Graphic Packaging International opens recycled paperboard mill in Texas ahead of schedule

USA – Graphic Packaging International has started operations at its new recycled paperboard mill in Waco, Texas, producing the first commercially saleable rolls in October. 

The facility, which came online earlier than planned, marks a key step in the company’s supply chain for sustainable consumer packaging. 

Full production should ramp up within 12 to 18 months, processing up to 500,000 tons annually.

During the company’s third-quarter earnings call on Tuesday, executives reported a 2% drop in packaging sales volumes compared to the previous year. 

CEO Mike Doss attributed the decline to sluggish consumer spending, noting that promotional activities by some customers failed to lift overall demand. 

He explained that order patterns grew erratic as consumer packaged goods firms delayed purchases to preserve cash flow.

Doss highlighted the Waco site’s advantages for sourcing recovered fiber, thanks to its location near four major urban areas. 

“The mill is a critical enabler for the consumer packaging we sell,” he said. 

The facility can handle up to 15 million paper cups daily, aligning with updated guidelines from the Recycled Materials Association that now include paper cups as recyclable.

To maintain capacity balance, Graphic Packaging plans to shut down its recycled paperboard plant in East Angus, Quebec, by December 23. 

This follows the earlier closure of the Middletown, Ohio, site and similar moves by competitors.

Doss indicated that the Waco addition will increase industry capacity by roughly 75,000 tons from early 2025 levels. 

He added that the startup will not significantly alter recycled paperboard market dynamics.

The company sees potential for its recycled paperboard to gain ground against pricier bleached options in various markets, drawing on output from Waco and the Kalamazoo, Michigan, mill.

However, Doss pointed to pricing pressures in the solid bleached sulfate segment, where rivals have cut rates to near recycled board levels, squeezing margins.

 Industry data from the American Forest & Paper Association and peer earnings discussions point to shifting SBS supply. 

“This unusual competitive behavior is not sustainable,” Doss stated, emphasizing that recycled products offer comparable appearance and performance at lower costs.

In personnel news, CFO Steve Scherger will leave to join Amcor, with Chuck Lischer stepping in as interim CFO.

Looking ahead, Graphic Packaging kept its full-year net sales forecast at US$8.4 billion to US$8.6 billion. 

It adjusted earnings before interest, taxes, depreciation and amortization guidance downward to US$1.4 billion to US$1.45 billion, within the original range. 

Doss expressed confidence in margin gains, saying the company stands stronger operationally than a year prior, even amid unpredictable demand.

Recent developments in the Middle East and Africa underscore growing interest in such technologies. 

A project in the UAE, announced last month, aims to build a similar recycled fiber processing plant with a US$200 million investment, targeting local beverage packaging needs and creating 300 jobs by mid-2026.

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