What is the story about?
What's Happening?
International Paper Co. has announced the closure of two paper mills in Georgia, affecting approximately 1,100 employees. The Savannah mill, a significant part of the local economy for 90 years, and the Riceboro mill will cease operations by the end of September. This decision is part of the company's strategy to focus on its packaging business, following the sale of its pulp division to American Industrial Partners for $1.5 billion. The company plans to expand cardboard production at its Selma, Alabama mill, investing $250 million. The closures will result in a $700 to $900 million accounting charge and $158 million in severance payments and other costs.
Why It's Important?
The closure of these mills represents a significant shift in International Paper's business strategy, focusing on packaging to enhance profitability. This move impacts the local economies of Savannah and Riceboro, potentially leading to increased unemployment and economic challenges. The decision reflects broader industry trends where companies streamline operations to maintain competitiveness. The sale of the pulp division and investment in Alabama indicate a strategic pivot towards more profitable sectors, potentially affecting market dynamics in the paper and packaging industries.
What's Next?
International Paper will proceed with the sale of its pulp division, expected to close by the end of the year. The company will focus on expanding its packaging operations, which may lead to further restructuring. Local communities affected by the closures may seek economic support or alternative employment opportunities. The broader industry may observe similar strategic shifts as companies adapt to changing market conditions.
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