International Paper announces layoffs

Associated Press

STAMFORD, Conn. — International Paper Co. said late yesterday it was cutting 3,000 jobs — about 10 percent of its salaried U.S. work force — and restructuring several of its businesses.

The company, which completed a move to Stamford last month after acquiring Champion International Co. last year, said the changes would help cut costs and focus resources on its core businesses of paper, packaging and forest products.

The job cuts will be spread over the next year though a streamlining of staff support functions and organizational changes in some operating businesses, the company said.

"These decisions are difficult because they affect hardworking and talented people who have dedicated themselves to making IP a great company," said Chairman John Dillon.

"Our capacity management and divestiture efforts, coupled with a rigid financial discipline, are having a favorable impact on our performance and will continue," Dillon said. "But the market and economic conditions we are facing require that we further reduce costs within the company."

The layoffs will occur across the country, said Jack Cox, an IP spokesman. Those affected will be provided severance, he said.

The layoff announcement comes at a time of weak demand for products in IP's industry, said analyst Rich Schneider, managing director of UBS Warburg.

"I think IP is very much reacting to what has turned out to be an extremely weak economic backdrop to their business," Schneider said.

A strong dollar has also hurt companies such as IP because it makes it more difficult to be competitive with exports, Schneider said. He noted that Dillon, the new chairman of The Business Roundtable, was in Washington last week to express concerns about the strong dollar to Bush administration officials.

The layoffs come at a time of consolidation in the paper and forest products industry. International Paper has closed or downsized several paper mills around the country and is in the midst of a $5 billion divestiture program of various specialty businesses so that it can focus on its core businesses.

IP has operations in nearly 50 countries, employs more than 113,000 people and exports its products to more than 130 nations.