Boise to sell to PCA, impact on International Falls plant uncertain

Illinois-based Packaging Corporation of America will buy Idaho-based Boise Inc., including the paper mill in International Falls, on Minnesota’s border with Canada, the companies announced Monday. This adds uncertainty to an already shaky situation in the north woods city, where the mill announced last spring it would lay off 265 employees -- a third of its workforce -- by Oct. 1.

Many employees have already left the plant for training and jobs elsewhere, but the bulk of the layoffs will take place at the end of September, when three machines will be shut down. The goal is to streamline the plant and cut costs to make it more viable in the future.

boise plant
Boise Inc. paper plant. Photo provided by Laurel Beager.

How the $2 billion sale of Boise, which includes $714 million in debt, will affect the plant is uncertain, though International Falls Mayor Bob Anderson thinks it could be a positive development. “My belief is this is a good story for the mill because PCA… understands the industry very well as they are an older, established paper company.”

According to a PCA company press release, Executive Chairman Paul Stecko said, “The acquisition is an excellent fit, both geographically and strategically, with unique and substantial synergies… The combined company is expected to generate strong financial results and strong cash flow which will be used to pay down debt as well as to continue to return value to our shareholders.”

The paper industry in Minnesota and elsewhere has been struggling as people move toward more and more electronic communications. Statewide, paper manufacturing employed 11,733 full- and part-time people in 2007, compared to 10,487 in 2012, according to the state Department of Employment and Economic Development.

And within Boise itself, which produces paper as well as packaging, the first half of 2013 saw paper sales decline from the same period a year earlier while packaging sales increased. The International Falls plant primarily makes copier paper, putting it in the weaker portion of the industry.

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Elsewhere, Wausau Paper closed a mill in Brainerd earlier this year, affecting 134 workers.

Asked what the sale might mean for the paper plant in International Falls, Virginia Aulin, Boise vice president of human resources and corporate affairs, said she could only speak of the near future. “The plan is to proceed and conduct business as usual,” she said. “We will proceed with the announced closures at International Falls. That’s a significant and important step for the mill and company. Beyond that, after close, PCA will be making strategic decisions for the future. They have said they will run the paper business as a strategic business unit.”

Like Anderson, Aulin sounded an optimistic note. “They appreciate the way Boise has run the company,” she said. “Though it’s a packaging company, PCA has a history, its executives have a history of running paper mills as well. Their intent is to continue running the paper mill at this time.”

She said the sale is expected to be completed by the end of the year.

Ground Level is interested in how the International Falls area can respond to a blow like this to its economy. If you have ideas, please let us know what you think by going to this questionnaire in our Public Insight Network.