Packaging Corporation of America (PCA) has announced plans to fundamentally reconfigure its containerboard plant in Wallula, Washington. The US packaging group intends to permanently shut down the W2 paper machine and the associated kraft pulp lines and operate the site as a single-machine plant with a recycling focus in future.
Packaging Corporation of America announced that the measures should be completed by the end of the first quarter of 2026. In future, only the W3 paper machine will be operated at the site, supplemented by recycled pulp preparation. This will reduce the mill's annual production capacity by around 250,000 tonnes to 285,000 tonnes of high-quality recycled liner and corrugated board raw materials in future. The W2 paper machine with a capacity of around 140,000 tonnes of corrugated base paper had already been out of operation since May 2025. In total, the plant is still expected to produce around 400,000 tonnes of containerboard this year
Cost structure as a key driver
According to the company, the new configuration should reduce production costs at the site by around USD 125 per tonne compared to the 2025 level. This is due in particular to high costs for wood fibres and purchased energy, which made the previous plant layout economically unattractive. By operating as a pure recycling plant with one machine, PCA aims to improve capacity utilisation and significantly reduce the cost base.
The 250,000 tonnes of capacity lost as a result of the closure is to be offset by production increases at other PCA sites from the fourth quarter of 2026. According to the company, this includes investments in existing plants and planned capacity expansions.
Restructuring costs and job cuts
In connection with the restructuring, PCA expects pre-tax charges of around USD 205 million, most of which will be recognised in the fourth quarter of 2025 and the first quarter of 2026. The majority is attributable to non-cash impairments and accelerated amortisation. In addition, according to PCA, around USD 40 million is earmarked for severance payments, contract cancellations and other restructuring costs. A total of around 200 jobs are to be cut.
PCA Chairman and CEO Mark Kowlzan emphasised that the decision does not reflect the performance of the employees, but rather serves to secure the long-term competitiveness of the site. PCA President Tom Hassfurther also pointed out that despite the capacity adjustment, the company would have sufficient containerboard available to continue growing with its customers.
Packaging Corporation of America is the third largest producer of containerboard in North America, operating ten paper mills and 92 corrugated plants and related facilities.
Source: PCA
