‘Everyone was there to do a job’
History, market forces and proud workers
Friday, Jan. 15, was the day of the meeting. Notices pinned to bulletin boards throughout the plant in the days prior alerted workers to that much.
That day, a Dixie executive from Atlanta was in town. She met with the workers’ union leaders at 7:15 a.m. — 15 minutes after the plant’s third shift ends and its first shift begins — and delivered the news. Then, at 7:30 a.m., she spoke to more than 150 employees sitting in chairs separated by 6 feet — a reminder of the pandemic that had chilled demand for the facility’s products. Those who couldn’t attend were notified with a phone call after.
Just after 9 a.m., corporate parent Georgia-Pacific released the news publicly: It was closing its longtime Dixie cup manufacturing plant in Forks Township by the end of 2021, putting 190 people out of work, and relocating some of the operation’s equipment to an existing site in Kentucky.
“I was taken by surprise,” said Dennis Andrews, a printing operator who has worked at the plant for 23 years and four months. “In hindsight, you could say there were signs, but everybody’s good with hindsight. For me, this came out of left field.”
Andrews, as financial secretary of United Steelworkers Local 412, heard the news at 7:15 a.m. and then again with the rest of the plant 15 minutes later, when he stood in the back of the large open room while the executive spoke through a microphone. He couldn’t tell you much of what she said at the larger meeting — his hearing isn’t all that good after years running the printing press that stamps designs on the Dixie cups.
What’s clear is the closure will be gradual, which effects bargaining between Georgia-Pacific and the union beginning Feb. 8, Andrews said.
The first cuts will come between March 25 and April 7, when 16 hourly employees and one salaried worker will lose
their jobs, according to a Jan. 21 notice filed with the state to comply with the Worker Adjustment and Retraining Notification Act.
Fifty-seven more — 51 hourly, six salaried — will be let go between July 21 and Aug. 3. The final 116 workers, which includes 104 hourly and 12 salaried employees needed to close the plant and decommission the facility’s assets, will lose their jobs sometime between Dec. 15 and Dec. 28.
Wind-downs like this have happened in the Lehigh Valley and beyond before, of course the decision made by a corporate parent based elsewhere that sees declining demand and opts to consolidate operations to reduce costs and keep pace with rivals. Those plants often were longtime employment hubs, places where generations of the same family spent their careers. That was the case at the Forks plant, which dates to 1964 and is just one part of Dixie’s long history in the Lehigh Valley.
The pandemic, by minimizing public gatherings, halting events and forcing many office employees to work from home, cut into sales for paper cups and opened the door for Georgia-Pacific to relocate operations under one roof as it attempts to bolster its competitive stance in the industry.
“We’ve seen a decrease in consumption as we’ve all transitioned to how we’re living in the last few months,” Georgia-Pacific spokesperson Tom Strother explained. “At the end of the day, decisions like this are difficult to make. This was a strategic decision we made based upon the needs of our business and our ability to be competitive long term.”
Or as Andrews said, as he tried to make sense of it all: “This is just the numbers. This is all just numbers.”
But in the Lehigh Valley, overflowing with industrial activity, economic development leaders expressed confidence the Dixie property will be in high demand when it closes. And with many employers in the sector struggling to find talent, the hope is many Dixie workers will land on their feet once they are let go.
Way back when
When state Sen. Lisa Boscola heard Georgia-Pacific was closing its Forks manufacturing plant, her mind flashed back to a 1999 tour of the facility when it was part of the Fort James Corp.
She remembers that Friday afternoon in August as an exciting day, when Fort James touted a $14 million, 48-job expansion at its Dixie plant as the company rushed to meet demand for a then-revolutionary product: a disposable cup made of plastic-coated paper that kept coffee hot without scorching the consumer’s hands. McDonald’s was among the big buyers of the cup, called the PerfecTouch. The company sent Boscola home with some of its cups that day.
“My husband and I thought they were pretty cool,” said Boscola, whose district no longer includes the Forks facility. “I remember having those cups in my house and thinking, ‘This is so great to have in the Lehigh Valley.’”
The state chipped in $275,000 in grants to support that expansion, with Fort James planning to use almost half of the 350,000-square-foot Forks plant to produce PerfecTouch cups. At the same time, the company also invested $14 million to equip its Darlington, South Carolina, plant to make the cups.
Less than one year later, Georgia-Pacific Corp., then better known for its forest and building products, announced it was acquiring Fort James for $7.8 billion in cash and stock, plus the assumption of $3.5 billion in debt. The deal closed Nov. 27, 2000, a major step in the Atlanta company’s push to transform itself into the holder of more consumer name brands such as Quilted Northern, Brawny and Dixie.
Analysts at the time predicted few changes for the 450 employees making Dixie cups, paper plates and disposable forks, knives and spoons at the Forks plant. But the acquisition of Fort James also loaded Georgia-Pacific up with more debt, and the company spent the next few years reducing its debt from a peak of $16 billion to $8.7 billion by the end of 2004.
By November 2005, Georgia-Pacific had a deal in place to go private: Koch Industries Inc. was buying the company for $13.2 billion, plus the assumption of $7.8 billion in Georgia-Pacific debt.
At that time, the Forks plant employed 386 people, Morning Call archives show.
Koch Industries, based in Wichita, Kansas, and run by brothers Charles and David Koch, is one of the largest private companies in the United States and still owns Georgia-Pacific today.
Under Koch, Andrews said the Forks operation’s employment slowly slimmed down over the years. That continued a trend at the site, considering the plant once employed 525 and was Northampton County’s 13th-largest employer in 1996 before the 1997 merger of James River Corp. and Fort Howard Corp.
Thinking about the plant now reminds Andrews of the conversations he had when he started there in the late 1990s. The old-timers, as he called them, would tell him: “Dennis, this isn’t like it was.”
Andrews, whose previous job was nonunion, didn’t think it was so bad.
But now with the plant getting ready to close?
“I find myself as one of the old-timers saying the exact same thing,” he said.
What happened?
Andrews usually would take overtime at the plant when it was available. But when the coronavirus pandemic hit in March, overtime dried up in the printing department. In fact, production at the plant shut down for a few weeks last year as demand slowed for the Dixie to Go/Perfec Touch cup and the snap-on lids.
“As a private company, we don’t publish specific production information,” said Strother, the company spokesperson. “However, there has been a decrease in volume, some of which is attributable to the global pandemic.”
Industry analysts said paper cup volume has been hit hard, especially with many office employees still working from home and no longer picking up their daily cup of joe-to-go. Also, Dixie’s PerfecTouch cup is often used in car dealerships, repair shops, doctor’s offices and other spots where coffee is available to people waiting or working, said Charles Gross, a senior equity analyst with Morningstar who covers the paper packaging industry, including many of Georgia-Pacific’s big competitors.
“Unfortunately, closures throughout the U.S. have sharply dried up foot traffic at those ‘water coolers,’” said Gross, who covers International Paper, WestRock and Packaging Corp. of America.
Though the paper packaging business as a whole is steadily growing, Gross noted there will be winners and losers in the industry. He also has concerns about long-term demand for disposable products that can be hard to recycle, such as the PerfecTouch cup, as consumers increasingly focus on sustainable items.
While it’s true that demand is down, longtime packaging and forest products analyst Mark Wilde thinks there is more to Georgia-Pacific’s decision to close its Forks plant. Wilde covered Georgia-Pacific when it was a public company and now analyzes Pactiv Evergreen and Graphic Packaging International, which also produce paper cups.
“I would be a bit surprised if this short-term issue was the only factor behind the Georgia-Pacific decision,” said Wilde, of BMO Capital Markets Equity Research. “I think they are always looking at their manufacturing footprint for ways to reduce cost.”
While market conditions matter, Strother said Georgia-Pacific also believes having all Dixie cup manufacturing under one roof in Lexington, Kentucky, will allow it to stay competitive. Once the Forks plant closes, all Dixie cups, including premium hot cups, recycled fiber cups and bath cups, will be made at the 550,000-square-foot Lexington facility that employs 230 people.
Gross said Georgia-Pacific’s peers also have consolidated facilities over the last decade.
“Ultimately most of these products can be considered ‘commodities,’ and it’s a constant race to lower your costs faster than the competition,” he said. “Consolidating locations can reduce overhead costs like property taxes or operating lease costs and typically allows some reduction in headcount — one fewer person managing the front desk and fewer accountants and managers per unit of production.”
With work moving to Lexington, Georgia-Pacific is planning to add about 50 jobs at that plant. Mike Watson, president of Teamsters Local 651, which represents the Lexington workers, said the union has started conversations to see if any existing Forks employees want to transfer.
While the company said 230 people work at the Lexington plant, Watson said that’s likely including nonunion employees since the Teamsters no longer has that many members at the facility following some cutbacks in the last couple years.
“This announcement that they were closing Lehigh … quite frankly, I thought it was going to go the opposite way,” Watson said. “We are happy here to a degree because we’re going to get 50 more jobs is what they’re telling me.”
It surprised Andrews, too. He said Georgia-Pacific rolled out a new computer system at the Forks plant in October, a technological upgrade that helped the facility better track product and do inventory. He took that as a sign that the company was reinvesting.
Strother said Georgia-Pacific is implementing new business systems at all of its consumer products manufacturing sites, which included the Lehigh Valley plant late last year.
Then, after all of those months with no extra work available, Andrews said he got a weekend of overtime in January.
“I thought things were turning around,” he said.
What now?
To Don Cunningham, the situation at the Forks facility feels familiar in a way.
He likened it to what unfolded more than five years ago when the Lehigh Valley learned that the longtime Kraft plant would close in Upper Macungie Township, costing 415 people their jobs as part of a larger corporate downsizing.
After the Kraft plant closed in November 2016, the property was sold just months later to an Atlanta developer that demolished the plant and built two industrial buildings, now a 1.5 million-square-foot manufacturing, warehouse and distribution operation for Keurig Dr Pepper.
Cunningham, president and CEO of the Lehigh Valley Economic Development Corp., said two manufacturing companies looking to enter the Lehigh Valley market have already expressed interest in Georgia-Pacific’s plant in Forks. In addition, he said, several area employers, hungry for talent, are eager to hire any displaced Dixie workers.
“There’s a lot of interest already,” Cunningham said. “I just hope the timing lines up.”
For Georgia-Pacific, which owns the nearly 36-acre property at 605 Kuebler Road, Strother said the company will decide what’s next for the property toward the end of 2021, after cup-making operations have ended.
As for the affected workers like Andrews, time will tell what’s next.
Andrews found out recently that his job as a printing operator is going to last until December, so he’ll be among the last group of employees to exit the building where he started as a general laborer 23 years and four months ago.
Born and raised in Easton, Andrews bought a house in Wilson a year ago and just turned 60 years old. The thought of not having a job is scary, he admitted, and he’s got another five years or so of work left in his career.
Whatever comes next, he said: “It will be union work, I guarantee you.”
Now one of the plant’s old-timers, he’ll remember the people he worked alongside at the Dixie plant. He’ll remember how they helped one another. He’ll remember how multiple generations of the same family worked at the plant over the years. His aunt and uncle, in fact, retired from the facility.
“Everyone was there to do a job, and it got done and everyone was happy,” he said.
But now, in 2021, each of the plant’s 190 employees will eventually do their job in Forks one final time. Their last task will occur in March, April, July, August or December, and then they’ll leave behind the facility with a giant Dixie cup planted out front.