MEMPHIS, Tenn. (AP) – International Paper Co. said Friday it will eliminate 1,000 to 1,500 salaried jobs by the end of next year as the “next step” in cost-cutting moves.

The company, which has been closing mills and production facilities in the face of weakening demand for paper products, said the job cuts would lead to savings of $150 million to $200 million by the end of next year.

The company estimated severance costs at $60 million to $120 million, plus $75 million to cover extra benefits for workers who are retirement age or eligible to retire within three years. Those benefits will be paid from pension plan assets, IP said.

The company said it expected to achieve the cuts through retirements, attrition and eliminating some positions. At the beginning of the year, IP had 51,500 employees.

IP disclosed the cuts in a regulatory filing and said it had informed employees.

The Memphis-based company said the job cuts were part of a plan to make the company more competitive. It is seeking to wring $400 million in savings from the $6 billion purchase of Weyerhaeuser Co.’s packaging facilities in August.

In the past three months, IP has responded to high raw materials costs and weak economic conditions by cutting capacity. It announced it was shutting down a pulp mill in Louisiana, closing a paper-production machine at a mill in Virginia, idling a containerboard machine in Oregon for at least three months, and idling another containerboard machine in Oklahoma for an indefinite period.

In October, the company announced that third-quarter profit fell 31 percent on falling demand for paper and packaging products and charges to write down the value of a mill in Scotland and for restructuring.

Shares of IP rose 26 cents, or 2.2 percent, to $12.17. They have ranged from $10.20 to $33.77 in the past year.

AP-ES-12-12-08 1810EST


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