International Paper cuts 674 jobs amid strategic review of global cellulose fibers | Packaging Dive

The news of a South Carolina pulp mill closure brings IP’s announced layoffs this month to more than 1,500. A potential sale of the broader GCF business is now under consideration.

International Paper on Thursday announced it will permanently close its pulp and paper mill in Georgetown, South Carolina, by the end of 2024. A total of 674 jobs (526 hourly and 148 salaried employees) will be impacted.

As of Thursday morning, there wasn’t a related WARN notice published in South Carolina’s public database, but it’s the single largest concentrated round of layoffs that the Memphis, Tennessee-based company has announced in recent weeks, of more than 1,500 total disclosed across multiple states. However, the Georgetown site is less focused on packaging.

The Georgetown mill produces 300,000 tons of fluff pulp for consumer products like diapers. Even with the closure, IP said it plans to retain customers and service them from other IP sites. The mill also has a supply agreement for uncoated freesheet papers with Sylvamo. That company, also based in Memphis, sells products such as copy and printer papers and those converted into envelopes, as well as specialty papers used in items like paper shopping bags or flour bags. IP and Sylvamo are ending that agreement Dec. 31.

The Georgetown closure comes as IP plans to “review strategic options” for its global cellulose fibers business. CEO Andy Silvernail said on a third-quarter earnings call Thursday that while the company will “evaluate every option ... the most likely option is a sale” and there have been multiple interested parties. IP retained Morgan Stanley as an advisor to review these options.

Silvernail said exiting the Georgetown mill “significantly lowers complexity and costs.” CFO Tim Nicholls said IP anticipates the Georgetown closure will decrease GCF business earnings by approximately $220 million in the fourth quarter due to depreciation expenses.

The GCF business reported $710 million in net sales during Q3, down from $725 million in Q3 of 2023, though profits were up.

Silvernail, who most recently served as an executive advisor in private equity, is now about six months into the job. He had alluded to forthcoming capacity reductions on the company’s second-quarter earnings call.

“As you look region by region, you have places that have way too much capacity, and you have places that do not have enough, and one of the mistakes that we have made over time is we have not made the tough choices,” said Silvernail. “Taking capacity out of places where we shouldn't have it, and then investing aggressively in places that we should have it” is what IP will focus on as it tries to find “that right balance.”

The South Carolina announcement is the latest of several big closure and layoff announcements by International Paper in October: