IP accelerating shutdown of its Courtland, Alabama, freesheet paper mill, to middle of Q1 2014; aim is to close mill 'as rapidly as we can,' says company executive, noting that it will depend on speed of transitioning production to other mills
October 25, 2013
– International Paper Co. (IP) now plans to close its coated and uncoated freesheet paper mill in Courtland, Alabama, by the middle of first-quarter 2014, about half a quarter faster than it originally planned, according to a company executive.
The permanent shutdown of the mill’s remaining two paper machines has been moved up and “the goal is to keep pulling that forward as rapidly as we can,” said Timothy S. Nicholls, senior vice president of IP’s Printing & Communications Papers the Americas.
“We’re trying to do it at the lowest possible cost,” said Nicholls, who was one of IP’s executives speaking and answering questions during IP’s third-quarter earnings call on Oct. 24.
The mill’s first two paper machines will be permanently shut down in mid-November, said IP CFO Carol L. Roberts.
This first phase of the mill’s closure will result in IP eliminating its coated paper output and the mill’s capacity for the export market and some marginally profitable domestic business, she said during the same earnings call.
IP is now running qualification trials at its four mills that could assume production of grades produced at the Courtland mill, which has annual capacity to produce 950,000 tons of freesheet paper, of which 765,000 tons is uncoated.
These operations include two uncoated freesheet mills in Eastover, South Carolina, and Riverdale, Alabama, and two specialty paper mills in Georgetown, South Carolina, and Ticonderoga, New York, according to the company.
IP will be “transferring our most attractive business to these commodity and specialty mills to enable our best business to run at the lowest possible cost,” said Roberts.
IP plans to stop producing the grades that are the least profitable, as the company has more orders than it has production capacity, she said.
After the Courtland mill’s first two paper machines are permanently shut down next month, the remaining two machines will not be fully available for current customer demand, noted Nicholls.
The last two paper machines will be busy covering for qualification trials under way at the other four paper mills, as well as helping build some inventory of unique products, such as the mill’s colored, uncoated freesheet, he said.
“The important point to make here is the process is well under way,” said Nicholls.
Having the Courtland mill running on half of its paper machines and in “transition mode” will create some “inefficiencies,” said Roberts. The impact on fourth-quarter operating earnings could be as high as US$40 million, she noted.