Packaging Corporation of America to Close Paper Machine, Restructure Wallula Mill
The company plans to offset the reduced output with production enhancements at other PCA mills beginning in late 2026.
SEATTLE (Scrap Monster): Packaging Corporation of America (NYSE: PKG) announced plans to permanently close the No. 2 paper machine (W2) and kraft pulping operations at its Wallula, Washington, containerboard mill, marking a major strategic shift for the facility. The company will continue running the No. 3 paper machine (W3) and its recycled pulping systems, with the changes expected to be completed by the end of the first quarter of 2026.
Following the shutdowns, the Wallula mill will have capacity to produce 285,000 tons per year of high-performance recycled linerboard and corrugating medium—a 250,000-ton reduction from current capacity. PCA noted that the reconfigured mill will lower production costs by roughly $125 per ton, supported by improved efficiency and utilization. The company plans to offset the reduced output with production enhancements at other PCA mills beginning in late 2026.
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The restructuring will result in approximately $205 million in pre-tax charges, including $165 million in non-cash impairments and $40 million in cash costs tied to severance, contract terminations, and related expenses. Around 200 positions will be eliminated.
CEO Mark Kowlzan emphasized that the decision stems from rising wood fiber and power costs that have weakened the mill’s competitiveness. PCA executives said ongoing investments across the company’s mill system—including new capacity at the Jackson mill and upgrades at acquired Greif facilities—will ensure ongoing supply for customers.