Packaging Corporation of America (PCA) has announced a major reconfiguration of its Wallula, Washington, containerboard mill, a move that will permanently shut down the No. 2 paper machine (W2) and the mill’s kraft pulping operations.
The company will continue operating the No. 3 paper machine (W3) and the recycled pulping line, positioning Wallula as a single-machine, fully recycled mill.
PCA expects the transition to be completed by the end of the first quarter of 2026. Once reconfigured, the site will have capacity to produce 285,000 tons per year of high-performance recycled linerboard and corrugating medium on W3—representing a reduction of 250,000 tons of annual output.
The W2 machine, idled since May 2025, accounted for roughly 140,000 tons of corrugating medium each year. The mill is projected to produce about 400,000 tons of containerboard in 2025, but PCA says Wallula’s current cost position is no longer sustainable.
A lower-cost operating profile is central to the company’s plan. PCA estimates that the new configuration will reduce the mill’s production cost by approximately $125 per ton compared with 2025 levels, due in part to improved utilization and a simplified operation.
To offset the reduced capacity at Wallula, PCA will shift production to other facilities beginning in late 2026. Projects already underway include adding 140,000 tons of lightweight linerboard capacity at the Jackson mill and phased upgrades at the acquired Greif mills and at Counce.
The restructuring is expected to result in pre-tax charges of about $205 million, spanning the fourth quarter of 2025 and first quarter of 2026. This includes $165 million in non-cash impairment and accelerated depreciation, along with $40 million in cash costs tied to severance, contract termination, and related items. The company anticipates a reduction of roughly 200 positions.
PCA Chairman and CEO Mark Kowlzan acknowledged the human impact of the decision while emphasizing the need for long-term competitiveness. “We recognize the impact of decisions like this on our employees and will provide support through this process,” he said. The changes, he added, are driven by the mill’s challenging cost environment, particularly wood fiber and purchased power costs, the highest across PCA’s system.
Kowlzan noted that the W3 machine, converted to containerboard in 2018, has been a focus of investment and remains central to the mill’s future role. “Operating as a single-machine, recycled mill will streamline operations and significantly lower our cost of production,” he said.
PCA President Tom Hassfurther reinforced that the company will maintain sufficient capacity to grow with its customers. The combination of upcoming capacity at Jackson and system-wide improvements is expected to replace all reduced tonnage as market needs evolve.
PCA remains North America’s third-largest producer of containerboard and also manufactures uncoated freesheet paper. The company operates ten mills and 92 corrugated products plants across the continent.
