Fort James Corp. will exit the groundwood business…………………

Fort James Corp. will exit the groundwood business based at the Wauna mill near Clatskanie, Oregon. This decision was made in part due to the company's ongoing strategy to focus on its core consumer products businesses.

"As a relatively small producer in a large, global marketplace, Fort James is unable to compete effectively in groundwood," said Joe Neil, President, Fort James Communications Papers Business. "Given current and projected market conditions, it's unlikely that we'll be able to grow this part of our business in the future."

The groundwood business, which employs approximately 70 people, annually produces 140,000 tons of groundwood paper for use as advertising supplements and newsprint. The business includes a whole log chipping operation, a groundwood pulp mill and a single paper machine. There are no plans to sell these assets, and they will be shut down.

Current plans call for all groundwood operations to cease at the Wauna mill within the next two months.

Fort James Corp. also announced that it has agreed to sell all of the shares of Fort James- Marathon, Ltd. to a joint venture between Tembec Inc. and Kruger Inc., both of Montreal, Canada.. The transaction is expected to be completed in the first quarter of the year.

Marathon is a wholly-owned subsidiary of Fort James that owns and operates a non-integrated northern bleached softwood kraft pulp mill in Marathon, Ontario. Currently, approximately half of Marathon's 180,000 annual metric tons of production is used by Fort James' tissue operations in Europe and the U.S., with the remaining production sold as market pulp. Approximately 300 people are employed at the Marathon mill.

Domestic Paper Stock Use Up for Month

Recent figures from the American Forest and Paper Association shows that the consumption of recovered fiber increased by slightly less than 1 percent for the first 11 months of the year, compared to figures the same time last year. The total for the first 11 months stands at 33.936 million tons.

November’s consumption total reached 3.050 million tons, down slightly from the previous month, although up sharply from figures the same time in 1998.

A promising indicator the further strengthening in the market has been the sharp decline in the supply of recovered fiber inventoried. According to the AFPA, the inventory at the end of November is down close to 19 percent compared to November 1998’s figure. The total for the month, 1.030 million tons, basically held firm from figures the previous month.