PCA permanently closes key machines at wallula mill, cutting 200 jobs 

USA – Packaging Corporation of America (PCA) announced the permanent shutdown of its No. 2 paper machine and kraft pulping operations at the Wallula containerboard mill in Washington state. 

The decision, revealed in a late Wednesday release, aims to address escalating costs and ensure the facility’s long-term operations. 

The mill’s No. 3 paper machine and recycled pulping units will continue running, shifting focus to recycled materials.

Layoffs will affect 200 employees starting February 2026, according to a company spokesperson reached by email.

PCA projects pre-tax restructuring charges of US$205 million, with most recorded in the fourth quarter of 2025 and the first quarter of 2026. 

The closures eliminate 250,000 tons of annual capacity, but the company plans to offset this through expansions elsewhere. 

Production boosts at mills in Alabama and Tennessee are set to begin in the fourth quarter of 2026, including 140,000 tons of lightweight linerboard at the Jackson, Alabama site.

High wood fiber and purchased power expenses at Wallula have made the current setup uncompetitive within PCA’s network, the release stated. 

By converting to a single-machine operation using recycled inputs, the mill expects to cut production costs by about US$125 per ton compared to 2025 levels. 

This year’s output stands at around 400,000 tons of containerboard, dropping to 285,000 tons annually post-changes for recycled linerboard and corrugating medium.

CEO Mark Kowlzan described the move as essential for the mill’s survival.

 “We are taking these steps to support the future viability of the mill and improve our efficiency and cost position, while continuing to invest in our future growth,” he said in a statement. 

The company will offer support to displaced workers and soon meet with the union representing many at the site. 

Kowlzan added that the choice does not stem from employee shortcomings, noting their valuable contributions.

This action follows a pattern of adjustments at Wallula. The mill idled in spring 2023, impacting 300 workers, before restarting amid rising demand in late 2023 and early 2024. 

It idled again in May 2025. Since 2018, PCA has poured resources into the No. 3 machine after its shift to containerboard production. 

Recent acquisitions, like Greif’s containerboard business in September, and upgrades at the Counce, Tennessee mill, will help maintain overall capacity.

Analyst Michael Roxland of Truist Securities viewed the changes as cost-driven rather than demand-related in a December 3 investor note.

He noted that shifting tons to other sites could yield even steeper savings by reducing downtime and raising throughput.

The broader North American containerboard sector grapples with a tough 2025, marked by nearly 10% capacity reductions from multiple firms. 

A RaboResearch quarterly report, issued Wednesday, labeled it one of the sector’s hardest years lately, citing weak sales and closures. 

Analysts forecast a third year of decline in 2026, with no strong rebound until 2027.

PCA’s third-quarter earnings in October showed a 38,000-ton drop in corrugated production year-over-year and a 2.7% sales dip, though demand picked up later.

In parallel industry shifts, International Paper recently detailed a US$150 million upgrade to its Vicksburg, Mississippi mill for recycled containerboard production, set to add 75,000 tons annually by mid-2026. 

The project emphasizes lower emissions through advanced recycling tech, responding to similar fiber cost hikes.

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