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Tue, Dec 6, 2022 08:41
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Management Side
PCA lays off workers; idles mill

ALABAMA (From news reports) -- The Packaging Corporation of America (PCA) paper mill in Jackson announced to its employees last week a layoff of virtually all of its 400-plus workers and a temporary idling of the mill.

PCA issued this brief statement through the Jackson mill: "Due to economic conditions and lower demand for our products, we have temporarily laid off workers at the Jackson mill. The mill is currently idled. We fully intend to resume operations after the holidays."

High inventories of linerboard and cardboard boxes manufactured from the linerboard have been cited as the reason to temporarily suspend manufacturing to let inventories catch up with demand.

Rumors had been floating around for weeks of a possible shutdown but they could not be confirmed and PCA indicated that work was continuing.

When the announcement came, Jackson Mayor Paul South said he was as surprised as anyone. He said he had no forewarning. He wasn't happy with the news but said PCA is important to the local economy and to providing local jobs.

In fact, South had just stated at the Nov. 7 city council meeting that rumors of a closing were unfounded and that PCA officials had told him they would not invest $500 million in the mill to not operate it.

PCA reportedly kept a handful of employees on the payroll, one unconfirmed report said 30 and another 38, to do maintenance work and to keep the mill ready for when production does resume.

One source said that a reopening is expected the first week in January.

A close reading of the earnings call transcript for PCA hinted at the problem a few weeks ago as a lot of the questions and comments centered around inventories.

A lot of customers apparently have large in-house inventories. Some of the backlog is also attributed to less buying because of economic conditions.

In mid-2020, at the height of the Covid-19 pandemic, the PCA paper mill in Jackson laid off employees and idled the mill for about two months because of a decreased demand for white copy paper.

Once inventories diminished and the need for white paper increased, the mill reopened and recalled workers.

The Jackson mill at the time exclusively produced white paper.

In 2021, PCA announced a $440 million project to convert one of the mill's paper machines to produce linerboard, used for corrugated packaging such as cardboard boxes.

The intent was to diversify and to produce the more popular and in-higher-demand linerboard.

Now, the oversupply problem has apparently shifted from white paper to brown paper, necessitating this shutdown.

Employees who are out of work can draw unemployment benefits. Many are also looking for temporary work and some say they are seeking a permanent job change.

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