Jobs: So Last Century

Friday, October 23, 2009

International Paper announced yesterday it will close its Franklin, Virginia mill in spring 2010. This will end the employment of 1,100. It is the largest of the company's North American closures idling some 1,600 nationwide. "These capacity shutdowns will not impact the company’s ability to serve its customers." The layoffs begin in November.
International felt it would be less costly to serve the Franklin plant’s customers from other International Paper facilities than to start serving some of their customers from Franklin.
International Paper acquired the mill in 1999 when it acquired Union Camp Corp. At the time of the corporate takeover, Union Camp employed about 2,600 workers in the Franklin area. Since the onset of the global recession, the decline in demand for International Paper’s uncoated freesheet in North America has accelerated. In its containerboard and coated paperboard businesses, International Paper expects demand to resume growth as the economy rebounds. However, the company’s demand is not expected to return to 2008 levels in the near future. Consequently the company has decided to further reduce its capacity permanently.
"This is not a reflection on the work force, they’ve been outstanding. They’ve done everything the company asked as we tried to stay competitive,"
The company will work closely with union officials concerning severance benefits for hourly employees. Salaried employees impacted by these shutdowns will be offered severance packages and outplacement assistance consistent with company policy. Employee assistance providers will be available to support employee and family needs.
“If you make a commodity product like paper used in making boxes or envelopes or packaging for delivery, when the economy is down and people are not buying things or shipping products, if you are a major supplier you get hurt worse,“ he said. “There ends up being an oversupply of your product in the market. If you can shut down production temporarily, then supply works out long-term…Apparently what has happened is [they] have looked long-term and the scenario may not be any better than the short-term…This should be a wake up call for Virginia that while the re-starting of the economy is within sight, there is still some shakeout that is on its way " – Brett Vassey, president and chief executive of the Virginia Manufacturers Association
Gov. Timothy M. Kaine announced the Virginia Employment Commission would sent a crisis team to Franklin. The mill employs nearly 4 percent of the total labor force of the city of Franklin and the counties of Isle of Wight and Southhampton. The loss of $6.5 million in local taxes will no doubt impact all Isle of Wight county residents. It looks like the next "Jobs Governor" has an immediate opportunity to deliver on promises made; and that this is just the beginning.

Cross posted at VBDems - Blogging our way to Democratic wins in Virginia Beach!