G-P eliminating more than 500 jobs

Atlanta-based Georgia-Pacific Corp. said Wednesday it is cutting more than 500 jobs, but a spokeswoman said none of the company’s employees in Maine would be affected. G-P blamed the cuts on a weak market for wallboard, the mineral-based slabs used to cover walls and ceilings.

The job cuts represent less than 1 percent of Georgia-Pacific’s overall work force but will result in a reduction of almost half in G-P’s North American wallboard production.

The company will close wallboard plants in Savannah, Ga., Long Beach, Calif., and Winnipeg, Manitoba, laying off about 270 workers, spokesman Greg Guest said. Wallboard production at three other plants – in Acme, Texas; Sigurd, Utah; and Blue Rapids, Kan. – will be suspended, accounting for about 60 lost jobs.

Georgia-Pacific also will cut 150 jobs by scaling back production at 13 other wallboard plants and will lay off 40 workers at its Atlanta headquarters.

A G-P spokeswoman said none of the company’s employees in Maine would be affected.

“We don’t have any gypsum plants in Maine,” she said. G-P owns paper mills in Old Town and Baileyville.

G-P said earlier this month it has completed a definitive agreement to sell its Baileyville pulp and paper operation to Montreal-based Domtar Inc. But the deal does not include two other units in the same area, the oriented strand board and chip-n-saw facilities. The chip-n-saw mill has been closed because of poor market conditions. Together, the two facilities employ 175 people. The Old Town mill employs more than 500 people.

The weak wallboard market has made G-P’s production levels unprofitable, chief executive A.D. “Pete” Correll said. He called the layoffs “critical for the long-term viability of our wallboard business.”

Georgia-Pacific, a manufacturer of paper and building products, employs about 85,000 people in North America and Europe.

Separately, Georgia-Pacific is moving ahead with the sale of its timber business to Seattle-based Plum Creek Timber Co. despite failure to get federal approval for a tax-free combination.

A real estate investment trust based in Seattle, Plum Creek agreed last July to buy Georgia-Pacific’s 7.8 million acres in 19 states held by a unit called the Timber Co. The deal is now valued at about $3.8 billion, including an estimated $750 million debt that Plum Creek will refinance at closing.

Plum Creek owns 904,000 acres in Maine. In 1999, G-P sold its Maine timberland, about 440,000 acres, to Wagner Forest Management Ltd.

No Maine land is part of the Plum Creek deal.

The companies had sought approval from the Internal Revenue Service to make the deal tax-free. Real estate investment trusts, or REITS, are exempt from corporate income taxes if, among other things, they distribute at least 90 percent of net income to shareholders as a dividend.

The companies said Tuesday that the IRS decided not to grant the status because the transaction did not meet a “business purpose” standard.

Shareholders of both companies are scheduled to vote on the deal Aug. 15.