International Paper Company
International Paper Company (IP) is a leading global manufacturer of paper and packaging products, established in 1898 through the merger of seventeen paper and pulp mills in the United States. With revenues of $25.2 billion in 2022, the company operates four main business segments: industrial packaging, printing paper, consumer packaging, and distribution. IP is particularly notable for its industrial packaging division, which produces containerboards and corrugated products, contributing nearly 70 percent of its revenue. The company has a vast footprint, managing approximately 23 million hectares of forestland and operating in over 150 countries.
Throughout its history, IP has expanded significantly, notably through strategic acquisitions, including the acquisition of Hammermill Paper Company in the 1980s. Despite facing challenges such as the decline of the paper industry due to digitalization, IP has adapted by restructuring its operations and focusing on industrial packaging. The company has also made strides in sustainability, implementing initiatives like a biomass boiler in Brazil to reduce fossil fuel use. Additionally, IP has been involved in labor disputes over the decades, reflecting the complexities of labor relations in the manufacturing sector. Overall, International Paper Company remains a significant player in the global paper and packaging industry.
International Paper Company
- Date Founded: 1898
- Industry:Paper and packaging
- Corporate Headquarters: Memphis, Tennessee
- Type: Public
Starting as a merger of seventeen paper and pulp mills in the United States, International Paper Company (IP) is one of the world’s oldest and largest manufacturers of paper and packaging products. The $23 billion company operated four major businesses in 2024: industrial packaging, printing paper, consumer packaging, and distribution. Within its industrial packaging business, IP was one of America’s largest manufacturers of containerboards and printing papers. The company owned or managed 23 million hectares of forestland across the world, with a presence in over 150 countries in Asia, Europe, Africa, Latin America, and South America.
The industrial packaging business, which makes containerboards and corrugated packaging products, is the largest sector, contributing nearly 70 percent of total revenue by 2017. The industrial packaging business in North America alone has tens of thousands of employees working in several containerboard mills, as well as many converting plants located in the United States, Mexico, and Chile. IP is also an important manufacturer of uncoated paper used to make envelopes, tags, and file folders. Some of the most popular IP brands include Hammermill, Chamex, and Svetocopy.
IP, which started as an industry leader at the time of the merger, grew exponentially in terms of capacity, technological advancement, and human resources through big-ticket acquisitions. Another prominent theme in IP’s growth story has been diversification. The company moved into the power industry in the 1920s. But the business ran into regulatory troubles and did not last for long. Post-1990s, the company strategically grew its presence globally by diversifying into newer geographies and buying out market leaders. It underwent a major restructuring in the mid 2000s in an effort to improve operations in an economic environment that had seen a steady decline in the paper industry due to various factors. It sold several businesses and a significant amount of forestland, yet remained a major player in the industry.
History
Incorporated in 1898 as a merger of seventeen paper and pulp mills located in the northeastern United States, the newly formed International Paper Company included major mills such as New York-based Hudson Mills, which alone produced over 150 tons of pulp every day. The company met almost 60 percent of the newsprint demand in the United States in its early years of operation. IP expanded in the south of the country in the three decades following the merger. An important reason for expanding in the southern United States was that it was easier to procure timberlands or grow trees faster in the South than it was in other regions.
IP’s story of growth is one of able leadership, strategic acquisitions, and periodic restructuring. Under the leadership of Hugh Chisholm between 1897 and 1907, the company was the first to establish an industrial laboratory and develop a unique time-harvesting system that saved young timber plants. He was also known to have a knack for hiring the best talents in the industry. In the 1940s, the company underwent major restructuring and recapitalization as it also sought to simplify its corporate structure. During World War II, the company diverted its resources to manufacturing packaging products for the military. IP introduced sturdy containers called V-1 boxes as a replacement for wooden crates to carry military supplies. Between 1943 and 1961, under the leadership of John Hinman, the company became financially stable and started paying handsome dividends to its stakeholders. Some of IP’s first important acquisitions made in the 1940s were kraft board and container makers Agor Manufacturing Company and Southern Kraft Corporation. By the 1950s, IP started expanding its operations beyond America to Europe, Asia, and Africa, where demand for paper was still growing.
The following two decades were defined by labor strife and a cyclical recession. In the 1980s, IP underwent another round of modernization and restructuring under the chairmanship of Paul A. Gorman. According to the plan, projects were required to show post tax profits of at least 10 percent for them to remain feasible. The underperforming plants and assets were either shut down or sold. In 1986, the firm acquired Hammermill Paper Company, one of its strongest competitors in white paper business, for $1.1 billion. In 1989, IP bought two important European companies: Aussedat-Rey, the second largest French paper company, and the German coated paper manufacturer Zanders Feinpapiere AG. IP already had operations in Italy, the Netherlands, Spain, Sweden, and Britain.
IP swept the market in the southern hemisphere with the acquisition of New Zealand-based Carter Holt Harvey in 1995. Through this acquisition, IP gained access to Asian and Australian markets as well. Another round of restructuring in 1996 involved selling off 300,000 acres of timberlands in the United States, a $515 million asset depreciation charge for its ailing assets such as imaging products and commercial printing, and a $1 billion divestment or sale of underperforming assets.
The explosive growth of the Internet and email in the twenty-first century in particular caused a downturn in the paper industry as a whole. IP underwent a major restructuring from 2005 to 2006, again selling off a number of businesses and timberlands, but in the early 2000s, the company was the single biggest private landowner in the United States. Pressures continued in the 2010s, with major customers such as the US government moving away from products like paper checks in favor of online alternatives. Yet in focusing on other markets and its industrial packaging business, IP managed to remain successful, even making several notable acquisitions. In 2021, the company announced it would be launching Sylvamo, its new global paper supplier spin-off. By March 2023, Sylvamo employed 6,500 individuals across the world.
Impact
As one of the largest and most prominent companies in the paper and packaging industry, IP has long had a major economic impact in the United States and around the world. Its products are widely used in everyday life, from office printing paper to shipping boxes to absorbent cellulose used in diapers.
Concerns have been raised about the environmental cost of producing paper and pulp, but IP has maintained that it is mindful of its ecological footprint and it sources its raw materials responsibly. In 2012, IP constructed a biomass boiler used in pulp making in Mogi Guaçu, Brazil. The boiler uses renewable biomass fuel and reduces fossil fuel use by 75 percent while saving electricity. The company has also secured third-party certifications to assure consumers that it does not engage in illegal logging or source material from endangered forests.
The company has seen its share of labor strife over its many years of operation. In 1921, as the demand for newsprint dropped and the market collapsed, the company became involved in a labor crisis that thwarted the company’s collective bargaining mechanism. History repeated itself in 1987, when 1,200 workers walked out, dissatisfied with the revised collective bargaining agreement in Maine. The new contract talked about doing away with double pay on weekends and holiday, and asked for givebacks, since the company had been going through a difficult time. Further, layoffs have become more common as the company closes plants across the country.
Bibliography
"About International Paper." International Paper, 2018, www.internationalpaper.com/company/about-international-paper. Accessed 30 Jan. 2025.
International Paper Company after Fifty Years: 1898–1948. International Paper, 1948.
"International Paper Company History." FundingUniverse, 23 Feb. 2016, www.fundinguniverse.com/company-histories/international-paper-company-history. Accessed 30 Jan. 2025.
International Paper Company. New York: International Paper, 1901. Hathi Trust Digital Library Web. 30 Jan. 2025. babel.hathitrust.org/cgi/pt?id=mdp.39015034599640;view=1up;seq=7.
"International Paper." Forbes, 2024, www.forbes.com/companies/international-paper/. Accessed 30 Jan. 2025.
"International Paper Lays Off More Employees, Shuts Down Another Location." Fox 13 News, 31 Oct. 2024, www.fox13memphis.com/news/international-paper-lays-off-more-employees-shuts-down-another-location/article‗6a1e561a-9797-11ef-ade4-e7b2a8fefc4b.html. Accessed 30 Jan. 2025.
"Maine Town’s Quiet Shattered by Strike." The New York Times, 25 July 1987, www.nytimes.com/1987/07/26/us/maine-town-s-quiet-shattered-by-strike.html. Accessed 30 Jan. 2025.
"Sustainability." International Paper, 2023, www.internationalpaper.com/sustainability. Accessed 30 Jan. 2025.
"Sylvamo, The New Name of International Paper’s Global Papers Spin-Off." International Paper, 9 Apr. 2021, www.paperfirst.info/my-test. Accessed 30 Jan. 2025.