International Paper announced that its Compton, California, and Louisville, Kentucky, packaging plants will close in January 2026, affecting 125 and 93 employees respectively. The company will provide outplacement assistance, mental‑health resources, and severance benefits to the 218 workers who will be impacted.
The closures are part of a broader transformation plan that began with a $675 million charge for accelerated depreciation and other restructuring costs in the third quarter of 2025. That quarter also saw a net loss of $1.10 billion and an adjusted operating loss of $224 million, with operating margin falling to a negative 10.8% from 3.7% a year earlier. The company’s full‑year 2025 EBITDA guidance was lowered to $3 billion from an earlier range of $3.5‑$4 billion, reflecting the need to reduce costs and reallocate capacity to higher‑margin facilities.
Employees at the two sites will receive outplacement support and severance packages, and the company has committed to mental‑health resources for those affected. The decision was described by Tom Hamic, executive vice president and president of North American Packaging Solutions, as “difficult but necessary” to focus on core packaging markets and improve operational efficiency.
Segment data from the third quarter shows Packaging Solutions North America generated $655 million in adjusted EBITDA, while Packaging Solutions EMEA produced $209 million. Despite a 300‑basis‑point margin expansion in the packaging segment, overall profitability was eroded by strategic charges and weak demand in legacy products. The company’s guidance for the remainder of the year signals a cautious outlook, with analysts noting the earnings miss and margin compression as key concerns.
Management emphasized that the transformation is aimed at becoming a focused sustainable packaging leader. CEO Andy Silvernail highlighted the need to “decentralize and bring production closer to customers” while maintaining profitability through cost discipline. The market reacted negatively, with analysts citing the earnings miss, margin compression, and the high short interest as primary drivers of the downturn.
The closures are expected to reduce operating costs and free up capacity for higher‑margin, high‑growth facilities in North America and EMEA. By concentrating resources on core packaging markets, International Paper aims to improve its competitive position and support long‑term growth, even as it navigates ongoing industry headwinds such as tariffs and weak demand.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.