International Paper impact: Alabama mill’s shutdown will hurt pulpwood market

Errol Castens | Buy at photos.djournal.com The closure of a large regional paper mill in Courtland, Ala., early next year could make it harder to sell pulpwood from thinning cuts such as this one in Lafayette County.

Errol Castens | Buy at photos.djournal.com
The closure of a large regional paper mill in Courtland, Ala., early next year could make it harder to sell pulpwood from thinning cuts such as this one in Lafayette County.

By Errol Castens

Daily Journal

Memphis-based International Paper Co.’s plan to shut its Courtland, Ala., paper mill next year may impact landowners and businesses across Northeast Mississippi.

Logging jobs may be lost or moved, and timber owners in some counties may find it difficult to market pulpwood at all.

Plans for the closure were announced on Sept. 11, and the process was expected to be completed sometime in the first three months of 2014. Two of the mill’s four processors were shut down in November.

“The business group is still determining a schedule for final shutdown,” said IP spokeswoman Laura Gibson. Among the considerations will be fulfilling existing customer orders.

The Courtland plant produces mostly uncoated papers used in business forms, envelopes, labels, copiers, printers – along with coated magazine papers.

“This decision to permanently close capacity is primarily being driven by demand decline for uncoated freesheet paper products in the United States,” said IP Chairman and CEO John Faraci.

That segment of the paper market began declining in 1999 as online publications and electronic billing and filing replace many paper purposes.

James Henderson, associate extension professor at Mississippi State University specializing in forestry management, said the impact on pulpwood markets in this area will be substantial.

“I’ve heard that pulpwood prices are already down because of it,” he said.

Pulpwood is most often small-diameter poles harvested when pine plantations are thinned so the remaining trees can grow faster. Lesser quantities – roughly one-sixth of Mississippi’s production– come from small hardwood trees and tops. Pulpwood and residues from sawmilling and other timber processes serve as the fiber basis of most paper.

Demand cut in half?

The Courtland IP plant, with an annual production capacity of 950,000 tons, has historically competed to buy Northeast Mississippi pulpwood with the Packaging Corporation of America plant in Counce, Tenn., which produced 1.056 million tons in 2012.

Errol Castens | Buy at photos.djournal.com Jimmy Trimm, an employee with MercyTree Forestry in New Albany, saws a log on a small logging job where a homesite is being cleared in Hickory Flat.

Errol Castens | Buy at photos.djournal.com
Jimmy Trimm, an employee with MercyTree Forestry in New Albany, saws a log on a small logging job where a homesite is being cleared in Hickory Flat.

“Given the capacity of the IP mill, demand in part of north Mississippi will be cut by at least half,” Henderson said. “Also, the PCA mill in west Tennessee will tighten its procurement radius, as it no longer has to compete with IP for wood fiber in northeast Alabama.”

T.R. Watson Jr., a registered forester with Oxford-based Shiloh Creek Land, Timber and Wildlife Services said his company, which specializes in pine plantation thinnings, hauls its pulpwood to Counce. He hopes Lafayette County timber owners will still be within PCA’s buying radius, even though their buying has already slowed.

“They’re getting more wood from north Alabama, and it’s stopping the mill up,” he said. “I think Lafayette County is going to be about as far west as you’re going to be able to go and still buy wood; I don’t know if that 150- or 160-mile drive is still going to be available. It may make us move farther north with our operations. There will be people going out of business over this.”

David Jones, an MSU associate extension professor whose specialty is forest products, said the Weyerhaeuser pulp mill at Columbus and the Resolute newsprint mill at Grenada, along with Norbord’s oriented strand board plant at Guntown are much smaller facilities and can take up only a small part of the surplus from the Courtland closing.

“Pulp papermills are a huge industry within an area,” he said. “They’re regionally located because you can’t support multiple papermills if they’re too close together, because they draw so much material in to do what they do.”

Registered Forester Jaysen Hogue is owner of New Albany-based MercyTree Forestry Services, which recently added small-scale logging to its offering of consulting services.

Hogue said the loss of a pulpwood market would be a financial setback for timber owners but that an even bigger financial risk is neglecting to thin trees in a timely manner.

“That hurts your production of sawtimber in the future,” he said. “If you can’t sell the thinnings, about all you can do is to cut them and let them rot away so your remaining trees can grow on up to sawtimber-quality and size.”

Some good news may be on the horizon.

Jones said a depressed pulpwood market would make Northeast Mississippi a desirable location for biomass companies such as those that make woodstove pellets for home heating and wood briquets for industrial fuel, though he knows of none that are currently scouting locations.

Don Whitehead, registered forester and area manager for a nationwide timberland investment advisory firm, said Northeast Mississippi’s timber surplus will likely entice new or renewed enterprises.

“We’re hopefully on the cusp of an economic upgrade to some extent, so the building material facilities are already upgrading and increasing production. We’ve also got others looking at reopening previously closed mills,” he said, noting an OSB plant at Grenada and a plywood facility at Louisville. He also noted that a four- to six-year window for thinning harvests before trees begin losing significant growth should keep timber owners from panicking.

“We’re very hopeful; we’ve just got to get through this one-and-a-half or two-year period,” he said. “Something will come in.”

errol.castens@journalinc.com