AC repair in Riceboro, GA

To many of the 1,100 workers at International Paper, news that the company was permanently shuttering its plants in Coastal Georgia came as a shock. Same for the normally savvy economic development leaders in Savannah.

In Hinesville, however, Liberty County officials say they had seen warning signs for months.

Cardboard and paper manufacturers have faced business headwinds for some time. Bloomberg News reported that IP saw a 5% drop in cardboard packaging in its second quarter compared to last year. The company acquired rival DS Smith earlier this year, a deal that signaled that it would be consolidating its operations in North America. On Thursday, IP announced that it was permanently shutting down the Riceboro plant and related timber and lumber operations, as well as two more plants in Savannah and concentrating work at its Selma, Ala., paper mill.

“Rumors had been that this was about to happen, that it was imminent, even though our hope was that it might not,” Liberty County Development Authority CEO Brynn Grant said.

During the previous eight months, however, business-friendly state and federal officials like Gov. Brian Kemp and Coastal Georgia Congressman Earl “Buddy” Carter — a former employee at the Savannah mill as was his father — apparently spent little political capital to save the hundreds of good-paying jobs.

“I’m not really sure what information you would expect us to have on this, as market forces were the driver behind IP’s decision, not government action,” wrote Gov. Brian Kemp’s press secretary, Carter Chapman. “It is a fact that industries are ever evolving, which is why the Governor has prioritized attracting record-breaking jobs and investment from diversified industries, including in this region of the state, to ensure opportunities are always available for Georgians to find success even as markets and industries change.”

Carter’s office said Tuesday it would forward a request for comment to his press secretary. No one had responded by publication time.

An LCDA internal memo shows that DS Smith, the company that ran the Riceboro paper mill and associated timber operations before International Paper acquired the company in January, had sought additional tax incentives from the authority this spring.

The development authority sought a meeting with IP and DS Smith about what it would take to keep the local operations going after their merger was finalized. LCDA attorney Kelly Davis told The Current that he, Grant, Georgia Department of Economic Development’s Dorrie Bacon, and representatives of DS Smith met on April 4 to start talks. But no one from IP attended, and local IP leaders did not engage with Liberty County about the company’s plans for Riceboro.

In the past, the LCDA had granted Riceboro’s Interstate Paper facilities nearly $200 million in tax abatements between 2002 to 2017. Yet IP operations were widely recognized to be old and inefficient. DS Smith said it would cost about $600 million to update the mill, LCDA Board Chairman Al Williams said at a board meeting Monday morning.

The first official public acknowledgement that something could be brewing was in May, when the development authority board passed a resolution to “communicate the authority’s support for the mills.”

One of the carrots the authority tried to offer was a 20-year tax break, according to the May 12 memo.

Williams said that the authority made “every effort” to keep the mill open, but acknowledged that IP was not serious about discussions. “We did a lot of negotiations, but this decision was made way up the line, and it was kind of inevitable,” he said.

Williams, who represents Liberty County in the state House of Representatives, told The Current he had not reached out to the governor’s office to see whether Kemp might be able to persuade IP to stay: “At this point, this was a decision to be made by corporate,” he said. “This was not a state decision. If it was a state decision, they’d be here.”

Riceboro Mayor Chris Stacy, who also has worked at IP for 29 years, told The Current that the Riceboro plant’s paper machinery was not as wide as that available in Selma, meaning Selma could turn out more product, and that the upgrades for Riceboro would have cost too much. IP announced plans to convert one of its Selma machines to make containerboard, which the Riceboro and Savannah mills have produced for years.

In an e-mail to The Current, Grant confirmed that IP had “mentioned the size of the paper they make there in Riceboro being smaller than today’s standard size,” but that the company’s representatives “did not mention Selma at all.”

In its announcement, IP said it was selling its cellulose fiber plant in Port Wentworth as part of a $1.5 billion deal with American Industrial Partners, a New York-based venture capital firm.

While that facility is expected to remain open, the news that IP was shutting down its containerboard mill and packaging facility in Savannah surprised the Savannah Economic Development Authority (SEDA) and local officials.

“[The] decision to close International Paper Savannah Mill was made and relayed to the public before SEDA or any other organization was allowed to convince them to stay open,” SEDA’s chief marketing and public affairs officer Angela Hendrix said.

Savannah Mayor Van Johnson said he received a phone call “first thing in the morning” from a “mid-level mill manager” informing him of the closures. He then received a written notice informing him and city officials that 691 local IP employees would be “displaced.”

With the seesaw economic policies of the new administration in Washington, city officials have held many conversations with businesses seeking to figure out the way forward “in this new reality,” Johnson said.

Johnson said there had been a “buzz” for “some time” that the company was “looking to streamline their operations.” Also, with the seesaw economic policies of the new administration, there have been many conversations with businesses seeking to figure out a way forward “in this new reality.” But while expecting some cutbacks at International Paper’s local operations, “I did not expect a total closure,” he said.

Like Johnson, Chatham County Commission Chairman Chester Ellis did not learn of the closures until they were a foregone conclusion. He said Friday he was notified of the closures 30 minutes before the company announced them. He and other county officials were working to match the laid-off employees with new jobs that pay a comparable salary.

In his remarks, Ellis did not indicate whether IP representatives had approached county officials before Friday’s announcement to discuss what the county might do to keep the plants open. A county spokesman did not reply to an email seeking clarification.

While IP is shuttering Coastal Georgia mills, some of which have run for nearly a century, it is not leaving taxpayers in the lurch for various bond and tax inducements offered over the years to one of the region’s largest employers.

Part of what development authorities like the LCDA and SEDA do is provide various incentives for companies to locate — or keep — their businesses in a given area. These incentives are offered during site negotiations between the authority and a company’s representatives. For example, a company might be offered a tax break, loans to upgrade equipment, or upgrades to a road leading to and from a warehouse or factory.

Georgia offers different kinds of bonds for industrial development projects. For IP’s Riceboro facility, the LCDA issued “bonds-for-title,” also known as “tax abatement bonds” or “phantom bonds.” The process is somewhat like taking out a secured loan, with the LCDA getting title to a company’s facility or equipment.

The company avoids ad valorem property taxes on its facilities and equipment, and the LCDA avoids general liability on the project. When the lease ends, or if the company terminates it early, the company buys its property back for a token sum ($1).

SEDA did business differently with IP. In 2019, 2022, and 2024, SEDA authorized a total of $285,545,000 in bonds to help IP equip its facilities, mitigate pollution, and refinance debt. Of that amount, $263,705,000 was actually issued; IP has repaid $21,840,000 for the pollution control bonds refinancing and terminated a $130,000,000 transaction it had sought last year to upgrade equipment at the Savannah Mill, Savannah Plant, and Port Wentworth Mill.

Savannah taxpayers are not on the hook for any of the outstanding bond funds, Hendrix explained: “SEDA was just a conduit and IP will have to pay it back.”

SEPT. 10: The Liberty County Development Authority will host a job fair for International Paper/DS Smith employees from 4:30 p.m.-7:30 p.m. on Wednesday, Sept. 10 at the Riceboro Youth Center, 5649 S. Coastal Hwy. in Riceboro. The event specifically targets the mill and timber employees whose jobs were eliminated, regardless of where they live in Coastal Georgia, but other jobseekers are welcome. LCDA Chief Executive Officer Brynn Grant said the fair is being held across the 6:30 p.m. shift change in order to accommodate as many employees as possible. Partners include the City of Riceboro, Liberty County Chamber of Commerce, WorkSource Coastal, Savannah Technical College, Regional Industry Support Enterprise (RISE), SNF, and other local industries. Resume assistance and training resources available on site.

SEPT. 11, 12: In Savannah, RISE will host a second job fair, “Job PALOOZA,” aimed at IP/DS Smith employees but open to all, at Enmark Arena in Savannah from 9 a.m. to 6 p.m. Thursday, Sept. 11, and from 9 a.m. to 3 p.m. Friday, Sept. 12. Employers from Bryan, Bullock, Candler, Chatham, Effingham, Evans, Liberty, and Screven counties will take part. Sponsors include International Paper, WorkSource Georgia, Chatham County, the City of Savannah, and Savannah Technical College. Learn more at risesavannah.com/jobpalooza. Arena parking is free. Dress for success, bring multiple resume copies, and be prepared for on-the-spot job interviews.

APPRENTICESHIP APPLICATIONS: Area union offices sponsor apprenticeship training throughout the year.