International Paper’s Bucksport mill plans one-week shutdown

BUCKSPORT – After a brief spate of steady orders, International Paper Co. announced Tuesday that it will take a week of downtime at the mill beginning Sunday, May 5.

Mill officials informed workers of the impending shutdown of all four paper making machines on Tuesday afternoon, a day after Great Northern Paper mills in Millinocket and East Millinocket began a two-week shutdown, citing the same weak market factors that forced the shutdown in Bucksport.

IP officials in Bucksport had been “guardedly optimistic” in view of a brief increase in orders earlier this month, according to spokesman Keith Cunningham.

“We’d had a couple of good weeks of order entries,” Cunningham said Tuesday. “But in the last few weeks, we’ve had less than what we need to run in order to keep our inventory in line with our customers’ needs.”

There had been some market indications that had spurred the cautious optimism at the mill, including some optimism from mill customers.

“We get information from our customers,” Cunningham said. “They’re looking at advertising rates and ad buying, and they’re optimistic. We take our optimism from their optimism. But we can’t predict what’s going to happen. Things change on a daily basis.”

The shutdown is the latest in a series of layoffs that have plagued the Bucksport mill and the printing paper industry in general during the past few years. A downturn in the overall economy, heightened last year by the events on Sept. 11, have reduced the overall demand for the coated paper the mill makes specifically for magazines and catalogs.

“This shutdown is due to a lack of orders on the part of our customers,” Cunningham said. “There have been fewer ad pages and fewer pages in catalogs, and that’s due to a lack of consumer spending.”

The IP mill makes paper specifically to meet its customers’ needs, he said. Those customers have different demands: They require different dimensions, different widths or different grades of paper. The company can’t stockpile the paper because those demands can change.

“We make paper specifically for our customers’ needs and we have to keep our production in line with the customers’ demands,” he said. “There’s too much opportunity for them to change. We’re not making the same rolls over and over again.”

The shutdown comes just a few weeks after International Paper posted first-quarter gains companywide, in a report that highlighted losses in the printing paper segment of the company.

On April 19, International Paper announced first-quarter earnings of $58 million, a large jump from the $24 million in earnings during the first quarter of 2001.

The company completed the first quarter with strong momentum, said John Dillon, IP chairman and chief executive officer, in a statement on the company’s Web site.

“Our internal programs are having a major impact on our earnings, we have continued to match our production with our customers’ demand, and we have delivered on our commitment to sell businesses that do not meet our long-term goals,” Dillon said. “Our inventories have been significantly reduced from last year’s levels, and we have now divested more than $3 billion worth of assets. When the economic rebound does occur, we are very well positioned to take advantage of it.”

The first-quarter figures, however, show that the printing paper segment of the company continued to lag behind last years’ figures.

The corporate report noted that first-quarter earnings for printing papers were $76 million, down from fourth-quarter 2001 earnings of $119 million, and down from 2001 first-quarter earnings of $154 million. Demand has continued to weaken and prices remained under pressure for market pulp, it stated.

“The strong U.S. dollar and the start up of offshore coated paper capacity further hampered a weak U.S. market for coated papers during the quarter,” the report stated.

The shutdown will affect all 1,000 employees at the mill, Cunningham said. Some may choose to take vacation, others will be laid off, and some may have the opportunity to continue working. Although the papermaking machines will be shut down, the mill will continue to operate its sewage treatment plant and the power plant and will need crews in those areas.

“Those details will be worked out within the next few days,” he said.

Plans call for the machines to be shut down Sunday evening and for crews to return to work at 6 a.m. Monday, May 13. The machines will be up and running as soon as possible after that, Cunningham said.

IP stock closed at 41.43 on Tuesday, up 2.28 points or 5.82 percent.