MEMPHIS, Tenn. (AP) -- International Paper Co., the world's largest maker of cardboard box materials, said Thursday it is cutting 1,600 positions -- nearly 3 percent of the current payroll -- as it brings capacity into line with sharply diminished demand.
The global recession has slashed demand for paper and paperboard products and IP, which has been cutting capacity since 2008, said a recovery is not in sight.
"The company's demand is not expected to return to 2008 levels in the near future," IP said in a statement. "Therefore, permanent IP capacity closures are necessary."
The company, which employs about 57,000 people, is closing plants in Albany, Ore., Pineville, La., and Franklin, Va., as well as permanently shutting down a currently idled Valliant, Okla., mill.
The moves, to be implemented from mid-December through Spring 2010, will cut IP's capacity, which has been about 16 million tons, by about 2.1 million tons or 13 percent.
"We have concluded that we have excess capacity in our North American paper and packaging businesses, and these decisions will better match our supply with our expected customer demand," CEO John Faraci said in a state.
Following these permanent shutdowns, IP will have about 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.
Charges of about $1.16 billion for the closures will be booked in the fourth quarter and first quarter of next year. In addition, IP will incur additional closure costs.
Shares fell 3 cents to $23.74 in afternoon trading.