Smurfit-Stone, the US-based global packaging provider, has said it will streamline its containerboard mill and container systems as part of the integration of the recently acquired Stevenson corrugating medium mill and other assets from MeadWestvaco.
Smurfit-Stone has said it will convert production at its Hodge, LA mill to kraft paper, phasing out corrugating medium production over the next several months.
In addition, Smurfit-Stone has said that the primary production of paper at its Montana plant will not be restarted. The number one paper machine, which has been temporarily idle since March 2001, had the capacity to produce approximately 180,000 tons of linerboard per year, will be closed leaving two remaining paper machines. The permanent closure of the number one paper machine at the Missoula facilities will result in a pre-tax restructuring charge of about $10 million (€9.8m) in the fourth quarter.
Smurfit-Stone also announced its intention to discontinue operations at three container plants acquired in the MeadWestvaco transaction. The plants, located in South Carolina, Arkansas and Wisconsin, are said by the company to significantly overlap existing Smurfit-Stone facilities.
The decision to close the facilities came after considering near- and long-term capital requirements, operating margins, cash flow and strategic fit, the company said. A total of 154 hourly and 63 salaried employees will be affected. Operations will be consolidated with other plants in the Smurfit-Stone system, and SSCC will facilitate a smooth transition for its customers. The plants are tentatively scheduled to close in the first quarter of 2003.
The mill reconfiguration is in concert with reductions in supply to the company of about 250,000 tons per year of medium and about 27,000 tons of kraft linerboard. This resulted from the transfer of Smurfit-Stone's ownership in Groveton Paper Board and the termination of supply contracts for 170,000 tons of medium from two significant suppliers in the third and fourth quarters.
Smurfit-Stone's acquisition of the Stevenson mill added about 830,000 tons per year of corrugating medium to the company's containerboard capacity. William Wandmacher, vice president and general manager of the North American Containerboard Mill and Forest Resources division, said the reconfiguration increases net medium supply to Smurfit-Stone's system by approximately 400,000 tons, or about half of the Stevenson mill output. In addition, the reconfiguration creates efficiencies and addresses internal and external needs for containerboard and kraft paper products.
"The acquisition of the Stevenson mill gives us the production capacity and potential to better balance our system logistics," Wandmacher said. "The moves that we are announcing today reinforce our commitment to produce to meet demand, while enhancing quality and service and providing a wider range of products to our customer base."
Wandmacher added that a significant portion of the new corrugating medium tonnage will be sold on the open market, in keeping with the company's commitment to supply at least one million tons to independent corrugators.