International Paper to Convert La. Mill to 100% Pulp

Nov. 6, 2007 - International Paper said it will invest approximately $10 million to convert its Louisiana Mill in Bastrop, Louisiana to 100 percent market and fluff pulp production. Conversion of the mill will begin later this year with equipment upgrades to be completed by the fall of 2008.

"Moving the mill from paper to pulp production, combined with key cost reduction measures, makes strategic sense for us," said Wayne Brafford, senior vice president of International Paper's printing and communications papers sector. "It allows us to operate the Louisiana mill competitively and meet global demand for our softwood and fluff pulp while reducing our uncoated freesheet capacity by about 250,000 tons."

The mill will cease production of uncoated freesheet, such as office paper and envelopes, as well as other specialty papers. Instead it will have the capacity to make up to 450,000 tons per year of primarily softwood pulp, used in tissue, towels, paper and packaging, as well as fluff pulp, used in diapers and personal hygiene products. The mill's bristols production, used for products such as index cards and file folders, will be shifted to other mills in the International Paper system.

Brafford said the plan for continued operation involved a cooperative effort among the company, employees, unions and the State of Louisiana.

"The assistance from Governor Blanco and the Louisiana Economic Development team has been instrumental in helping the mill continue to operate," he said. "They have been actively involved in discussions with us over the last two years and eager to lend support on a number of fronts."

Mill employees have agreed to some wage and benefit adjustments to help reduce labor costs, a significant factor in the mill's overall cost structure. These changes have been negotiated and approved by the represented employee unions and will become effective over a four-year period.

"We appreciate that our employees recognize the importance of a competitive cost structure to the future success of the mill," Brafford said. "Their decision demonstrates the strength of their commitment to the mill, the community and our customers."

With the conversion, the mill's employment will decline about 15 percent, from approximately 600 to approximately 525. The company plans to manage the employee reduction predominantly through normal attrition, such as retirements and voluntary severance.

International Paper had been exploring strategic alternatives for the Louisiana Mill, including possible closure, as part of its transformation plan, announced in 2005.

"The Louisiana Mill employees and leadership have operated the mill successfully for the last two years, setting records in safety, quality and production," Brafford said. "We are pleased that the evaluation has been completed and the mill will operate as a premier pulp producer."

SOURCE: International Paper

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