Merger would make former Longview Fibre mill part of world's largest paper packaging firm

Imminent opening of new $80 million box plant helps position mill site for e-commerce retail era; ultimate management control to move overseas

By next spring, the former Longview Fibre Co. pulp and paper mill will have its fourth owner in 17 years and will become part of the largest cardboard and box manufacturing company in the world.

The Longview mill site, where a new $80 million cardboard box plant is scheduled to open in the next few weeks, will be a key player for the merged company’s Northwest business, according to union and other sources.

WestRock, the current owner of the Longview mill, and Ireland-based Smurfit Kappa in September signed a merger agreement to create a $34 billion publicly traded company with 67 pulp mills that annually manufacture 23 million tons of containerboard (commonly called cardboard.) It will own 500 box-making plants worldwide.

Assuming the deal passes antitrust review — which the companies project will occur by March — the new firm  will be called Smurfit WestRock. It will have about a 6% share of the global containerboard market, according to Fastmarkets, a market analysis firm.

Smurfit is the largest containerboard maker in Europe and also has plants in Mexico and South America. It owns nothing in the Pacific Northwest. 

WestRock is the second largest containerboard producer in North America, with about a 20% market share, but its ownership is scattered across the nation and is concentrated in the U.S. East and South.

WestRock in the last year shut down four pulp mills, including the September closure of its 400-worker Tacoma containerboard mill, citing high costs and need for costly upgrades. In the last year or so WestRock has permanently shut seven corrugated converting plants and more than 1 million tons of U.S.  containerboard capacity.

WestRock had $8.6 billion in debt at the end of September, and the company reported a $1.6 billion loss for fiscal 2023, which ended September 30. It reported a $106 million profit in the fourth quarter ending on that date, down from a $345 million profit a year earlier.

The lack of duplicate or similar pulp and boxmaking capacity in this region makes WestRock’s Longview mills — both its pulp mill and box making facilities  — well positioned to serve growing regional demand for consumer packaging in the Northwest’s e-commerce retail era, according to WestRock and union sources.

Smurfit, “would not have bought this plant just to shut it down,” said Bill Sauters, Washington-area representative for the Association of Western Pulp and Paper Workers, a union that represents about 750 workers at the Longview mill site. 

Citing the presence of Amazon and growth of e-commerce, Sauters added:
“This plant is here for a reason. It’s unfortunate, but brick-and-mortar stores are becoming a thing of the past.”

The new box plant will make boxes from containerboard produced in the Longview pulp mill and will be called Longview Corrugated. (Its internal project name during construction has been “Hercules, ” after the legendary superman of ancient Greek mythology.)

“This is the biggest mill that (the newly merged company) will have west of the Mississippi,” and the adjoining new box plant “will be their flagship plant,” Sauters said in a phone interview Monday.

Patrick Ortiz,  director of strategic projects for WestRock, said the new box plant in Longview will produce 3 billion square feet of containerboard annually and will enable the company to expand its presence in the Northwest.

The 410,000-square-foot box plant will employ about 150 workers, although the net gain in mill site employment will be 40 to 50 jobs taking transfers into consideration, Ortiz said.   (That will bring union employment at the site to about 800.)

Union hourly jobs at the plant will pay in the range from the upper $20s to-mid $30s, Sauters said.

The new plant already has had an impact on the local and regional economy. The general contractor is Clayco, based in St. Louis, but local subs,  including J.H. Kelly of Longview, have worked on the plant. The new plant is located on formerly open land just off Fibre Way adjacent to the Export Grain Terminal.

WestRock is partnering on the project with ElmTree Funds, a St. Louis-based equity firm.

Sauters said he did not know what kind of relationship Smurfit has with unions, but he’ll soon find out. The AWPPW contract at the Longview mill expires at the end of May, so negotiations will begin even while the parties close the deal and await regulatory approval.

The Longview mill site once employed more than 2,000 union workers,  but the work force declined over the years as the plant changed hands and paper machines shuttered to make pulp operations profitable.

The merger will be the fourth time ownership of the Longview plant has changed hands since 2007, when Brookfield Asset Management purchased it after decades of management by Longview’s Wollenberg family. The Wollenberg’s founded the company in 1926-27, and for several decades it ]was the only Fortune 500 company headquartered in Longview.

Brookfield sold it to KapStone Paper & Packaging Corp. in 2013. KapStone in turn sold it to WestRock in 2018.  

Smurfit WestRock would be incorporated and based in Ireland with global headquarters in Dublin, Ireland. North and South American operations will be based in Atlanta, according to the two companies.

The merger deal emerged following  a sharp drop-off in demand for cardboard boxes since the second half of last year.. The drop-off was not a surprise, because demand had reached record levels globally during the Covid pandemic when demand for consumer goods – from giant TVs to patio furniture – spiked during lockdowns, according to The  Irish Times. However, Smurfit CEO Tonh Smurfit told the newspaper,  prospects for long-term growth remain solid due to the demands of e-commerce. 

“We’ve never seen these kind of falls in corrugated box consumption —  as we never saw the kind of growth that we saw in 2021 and 2022,” Smurfit told The Irish Times, adding that he expects box prices and demand to rally.

WestRock has been on a “transformation journey” and Smurfit Kappa is aboard to make WestRock assets “stronger” and “rightsized” as part of the combined company, CEO Smurfit told PPI Pulp & Paper Week in September.

Mergers have become a trend in the global packaging business in recent years, especially in North America, according to Fastmarkets. WestRock itself was part of that trend through its $5 billion merger acquisition of KapStone in 2018. The expansion is driven by an oversupply of production and, a need to cut costs and spur innovation,  according to Fastmarkets.