International Paper Shreds Jobs

International Paper Co. (IP - Analyst Report) plans to close three of its mills, which will reduce its work force by 1,600 employees. The company plans to close its paper mill and associated operations in Franklin, Virginia, besides its containerboard mills in Pineville, Louisiana and Albany, Oregon. 

Also, the company said that it would permanently shut down the previously idled No. 3 machine at its Valliant, Oklahoma, containerboard mill. The Valliant mill's two other machines will continue to operate. 

The company said that the permanent shutdowns were necessary as it does not expect the demand to return to 2008 levels in the near future. These actions will reduce the company’s North American paper and board capacity by 2.1 million tons. 

Following these shutdowns, International Paper will have approximately 10 million tons of North American containerboard capacity, 2.6 million tons of North American uncoated freesheet production capacity, and 1.7 million tons of North American coated paperboard capacity. The company is confident that these shutdowns will not impact its ability to serve the customers. 

These closures are expected to result in non-cash asset write-offs and accelerated depreciation charges of approximately $1.1 billion and cash severance charges of approximately $60 million in the fourth quarter of 2009 and first quarter of 2010. Also, the company expects to incur additional closure costs.