Weyerhaeuser: Returning to Its Roots

Weyerhaeuser (WY) was founded as a timber/lumber enterprise. In the 1970s or thereabouts, many wood products (lumber/plywood) producers diversified as a form of integration into paper and packaging products. The reason was lumber mills produced waste material (chips, etc) which could be used in making paper pulp. Thus, WY added paper, as did Georgia Pacific, while International Paper (IP) went the other way by getting into the wood products business.

Now WY is unwinding that diversification and returning to its roots. Just guessing at the strategic rationale: the paper business is very capital intensive, does not grow much if at all, is energy intensive as well, and has pollution control costs. Also, the industry despite consolidation remains very competitive.