Weyerhaeuser Co. is considering selling Norpac and its liquid packaging plants in Longview as part of an evaluation of its cellulose fibers business, in which profits have sagged over the last year, the company announced Sunday.
Weyerhaeuser says it will consider a broad range of alternatives, including continuing to hold and operate the business, selling it or spinning it off. In addition to the plants in Longview, the company is also evaluating mills in Georgia, North Carolina, Mississippi and Alberta, Canada. The two Longview plants employ about 990 workers combined.
“We believe now is the right time to evaluate all options to ensure the best long-term results for this business and at the same time create the most value for our shareholders by further focusing our portfolio,” Doyle R. Simons, Weyerhaeuser president and chief executive officer, said in a prepared statement.
There is no way to tell at this point whether any mills will be sold or changed, and the company will not comment further while the evaluation process is in play, Weyerhaeuser said. No timeline was announced.
The announcement was largely overshadowed by news that Weyerhaeuser will merge with Plum Creek to create a $23 billion timber real estate investment trust — a company that owns income-producing real estate and pays no corporate income tax. (A REIT typically pays out all taxable income to investors, who then pay taxes on that income.)
“It makes sense to look at streamlining ... when you’re already going through a big internal restructuring,” said Paul Latta, industry analyst at Glacier Peak Capital.
Norpac, founded in 1979 as a non-union mill, employs about 450 workers in Longview and is a 50-50 joint venture with a Japanese company. Norpac has been seeking to diversify in response to declines in the newspaper and book publishing industries, for which it produces paper. The company, for example, has been trying to market Norpac’s “Natural Choice” office/copy paper.
Many observers weren’t surprised by the company’s announcement.
“I think there’s a number of employees that are not surprised,” said Greg Pallesen, vice president of Association of Western Pulp and Paper Workers, the union which represents 450 workers at the liquid packaging plant. “Weyerhaeuser has wanted to sell to the Longview site for quite someone time. That’s really nothing new.”
The forest products company has been shedding paper and pulp mills for years to concentrate on timber and lumber sales. In the years leading up to its 2010 conversion to a REIT, for example, Weyerhaeuser sold eight fine paper mills and shortly afterward sold its packaging business.
Even if the Longview mills are sold, Pallesen believes there is only a “remote” possibility they would close. Two Pacific Northwest paper mills have announced closures in recent months, and analysts say that tightened newsprint supplies allowed Norpac to raise its domestic prices Monday.
Weyerhaeuser’s cellulose fibers business accounted for 25 percent of the company’s net sales in the third quarter of this year, generating $471 million. That’s down from $507 million in the same period last year. So far this year, the cellulose fiber division brought in $157 million in operating income. That’s a 23 percent dip from the same period last year.