Franklin paper mill to close; 1,100 to lose jobs

International Paper Co. said Thursday that it will close its paper mill outside Franklin next spring, laying off 1,100 workers.

The layoffs will begin Nov. 7, with the shutdown of one of the plant's four machines, and continue through the spring, said Jeannine Siembida, the plant manager.

"The biggest reason is the global recession that we've got going on," Siembida said. "We've realized a good portion of the demand is not going to come back, so we've had to make this permanent decision."

Carroll Story, the president of the United Steelworkers local that represents the workers, said: "Right now, everyone is in a hole. They're in a daze, a dream. They're like, 'What happened?' "

"You have people here 30, 40 years, and this is all that they've ever done," said Story, 49, who has worked at the mill for 31 years. "It's going to be devastating to the community. There's not enough work in this area to absorb this work force."

International Paper's decision will remove a regional bulwark created by a trio of enterprising brothers in the 19th century. It's also a second blow to Isle of Wight County, which already faced a big job loss at its other large employer.

Smithfield Foods Inc. plans to close its Smithfield Packing Co. South plant early next year. Of its 1,375 workers, the company said 745 will be transferred to the nearby Smithfield Packing North plant, 290 will be given transfers to North Carolina plants and 340 will be laid off.

International Paper, based in Memphis, Tenn., announced Thursday that it would close the mill outside Franklin and two others, in Louisiana and Oregon. The local closing will account for more than two-thirds of International Paper's 1,600 job cuts nationwide.

The mill near Franklin produces about 740,000 tons a year of uncoated freesheet and coated paperboard. Uncoated freesheet is used for products such as envelopes and copy paper, and coated paperboard for greeting cards, book covers and direct-mail advertising.

Siembida said International Paper chose to shut the local plant because those two products were hit particularly hard by the economic decline.

"The company looked at capability, capacity and cost," she said. "When looking at all of those alternatives, it's not one of those that made a difference, but it was a combination of all of those."

This is the most recent and most painful of several cutbacks that International Paper has made locally in the past year.

Last November, the company announced it was closing one of the five machines at the Franklin paper mill.

In April, it said it would shut its lumber mill near the paper mill and its corrugated-container plant in Chesapeake and trim departments at the paper mill. Those moves cut about 260 jobs. And in July it announced it would lay off 100 workers at its manufacturing plant in Newport News.

It also has idled machines and enacted furloughs.

Siembida said all employees at the paper mill would get severance packages and job-placement assistance. Gov. Timothy M. Kaine announced that the Virginia Employment Commission would soon dispatch an Economic Crisis Task Force to Franklin.

The closing "is a deep blow to the community and the commonwealth," Kaine said in a news release. "This plant has long served as an economic asset for the area, and its phased closing is most distressing."

Democratic Sens. Mark Warner and Jim Webb said in statements that they would seek federal assistance for the employees.

"Over the longer term," Warner said, "it also is important that we market the quality work force in this strong and resilient community to other potential employers."

The mill dates from 1887, when Paul D. Camp and two brothers founded Camp Manufacturing Co. with the purchase of a sawmill on the edge of Franklin. They began producing paper in 1936.

Camp Manufacturing merged with Union Bag and Paper Corp. of New York in 1956 to become Union Bag-Camp Paper Corp., which was later shortened to Union Camp Corp. In 1999, International Paper purchased Union Camp in a deal valued at $7.9 billion.

"Am I surprised to see the mill closing?" said Dennis Ruggles, a director with Fitch Ratings in Chicago who studies the paper industry. "No. I'm not surprised at all."

International Paper is faring better than most paper companies, Ruggles said. Even so, it is suffering the twin blows of the economic downswing and the gravitation of advertising from print to online.

"Paper producers don't close mills lightly," he said. "You get to a point where it's too expensive to carry a fixed cost, and something has to give. You have to take down your highest-cost mill."

International Paper said it expects to take a charge of about $1.1 billion to write off the closing assets. The company is scheduled to report its third-quarter earnings next week. In July, it reported second-quarter earnings of $136 million, a bit more than half of the $257 million it made in the same period a year before.

Its shares rose 61 cents Thursday to close at $24.38 each on the New York Stock Exchange.

"The message I've tried to give people is, the employees of this facility have done all that they could do," Siembida said. "This is in no way a reflection of their abilities and talents. It was unfortunate that we got caught up in this recession, and we needed to match that supply with demand."

For Story, the union president, the closing violates the American promise in which his colleagues put their faith.

"We were taught to get up and go to work and build a product that we can sell," he said. "When we do the right things and were profitable as long as we were, how do you justify taking this mill out of the system?"

Pilot news researchers Jakon Hays and Maureen Watts contributed to this story.

Philip Walzer, (757) 222-3864, phil.walzer@pilotonline.com