International Paper has announced they will close four container plants due to the firm’s merger with Temple-Inland creating ‘overcapacity within the system’.
The closures come after the acquisition of Temple-Inland for $4.5bn (€3.4bn) last year because the merger created overlap, leading to overcapacity within the system compared with customer needs, said the paper supplier.
A sheet plant in Arkansas and corrugated operations at Chicago, Ohio, and California will close by the end of June.
Amy J. Sawyer, senior communication manager of industrial packaging business at International Paper, told FoodProductionDaily.com the combined corrugated packaging business expands the capabilities and reach of supply.
“The larger portfolio has also created opportunities to streamline our capacity and our capabilities to our customer demands. The announced closures are one step in balancing our production with customer needs and optimising our corrugated packaging system in North America.
“By streamlining and optimising our corrugated packaging footprint, we will be able to operate more efficiently, while still providing outstanding service and quality to our customers,” she added.
“Our first priority is ensuring our customers receive uninterrupted supply and service throughout this process. We have already reached out to each customer to begin talking about proposals to transition their business.”
The purchase is set to boost International Paper's share to about 40% of the North American market for corrugated packaging materials.
Sawyer added:“We are now better positioned to supply customer needs by combining the very best of both IP and Temple-Inland to provide customers with quality products, reliable service and superior value.
“Our vast network serves major industrial markets throughout the US and Mexico with a breadth of products to meet the needs of a broad customer base, from transport packaging and bulk bins to retail displays and solid fibre containers.”
In February this year, International Paper agreed a consent decree with the Antitrust Division of the US Department of Justice (USDOJ) in relation to last year’s acquisition of Temple Inland, to divest the firm’s Hueneme, California plant and Temple-Inland’s facilities in Ontario, California and Tennessee.
As part of the deal the paper supplier needs to divest 970,000 tons of capacity.
When asked how this was going, Sawyer said ‘the process is moving forward well.’