selling multiple facilities.
This is all part of IP’s “ongoing transformation” to sharpen its focus, according to the announcement.
IP is making changes at the following U.S. sites, collectively impacting some 110 hourly and 24 salaried workers:
- Closing a packaging facility in Marion, Ohio, come Sept. 1, which an IP spokesperson said will affect 107 employees. IP’s website lists its Marion site as a container plant. This capacity will be absorbed elsewhere in IP’s network.
- Closing its recycling facility in Wichita, Kansas, come July 31, affecting 16 employees. This capacity will be eliminated.
- Converting a Reno, Nevada, facility that had been supporting its molded fiber business to instead support its packaging business. This change, happening on or before July 31, will affect 11 employees. This was IP’s sole production site for its “relatively small product line” in molded fiber, which included wine packaging systems, according to Amy Simpson, head of corporate communications and corporate marketing. “Given the small market for this product, the decision was made to streamline our operations and focus investments on products and facilities that best meet our customers’ needs,” she said in an email.
The company is also immediately selling some assets in Mexico to Mexican packaging and materials company Acabados de Papeles Satinados y Absorbentes, or APSA. This includes one containerboard mill and one recycling plant in Xalapa, east of Mexico City near the shore, along with another recycling plant in Apodaca, near Monterrey, closer to Texas. RBC Capital Markets highlighted in a note to investors that International Paper acquired the Xalapa mill from forest products company Weyerhaeuser in 2008, estimating its capacity as “relatively small,” between 25,000 and 30,000 metric tons per year.
IP reported that APSA intends to retain current on-site staff. Following these sales, International Paper will still have numerous other facilities in Mexico.
With all of these changes, IP said that it’s “committed to minimizing the impact through job placement in existing vacancies, retirements and other internal opportunities,” and that affected employees will receive severance and outplacement support where possible.
“While difficult, these decisions will help enable IP to prioritize the right geographies, customers and products and make investments in resources to support our growth in sustainable packaging,” said Tom Hamic, president of North American packaging solutions, in a statement.
In a note to investors, Michael Roxland, Truist Securities senior paper and packaging analyst, called these decisions “consistent with IP’s 80/20 strategy to streamline its North American operations and optimize its box plant and mill footprint.” The 80/20 strategy, championed by CEO Andy Silvernail, embraces the idea that 80% of results come from 20% of efforts, inspiring a more focused approach. The company is aligning investments and resources to prioritize key customers and reduce complexity and cost.
Other recent changes that IP has announced include restructuring its footprint along the U.S.-Mexico border, namely closing a box plant and sheet plant in Edinburg, Texas, and shifting some operations to Reynosa, Mexico. Earlier this year, the company also announced facility closures in Arizona, Louisiana, Missouri and Pennsylvania.
