Why is a paper giant leaving Savannah? Answers trigger questions, theories

International Paper classified the moves as strategic in its press release and related to a recently completed acquisition of DS Smith, a UK-based paper manufacturer that specializes in containerboard, similar to what the Savannah mill produces. The DS Smith deal, completed in January, added between 500,000 and 600,000 tons of containerboard capacity to International Paper.

But in last week’s closure announcement, International Paper disclosed plans to reduce containerboard capacity by 1 million tons. Industry analysts say the move reflects International Paper’s ongoing pivot to make more packaging from recycled paper, which has a higher profit margin than pulp.

Yet Savannah officials and mill employees parsed through International Paper’s most recent earnings report for other clues — especially what was said about the effect of President Donald Trump’s tariff strategy and related policy changes, such as the elimination of the de minimis exemption on small orders.

The de minimis rule allowed international shipments valued at less than $800 to enter the country duty-free. Many of those orders come in small cardboard boxes, like the ones made from containerboard.

Credit: Sarah Peacock

Credit: Sarah Peacock

This theory swept the hallways and workshops at International Paper’s Savannah mill following the announcement, according to several employees who asked not to be identified for fear of jeopardizing their severance packages.

Contacted earlier this week regarding the effect of tariffs on the decision to close the Savannah-area mills, an International Paper spokesperson said the company “considered several factors” and listed customer demand, economic forecasts and production efficiencies.

She also pointed to statements made during the July earnings call, where company leaders noted soft manufacturer demand for boxes in North America because of “economic uncertainty from tariffs.” In the same call, International Paper executives cited “unpredictable and unresolved tariff negotiations” as a “wild card” that poses continued “macroeconomic uncertainty” for the company.

Even if tariffs did play a contributing role, Savannah workers continue to ask, “Why us?” They note that in the same announcement where International Paper reported the shuttering of the two local mills, the company said it would invest $250 million to convert a machine in an Alabama mill to produce containerboard.

Credit: Courtesy of Georgia Ports Authority

Credit: Courtesy of Georgia Ports Authority

The Savannah-area mills operate in one of the most timber-rich parts of America and near the busiest paper product trade ports in the United States. The Georgia Ports Authority handles about a fifth of U.S. forestry exports from its Garden City terminal, literally next door to the Savannah mill.

The Savannah mill’s proximity to the port terminal prompted another theory: that International Paper recognized the value of the mill’s 450 acres of real estate. The mill has hundreds of yards of river frontage, and the property also stretches far inland, with enough room that a nine-hole golf course was built behind the factory.

Meanwhile, the Georgia Ports Authority has significantly expanded its footprint along the Savannah River in recent years, adding a 100-acre container yard two years ago and a 90-acre transload warehouse that same year. The port even has plans to build a new cargo terminal on a 395-acre site on the river’s north bank, opposite its current facilities, later this decade.

A Ports Authority spokesperson said acquiring the site is not part of the authority’s 10-year plan.

“We are saddened to see the closure of the International Paper Savannah mill and its impact on the people and community,” the spokesperson, Tom Boyd, wrote in an email. “It’s also a great loss of business as a major export customer.”

Credit: Miguel Martinez-Jimenez

Credit: Miguel Martinez-Jimenez

There will be plenty of suitors for the Savannah mill site, said Trip Tollison with the Savannah Economic Development Authority. He’s already had discussions with International Paper officials about having a “seat at the table” in regards to marketing the property for sale once the mill infrastructure is removed.

SEDA has already received calls of interest from potential new users, Tollison said.

“The (International Paper) site is a very special piece of property with everything with it,” he said. “I would think (Georgia Ports Authority) has a lot of interest in the property, but do they have interest in all of it? There are pieces of the property that make sense for container activity, and there are pieces that make sense for another line of business.

“My opinion is there is enough to please more than one user that wants to be over there.”

While the future of the mill site remains uncertain, the future for the workers affected by the closure is taking shape. Job fairs in Riceboro, site of the Liberty County mill, and Savannah are planned for next month.

The Riceboro event is Sept. 10 from 4:30 p.m. to 7:30 p.m. at the Riceboro Youth Center. A job fair organized by the workforce development arm of the Savannah Economic Development Authority, known as RISE, is scheduled for Sept. 11 and 12 at the Enmarket Arena and will include employers from the manufacturing sector as well as other industries.

The intent is to show International Paper employees, many of whom spent decades at the mill and have a level of knowledge and expertise that is valued across the industry, that their career opportunities stretch beyond going to work at one of the several other paper product manufacturers along the coast.

“We don’t want to lose them from the region because they are terrific workers and they will be highly desired if they want to stay in that industry,” said Bert Brantley, president of the Savannah Area Chamber of Commerce. “But if they want to stay here, we want every resource and opportunity made available for them.”