International Paper to Lay Off 1,100 in Alabama Mill Closure

By Bill Dries

International Paper Co. will close its paper mill in Courtland, Ala., in several stages through the first three months of 2014.

Memphis-based International Paper Co. announced Wednesday it will close a paper mill in Courtland, Ala. because of declining demand for the kind of paper products made there.

(Daily News File/Lance Murphey)

The Memphis-based company announced the closing Wednesday, Sept. 11, and estimated 1,100 workers will lose their jobs in the North Alabama town east of Muscle Shoals.

Four other U.S. paper mills that produce the same uncoated freesheet paper products as the mill in Courtland will remain open.

International Paper chairman and CEO John Faraci said the Courtland mill closing is “driven by demand decline for uncoated freesheet paper products in the United States.”

Those products are papers used in copiers and computers as well as business forms and envelopes. They are also used in textbooks as well as commercial printing in general and stationary.

International Paper isn’t getting out of the business, which, like other divisions of the company, is based in Memphis. But it is seeing a decline in the North American market that led to the decision to close one of the five mills in the U.S.

The company began seeing a decline in uncoated freesheet starting in 1999 and that has accelerated with electronic billing and filing and online publishing gaining in consumer acceptance and use.

“Permanently closing the mill best positions the business.”

–Tim Nicholls
International Paper senior vice president

 

In its latest quarterly earnings results announced in July, company officials announced they had established a $28 million reserve to cover what could be credit exposure from the bankruptcy of National Envelope Co.

The printing papers division also posted an earnings decrease of $73 million for the quarter.

National Envelope cited the same shift to online billing and filing when it filed for Chapter 11 bankruptcy reorganization in June. It marked the second bankruptcy filing by the Texas-based company in three years.

“We explored numerous business and repurposing options for the Courtland Mill, but concluded that permanently closing the mill best positions the business for the future,” said Tim Nicholls, International Paper’s printing and communication papers senior vice president. “IP’s printing papers business remains a valuable and strategic part of IP.”

International Paper expects to take a pre-tax noncash asset write-off and accelerated depreciation charge of $550 million and severance and other shutdown charges of $125 million across the rest of the 2013 calendar year and into the first quarter of 2014.