SAVANNAH, Ga. — International Paper Co. made headlines Thursday with its announcement to shut down two paper mills in Georgia, including a facility that has played a vital role in Savannah’s economy for nearly a century. The closures are expected to impact about 1,100 employees, with around 800 workers affected in Savannah and approximately 300 in Riceboro by the end of September.

The decision coincides with the company’s plan to divest its pulp division, agreeing to sell it to American Industrial Partners for $1.5 billion. This move marks a strategic shift for International Paper as it aims to concentrate more on its packaging business, a space where it currently leads the North American containerboard market. The transaction is anticipated to finalize by year’s end, aligning with the company’s goal to simplify operations amid declining profits and market share.

Alongside the closures, International Paper announced a $250 million investment to enhance cardboard production at a mill in Selma, Alabama. The company plans to record a significant accounting charge of up to $900 million resulting from the closures, reflecting a decreased valuation in its cellulose fiber business, which also supplies materials for consumer goods such as towels and tissues.

The closing of these two mills will reduce International Paper’s containerboard production capacity by approximately 1.43 million tons. The company is bracing for a write-down of around $570 million related to the mill assets while also budgeting $158 million for severance payments and closure expenses.

Tom Hamic, the company’s Executive Vice President, emphasized the challenge of these decisions, noting they are necessary for positioning International Paper for future success. He stated that the focus will now shift to areas where the company can deliver the most value.

Local officials reacted to the news with a mixture of devastation and concern about broader economic implications. Savannah Mayor Van Johnson expressed his disappointment, while Savannah Economic Development Authority CEO Trip Tollison described it as a “terribly sad day” for the city.

The repercussions are likely to extend beyond the mill workers. Georgia House Speaker Jon Burns voiced the apprehension shared by many in the timber industry, highlighting that these closures will adversely affect loggers and timberland owners across the region. He termed it a detrimental blow to both Georgia’s timber sector and the economic health of Southeast Georgia.

Historically, the Savannah mill has been a longstanding establishment, constructed in the mid-1930s to help alleviate the hardships of the Great Depression in the coastal city. The Riceboro mill, which began operations in 1968, was recently acquired by International Paper following its purchase of British firm DS Smith earlier this year.

With the planned closures marking a significant turning point, the community faces an uncertain future as it navigates the immediate economic fallout and the long-term implications of International Paper’s strategic shift.