Two years after buying Buckeye Technologies for $1.5 billion, Georgia-Pacific Cellulose LLC has spent $20 million upgrading the mill and research center.
Buckeye, a fixture on Memphis’ north side since the 1920s, has been renamed Georgia-Pacific, and continues to render cotton and wood pulp into material used in toothpaste, tires, diapers, hot dogs and an array of other consumer items.
“We’ve definitely been able to grow our business,” Pat Boushka, president of Atlanta-based Georgia-Pacific Cellulose, said in a recent interview recapping the second anniversary of the purchase.
Buckeye, which exports about 70 percent of its product, employs about 200 workers in the research center and mill, which Boushka said was upgraded to boost productivity, safety and quality of the material it makes. Employment had totaled about 235 in Memphis at the time of the sale, and was down from 600 more than a decade ago.
The mill was producing at less than half its capacity when G-P Cellulose, a unit of 35,000-employee Georgia-Pacific LLC, bought the Memphis line to complement its fluff pulp business.
The takeover came during the consolidation in the forest products industry. Manufacturers were hit by soaring natural gas prices early in the 2000s and then a recession followed by falling demand for paper amid the rise of digital publishing.
That reordering saw Memphis-based International Paper Co. in 2006 spin off Verso Corp., a manufacturer of pulp and magazine-quality paper, amid larger plans to sell off forests and lumber businesses and focus on paper and cardboard units. Verso in turn brought in Georgia-Pacific paper and paperboard executive David Paterson as chief executive officer. IP also acquired Texas-based rival Temple-Inland and two years ago sold Temple-Inland’s building products business to Georgia-Pacific LLC.
Once one of the nation’s largest lumber producers, Georgia-Pacific Corp. faced high debts related to settlements in asbestos lawsuits in its building products business. The company sold lumber mills and forests to cut debts and in 2005 was purchased for $13.2 billion by Koch Industries Inc. of Wichita, Kansas.
The Atlanta business, renamed Georgia-Pacific LLC, is the largest holding of the Wichita company, which employs 110,000 worldwide. Koch Industries, with $110 billion in annual revenue, is considered the largest private business in the United States after Minnesota-based grain and commodities handler Cargill.
G-P Cellulose, now considered one of the 10 largest companies in its product lines, competes with International Paper, Weyerhaeuer and a number of rivals in Brazil, Canada and other countries, Boushka said.
“We remain very happy with the acquisition and the combination of our two businesses,” Boushka said.
Koch Industries, founded in 1940 as Wood River Oil and Refining Co., is controlled by the Koch family of Kansas. The company became a household name in U.S. political circles after brothers Charles and David Koch were connected to heavy financial support for conservative campaigns throughout the country, including donations through the super-PAC Freedom Action Partners Fund. This year, their Americans for Prosperity lobbied against Insure Tennessee, spending $1.1 million to help defeat the measure.
Boushka, an employee of Koch Industries for 18 years, described the company as a patient owner rather than an investor who fixes and sells companies.
“We’re very interested in long-term value creation,’’ said Boushka, an Atlanta-based executive who travels to Memphis eight times per year.
The northside mill originated in the 1920s as a cellulose plant opened by consumer products maker Procter & Gamble. The business was spun off in 1993 as an independent company renamed Buckeye, which went public in 1995.