A SHORT HISTORY OF INTERNATIONAL PAPER GENERATIONS OF PRIDE

INTROOUCTION was a merger comprised of 17 pulp and protected young I'rces. Operating in Ihe paper mills. Production facilities ranged Northeastern United States, the heart· n the threshold of the 21St cen· from a small mill in Turncrs Falls, Mas­ land of the turn-of-the-century pulp and O tury. International Paper is a diver­ sachusetts-which produced II tons of paper industry, IP employed some of the sified, global company with manufaCluf­ paper perday-to the Hudson River mill nation's most experienced papermakers. ing operations in the Western Hemi­ in Corinth, Ncw York, onc of the most many of whom had honed their skills sphere, Europe. Asia and South Africa. advanced in the industry with a daily during decades of shop floor labor. Its international presence is the result of output of 150 tons. Holdings also in­ These workers knew their pulpwood long-term changes that evolved since the cluded 1.7 million acres of timberland in grinders and paper machincs insidc and company's founding in 1898. Starling as the Northeastern states and Canada. out and rarcly needed the advice of a pulp and paper company based in the During its early years. IP was the managers, who usually concentratcd on Northeastern part of the United States, nation's largcst produccr of ncwsprint, administrative and financial matters. IP expanded imo Canada and the Ameri­ supplying 60 percent of all newsprint The company's ncwsprint business can South during the 19205. Three de­ sold in the United Srates and exporting declined after 1913, when the United cades later the company began expand­ to Argentina, England and Australia. States Congress climinatcd tariffs on ing beyond North America. This was fol­ The company became an industry low-cost Canadian imports, which lowed during the 19805 by the acquisi­ pioneer under rhe leadership of Hugh flooded U.S. markcts, croding IP's mar- tion of subsidiaries operating in Europe, Chisholm, who served as president from South Africa and Asia. 1898 to 1907. Milestones included the conslruction of Ihe first laboratory in Above lutenlaliOlwl P"per pl"yea a /lwjor ORIGINS ANO GROWTH. 1898-1940 the American pulp and paper industry in role ill Ille ,levelopmellt of tire "secOlla" Glens Fall, New York, the industry's first alia "thira"forests ill the SOli til. This photo Incorporated in Albany, New York, on collcCtive bargaining agreemenl and an is part of Ihe secOlla foresl IIcar Nalcllez, January 31. 1898, International Paper innovative timbcr harvestingsyslcm that h-I ississippi,

FOREST HISTORY TODAY I 1998 19 ket share. Moreover, the company be· ing canons. tags and file folders and sup­ technologies. products and market'S dur­ came embroiled in a labor conOiet in plied Ihe first bleached kraft' paper ing the Great Depression of the 1930s 19Z1that disrupted its system of collec­ grades [hat were suitable for milk carton was initiatcd b}' Richard Cullen. who th't: bargaining. IP was subsequently led production. The company sold the bulk served as presidcnt from 1936 to 1943, by Archibald Craustein, presid~nt from of its milkcanon board oUlput to Single and as chairman of t'he corporation 19Z4 to 1936, Craustein reinvigorated Service Containers. Determined to ex­ from 1943 to 1948. the company's newsprint o~rations by pand irs presence in the converting sec­ forming Canadian International Paper, tor. IP acquired Single Service in 1946 VIEW FROM THE TOP. 1940·'960 an IP subsidial'},that acquired vast tracts and later turned it into an inregnted liq­ of timberland in Canada and con· uid packaging operation. The company The early 19405 marked a watershed in structed some of the world's largest also laid the foundation for its specialty the history of the compan)'. In 1941. In­ newsprint mills in the Province of Que· product'S business during the Creat De­ ternational Paper completed a large­ bec. Within the United States, the com· pression, During the early 1930s. it scale reorganization that recapitalized pany diversified intO Southern knft pa· formed Arizona Chemical as a joint vcn­ the company and simplified its corpo­ per production by acquiring two mills in lUTC with the American Cyanamid Com­ rate srruct'ure. During World War II. In­ Bastrop, Louisiana, and one in Moss pany. Arizona Chemical refined crude Ii­ tcrnational Pa~r converted some of ilS Point, Mississippi, and by building new quorturpemine, a by·product of the sul­ manufacturing operations to the pro­ mills in Camden. Arkansas, and Mobile, f;He pulping process, and later became a duction of military items. These in· Alabama. Consolidating its operations in specialry chemicals producer wit'h op­ cluded Ihc V-I Box. an ulrra·strengl'h the Northeastern part of the United erations in the Unired States and over· containcr developed by IP that rcplaced States. IP sold or closed several older seas. In 1939, Canadian Internat'ional woodcn cratcs for the shipment of mili­ mills and converted the remaining oncs Paper teamed up with the Masonite Cor­ tary supplies. Featuring five layers of from newsprint to book and bond porarion to build a hardboard products moisture·proof kraft board laminatcd grades. The company also built up all plant in Carineau, Quebec. Almost' five with insoluble adhesive, the V·I Box un· extensive hydroelectric power business decades later, IP acquired Masonite with dCl"wcnr rii,'Orous tcst'ing, in which it' was in the Nonheast and Canada. This ven· operations in [he United States, Europe left to soak in the ocean surf for Z4 hours ture had to be dissolved when Congres­ and South Africa. The quest for new and then dropped repeatedly on a con- sionallegislation prohibited the combi, nation of manufacturing operations and electrical power production. The Great Depression of the 1930s marked a difficult period, Like most manufacturing companies, International Paper suffered 5t."\'Cre financiallosscs due to the unprecedented economic down· tum. forcing the company to reduce out· put and layoff workers. In addition to selling off poorly pelforming subsidiar· ies. the organization weathered these hard times by illtroducing a range of new products and. later, by branching out into the packaging business. In 1931, III became one of the first paper compa­ nies to manufacture Iinerboard on the Fourdrinier machine. which produced inexpensive. high-quality grades for use in corrugated containers. Major custom­ ers for this product included a leader in the corrugated comainer industr)'. the Agar Manufacturing Corporation. which was acquired b}' IP in 1940. This transaction made the company one of the first integrat'ed linerboard manufac· t'urers in the American pulp and paper indust'ry. Otherefforts to den:lop new business "- followed the same pattern. In 1939. IP We"slrclIgth lillerboord prodllud allIle Geo"&etolVJI alld CallI/It'll mills \\'as us((l,o pioneered bleached kraft grades for fold- produu ,11I:s(' .. vboxes"for Americall scrvicemcII mId women o\'tTScas.

;0 I:OREST HISTORY TODAY 1\1\18 Eswblislled by tP ill J957, the Soutlt/mltis Experimtllf Forest became the compallY'oS umralforeoSt resenrch flldlity rltat dewlopt'd lIlalwgt'mOlf fedlllilllU$ lIud tile' SIII'O'Tm:™. Fred C. Cragg (left), viC( prtsidflll (md gello~ral mallager·woodin lids, Sowllcrn Kraft DivioSioll alld unvrcuuj. Kligle­ 1II1l11, vice prcs('Illalld gcnfral mallager-wood­ lands, inspect a test plantatioll ofoS/aoSll pine trees groWll from genetically improved sud at the SEF in Bainbritlgt:, Georgia, 1966. cretc floor. Using largc amounts of rc­ authorities over the Long-Bell acquisi­ further developcd its pulp and paper cycled paper. [P also manufactured kraft tion. however. convinced IP 10 proceed business. Responding to growing com· cases for the transportation of gun shclls cauriously with further eHorts to expand pctition that resulted in a decrease of and hundreds of other military items. bcyond pulp and paper. As a result. IP domestic market share. Doane estab­ Nitro·ccllulose for explosivcs was made became less diversified than major com· lished a creative marketing center and from dissolving pulps produced by Ca· petitors during the 1950s and early launched an innovative sales training nadian International Paper's mills. 1960s, leaving it morc exposed 10 the program. On the manufacturing side, IP Thc postwar cra witnessed unprec· highly cyclical market for newsprint and added new mills in Vicksburg, Missis­ edented growth and prosperity. John kraft paper products. Thc company tried sippi; Gardiner, Oregon; and jay. Maine. Hinman. who led the company as presi. to address the diversification problem In 1962. thc Georgetown, South COiro· dem from 1943 to 1954 and as chairman during subsequent years. but a viable so­ lina. mill became olle of the first in the from 1954 to 1961. reduced its debt to lution was nor implemented until the pulp and paper indust'ry 10 install com· zero and increased dividend payments. 1980s. putcrized information and process can· During his tenure. International Paper The late 1950s marked the bcginning trol s)'stems. Improving its convening established a research laboratory at Mo· of Imernarional Paper's expansion m'cr­ operations. IP built and acquired liquid bile. Alabama, and the Southlands Ex· seas. The company had bccn a major packaging. corrugated container and periment Forest at Bainbridge. Georgia. exporter for dccades and maintained folding carron planrs in the United which developed lP's SuperTrcc through sales offices in London. Paris, Zurich and States. selective breeding of gcnetically superior Johannesburg. [n 1959, it added the first overseas manufacturing operations pine trees. In 1950. the company started THE CHAllENGES OF CHANGE. a dissolving pulp mill in Natchez. Missis­ through joint ventures with container 1960-1980 sippi, that was the first to usc 100 per­ companies in Israel, Germany. Greece cent hardwood. and started a paper mill and [taly. The same year it organized a International cxpansion continued in Pine Bluff, Arkansas. producing news­ new subsidiary and built a liquid packag­ throughom the 19605. Ovcrseas manu­ print, milk carton grades and light­ ing plam in Caracas. Venezuela. It also facturing operations acquired during the weight white papers. acquired major shares in a bagasse paper 1960s included corrugated container In 1956. IP acquired the Long·Bell mill in Cali, Colombia; converting op­ plants in Catania. ital),; Bilbao. Spain; Lumber Corporation in an attempt to erations in Arecibo, Puerto Rico; and a and Aries and Mortagne, France. These divcrsifY into markets outside paper pro· folding carron plam in Mexico City. Also facilities improved International Paper's duction and conversion. Although the in 1959. International Paper first presencc in the European markcr. The Federal Trade Commission initially ar· achic\'ed S1 billion in sales. company also built new corrugated con­ gucd that this transaCl'ion violatcd anti· Under the leadership of Richard taincr plants in POl1lezia, haly: Guade· trust Icgislation, the merger was eventu· Doane-elected presidcnt in 1954 and loupe. French West Indies: and Las ally approved. The struggle with federal chairman in 1961-lmcrnational Paper Palmas. Canary Islands.

FORr:ST HISTORY TODAY J 1~~8 JI IP's Thomas BuS('h developed madlinery illal influenced laterdevelopmt'Jlts in logging operations. The most famous is ti,e Busch combille or "Buschmaster- .'Ihou'?l herr rimJ J96O. It Olt indi...idlud 1rt't'S. delimbed tllmr, cuI fhnt! ira lengths alld stacked thmr.

Imemational Paper entered a critical VeTOltec. a specialty business launched in Florida: and Springhill. Louisiana. A period in the late 19605. Controlling 1987. Another major initiati\'C ofthe late large-scale corporate reorganization in \'aluable and debt·free assets that had 19605 and early 19705 was the construc­ 19i6 replaced the Southern Kraft Divi· been built up over decades. IP witnessed tion of the Corporat'e Research Center sion and the Northern Division with an era of an unprecedented number of at Sterling Forest, New York. This facilit)' functional business units: white papers. mergers and acquisitions. To avert a hos· has pioneered important manufactUring consumer packaging. industrial packag­ tile takeover and tackle IP's diversifica· and environmental technologies as well ing, wood products and specialty pack­ tion problem. Edward Hinman-elected as innovath'e products during subse­ aging. In each busincss unit, production president and CEO in 1966-increased quem decades. IP also built state-of-the­ managers were encouraged 10 think as the company's indebtedness and Ole· aTl pulp and paper mills in Ticonderoga, marketing and financial managers, and quired speciah"}' businesses. including a New York, and Texarkana, Texas. vice versa. As a result. strategic changes major real estate developer and a mallu, Edward Hinman was succeeded by in a unit's manufacturing' operations facturer of medical products. However. ~redcrick Kappel who served as chair­ were made with a keen e)'e on earnings like many leading corporations of the man of International Paper's board of and sales. late 19605 that diversified into marketS directors from 1969 to 1971. Formerly that were unrelated to their core busi­ chairman of American Telephone & MEETING THE CHALLENGES OF nesses. IP found it difficult to integrate Telegraph. Kappel was the first leader of CHANGE.IBBO-PRESENT its recent acquisitions and most were Imernational Paper since Philip Dodge sold a few )'ears later. A recession in the (1912-1924) who had spent most of his This restructuring led to a major new pulp and paper market meanwhile k-d [0 C2reer with another company. initiative in the 19805. when IP launched a 30 percent drop in the company's earn­ Streamlining i[s operations during a large·scale overhaul ofits mills. Led by ings in 1970. producingaddi[ional finan­ the 1970s. International Paper phased Dr. Edwin Gee-who served as chair· cial hardships. OUI sc\'eral facili[ies and improved its man &om 1980-1985-IP conducted in· Despite these difficulties. Interna­ marketing organization. These [;ISks fell depth studies of mills and plants. The tional Paper scored a number of impor­ to Paul Gorman-who scrved as chair­ Bastrop. Louisiana, mill had to be closed tant successes during this era. Its non· man from 1971 to 1974-and his succes­ in 1982. Other mills received extensive woven fabrics division. which built a sorj. Stanford Smith. who led the com­ upgrades in a 56 billion capital improve· plant in leWisburg. Pennsylvania. made pany until 1980. During their respectivc ment program that included a complete IP an important nonwoven fabrics pro­ tenures, IP closed or sold older mills in reconfiguration of the Ceorgetown. ducer and laid the groundwork for Livermore ralls, Maine: Panama Cit),. South Carolina, mill. The program

Jl FOItEST HISTORY TOI)A\' I lQol)8 phased out inefficient linerboard opera­ One year after the Hammermill ac­ three mills and there was a lockout at a tions and switched to more profitable quisition, a labor conOict emerged at [n­ fourth. The strikes and lockout ended in bleached paper products. The program ternational Paper. In an effort to control the fall of 1988. In 1993. the company also included the reconfiguration of the production costs, the company had ne­ and the union signed a "peace accord" Mobile, Alabama, mill from newsprint gotiated a number of agreements with and agreed to return a positive relation­ and kraft grades to white papers. These the United Paperworkers International ship. mill reconfigurations enhanced produc­ Union and others to eliminate premium [n the late 1980s, International Paper tion efficiency and contributed to a 5 pay for work performed on Sundays and devised a viable solution to its diversifica­ percent cost decrease in per-ton produc­ holidays. However, strikes took place at tion problem. [n the pulp and paper in· tion of white papers from 1982-1988. Fi­ nancial resources for the corporate capi­ tal program were raised through the sale of Canadian International Paper, Gen­ Hugh Chisholm (1847-19121, eral Crude Oil Company and other sub­ one of International Paper's sidiaries, stock offerings and loans. In founders, served as the company's addition to reconfiguring existing facili­ president from 1898 to 1907. ties through the corporate capital pro­ Born in Canada. Chisholm began gram, International Paper built a highly his career as a newsboy on trains efficient containerboard mill in running between Toronto and Detroit. Mansfield, Louisiana, which helped the Possessing considerable business company reduce containerboard pro­ acumen, he soon controlled news­ dunion costs by 18 percent in a six-year paper distribution on major U.S. and period. Canadian railroads and steamboats. The decade from the mid-1980s to In 1865, he sold the business to his the mid-1990s marked a period of un­ brothers, emigrated to the United precedemed expansion when sales more States and became an American Widely considered the most than quadrupled, reaching $20 billion in citizen. powerful man of the time in the 1996. This trend reflected the growth of As a newspaper dealer and owner American pulp and paper industry, high-value product lines, enhanced by of a publishing house in Portland, Chisholm helped IP gain control of the acquisition of the Hammermill Pa­ Maine, Chisholm became interested 60 percent of the American news­ per Company in 1986. This $1.1 billion in the paper business. After an ex­ print market. His skillful financial transaction was engineered by John haustive study of industry condi­ management enabled the company Georges, chairman from 1985 to 1996. In tions, he acquired a small mill in to post significant profits through­ addition to a rich tradition in fine paper Livermore, Maine, and organized the out the early years. Chisholm's production and nine mills, Hammermill Umbagog Pulp Company in 1881. By success raised the ire of newspaper brought invaluable marketing experi­ 1885, Umbagog operated two paper owners who argued that the "paper ence into the partnership. Recognized as machines. Two years later, Chisholm trust" charged exorbitant prices for the "best-known name in paper," organized the Otis Falls Paper Com­ newsprint. Chisholm denied these Hammermill had developed a distribu­ pany, which was followed by another accusations at several highly pub­ tion network and a reputation for quality venture that led to the formation of licized Congressional hearings. that were unrivaled in the American an extensive paper mill and power During his tenure at the helm of the pulp and paper industry. As a result of complex at Rumford. Maine in 1891. company, Chisholm initiated IP's the merger, IP learned valuable market­ Believing that a large-scale merg­ first forest management programs. ing lessons and Hammermill improved er of American paper companies In 1901, he issued instructions the profitably of its manufacturing op­ would stabilize the industry, Chis­ forbidding the harvest of immature erations. Hammermill's extensive distri­ holm joined William Russel, A.N. trees. He also forged a close re­ bution network later became the foun­ Burbank and other industry leaders lationship with Yale University's dation for ResourceNet International. a to form International Paper. At the forestry program, whose faculty large-scale marketing organization that company's first board meeting, and students helped IP select trees sold a wide variety of products made by William Russel was elected presi­ for cutting. IP and other leading companies. Operat­ dent but he died in less than six In 1907, Chisholm resigned as ing in 250 locations at the time, the dis­ months. Hugh Chisholm, who had IP president so that he could devote tribution operation sold graphic arts been elected first vice-president, his eHorts to developing the Oxford supplies and equipment, printing paper, then became president of the new Paper Company at Rumford Falls, industrial packaging, janitorial and enterprise, which was the world's Maine. He was succeeded by A.N. maintenance supplies, retail packaging largest paper company. Burbank. and related products. ResourceNet Imer­ national was renamed xpedx in 1998.

FOREST HISTORY TODAY I 1998 JJ dustry, whose core business was highly During the early 1990s, IP also ~oaincd among many operations, pilot project cyclical, a secure foothold in less-volatile a major presence in the Pacific Rim. plants for dcvelopment work in priming, markels was necessary to maintain a where it established over time a majority packaging and extrusion coating. The healthy balance sheet when earnings shareholder stams in Caner Holt Harvey Cincinnati Technology Center continues from paper producls declined. IP had of ew Zealand. Founded in the 19th some of the function of the Erling Ris learned painful lessons during the late cemury, Carter Holt Harvey became a Research laboratOry which was phased 19605, when il made acquisitions that did leading manufacturer of pulp, paper. tis­ OUt. nOI fit into the overall organization. De­ sue, containerboard and wood products Under Dillon's direction. the com­ termined to avoid this mistake, IP operating primarily in ew Zealand and pan)' undertook a thorough evaluarion strengthened its position in markets for Australia. It also acquired a presence in a of its business leading to decisions that specialty products that were related ro its Chilean energy and forestry company. would guide the allocation ofcapital and core business but less cyclical in earnings COPEe. Carter Hoh Harvey's di\'ersi­ set new requirements for acceptable lev­ that the pulp and paptcr market. fied holdings centered around a core els of profitability. As a resull of this In 1988, for example, the company business in wood products fit well with analysis, the company announced, in acquired the Masonite Corporation, IP's o\'erall organization and corporate mid·I997. a performance improvement modernized its manufacturing facility in philosophy. IP acquired majority share· plan that would include the sale of SI Laurel, Mississippi, and later built an ad· holder status in Carter Holt HaT\~Y in billion in assets. ditional plant in Ireland. These invest· 1995. ments fulfilled their purpose. In 1996. The most recent chapter in the his­ THE IP WAY when the printing papers business stag· tory of International Paper. which began nated, earnings in IP's specialty panels with John Dillon's election as chairman As in the past, International Paper is business grew at double·digit rates. IP and CEO in 1996, was still unfolding commined to continuous improvement derived similar benefitS from other spe· when the company approached its cen· in everything it docs and the key is the cialty businesses. including chemicals tennial. One of the leaders of IP's corpo­ people who make up the company. In and petroleum. nonwoven fabrics and rate strategy development during the 1898, a typical paper mill was run by silicone-coated products. 1980s and early 1990s, Dillon's philoso­ skilled workers who knew more about The late 1980s and early 1990s phy emphasizes customer focus. low­ pulp production, paper machines and marked a period of international e~an­ cost production, technological innova­ product quality than anyone else in the sion. Prior to this era. the compan)' had tion, workforce diversity, and employee organization. One hundred years later. exported a significant share of its prod· involvement in running the business. International Paper is committed to be­ ucts to overseas markets but most of its At the beginning of Dillon's tenure as coming a High Performance Organiza­ manufacturing operations were located chairman. IP extended its long tradition tion. a company with a greater degree of in the United States. the world's largest of community im'olvement by provid­ teamwork and greater decision·making paper markel. During the 1980s. how­ ing building malerials for the reconstruc· power delegated throughout the organi­ ever, overseas demand for paper rose tion ofchurches that had been destroyed zation in order to bener satisfy custom­ sharply with the introduction of office by a series of arson anacks. MoreO\'Cr, IP ers and beat the competition. copiers, computer primers and fax ma­ was a major sponsor of the 1996 Olym· Employees sharing their ideas and chines. In Europe, paper consumption pic Games in Atlanta, Georgia. experiences to improve the business is per person rose at an annual rate of 3 One of Dillon's first business objec· part of what has come to be called "the percent, compared to 1 percent in the tives was the successful integration of IP Way." More formally. "the IP Way" United States. In 1989,Imcrnalional Pa­ Federal Paper Board into the Interna­ includes a commitment to be a global per acquired two European companies: tional Paper family. Fedcral merged with leader and earn an excellent return. It Zanders Feinpapiere AG. Germany's IP in March 1996 in a £3.5 billion transac­ includes being the company of choice leading producer of coated papers that tion that included mills in: Augusta, llOl only for customers but employees. had been founded in 1829; and Aussedat Georgia; Riegelwood, North Carolina: shareholders and suppliers. Rey. a diversified French manufacturer Versailles, Connecticut; the Tait mill in In 1998, as International Paper enters of office copying paper. specialty panels Inverurie, Scotland, as well as extensive the new millennium. its success in fulfill· and related products whose origins date packaging and wood products opera­ ing its vision will depend on the ability back to the 18th century. In 1992. IP ex­ tions. The merger has exceeded its fman­ to conlinue its legacy as a company of panded its European presence with the cial expeCtations. employees who think and act with ere· acquisition of Kwidzyn. Poland's most Also in 1996. International Paper ativity. energy and. most of all. the drive modem paper mill. which subsequently opened the new Cincinnati Technology to succeed. 0 was expanded and upgraded. Center, a major facility that includes,

Printed With pemussion from Genetatlons ofP"dB. A Centennial HislOi)' oIlnletna!1Otla1 Paper. Cos:rtr9l1 19!11. International Paper Company.

J~ FOREST HISTORY TODAY I 199