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Nippon Says No Layoffs for Longview Liquid Packaging Workforce

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According to a report Tuesday (June 21) by The Colombian (Vancouver, Wash., USA) Nippon Paper says it won’t lay off employees when it buys the Weyerhaeuser (Federal Way, Wash.) liquid packaging plant in Longview, Wash. this fall.

Nippon Paper Industries spokesman Mizuho Ishida confirmed this past Friday (June 17) that the company will retain the mill’s existing 550-employee workforce.

Both companies announced this past Wednesday that Nippon will buy Weyerhaeuser Co.’s liquid packaging plant in a $285 million cash deal detailed in this past week's edition of OTW.

Nippon is already in the liquid packaging market, operating four mills in Japan that make milk and beverage containers. That arm of the company captures about 30% of the Japanese market share with $300 million in sales, Ishida said in an email to The Daily News. When a Japanese shopper picks up a Nippon Paper-made carton in the grocery store, the linerboard it’s made of most likely comes from Longview.

"Longview’s liquid packaging board is our main supply to NPI’s liquid packaging business, and its quality is highly (valued) among Japanese users, being de-facto standard in the market," Ishida said.

Depending on third-party suppliers has its downsides, though, and Nippon saw it as "critical to secure its own supply to establish an integrated model of liquid packaging business," Ishida said. Reliance on third-party linerboards can cut into profits, especially if the value of the Japanese currency tumbles, making imports of foreign materials relatively expensive.

Overall, the company saw net sales slide 2.6% in fiscal year 2015, to about $10.5 billion. But net income stayed relatively steady at about $232 million, according to the company’s 2015 annual report.

Paul Latta, industry analyst with Glacier Peak Capital, said the Weyerhaeuser mill purchase makes sense for Nippon. "If they have a footprint over in Longview ... then the profitability of the liquid packing there effectively offsets" potential losses in liquid packaging in Japan, Latta said.

Weyerhaeuser and Nippon already have had a working relationship for 40 years.

"They’re going to have some familiarity with the players already. It’s not a cold call here. This is a warm introduction, and they know what’s happening," Latta said.

Ishida said Nippon has long eyed Weyerhaeuser’s liquid packaging plant as a potential purchase, "therefore it appeared natural when they approached us to offer purchase of their LPB (liquid packaging board) business under their strategic review."

Weyerhaeuser put its pulp and paper businesses up for sale last year to focus on its timberlands and lumber business. In February, the company nearly doubled its U.S. timber acreage when it finalized an $8.8 billion merger with Plum Creek, creating the world’s biggest timberland and forest products company.

In early May, International Paper Co. bought seven of Weyerhaeuser’s mills for $2.2 billion, but the deal excluded the Longview newsprint and liquid packaging mills.

The North Pacific Paper Co. mill in Longview will be the sole remaining Weyerhaeuser-owned paper mill after its deal with Nippon is finalized by the end of the third quarter.

Other than NORPAC, Nippon already has a presence in North America. It owns a mill in Port Angeles  that makes paper for telephone books and generates biomass energy for sale. It also has subsidiaries in Portland (Paper Products Marketing) and Daishowa-Marubeni International in Vancouver, B.C., Canada.
 

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