Graphic Packaging Holding Co. expects to break ground on its $27 million expansion here next month.

The growth planned by Marietta, Ga.-based Graphic Packaging is remarkable, local officials say, considering industry trends and Kalamazoo's recent history of paper-industry contractions.

``It's an extremely competitive industry. ... A lot of mills have closed over the years,'' said John Caston, director of operations for the company's folding-carton plant. ``Nobody is doing this.''

Graphic Packaging, with annual sales of $2.4 billion, last week picked up state and local tax incentives it needed to approximately double the size of its folding-carton plant on North Pitcher Street.

Caston said the company will begin hiring 160 additional workers in 2009.

``It's the strategic location of the mill, it's the skilled work force, and it's the efficiency of the plant,'' he said of why Graphic Packaging decided to expand in Kalamazoo.

The carton plant's work force, represented by the United Steel Workers, will double within two years, Caston said.

Graphic Packaging acquired the carton plant and a larger paperboard mill across Pitcher Street in 1999 from Fort James Corp. The next year, four local paper mills closed, eliminating more than 1,000 jobs.

``It's a good thing for Kalamazoo,'' Jeff Haynes, president of USW Local 2-1010, said of the plant's expansion.

Graphic Packaging, which merged last year with Chicago-based Altivity Packaging LLC and posted a $74.6 million net loss for the year, is looking to increase efficiency and value by increasing production at its best plants, according to a statement from the company.

``We plan to invest in our business where the local operating opportunities are the most productive,'' David W. Scheible, the company's president and chief executive officer, said in the statement. ``From this perspective, we believe our operations at Kalamazoo can become a company model for ongoing performance and manufacturing effectiveness.''

Caston said the Kalamazoo carton plant has increased its efficiency and performance each year for the past several years.

``We're arguably the most productive web-press operation in the world,'' Caston said.

The plant converts 100,000 tons of coated recycled paperboard into more than 1 billion food-product boxes a year, he said. Products include cereal boxes for Battle Creek-area companies.

The carton plant will increase its number of presses to five from three, which Caston said will allow the factory to ramp up production by more than 50 percent.

High fuel costs played into Graphic Packaging's thinking, Caston said. With a paperboard mill next door, expanding the Kalamazoo carton plant can save on freight costs.

Finally, Caston said, the skills and experience of the Kalamazoo work force were essential to winning the expansion.

``Our local union was important in making these jobs come here,'' he said.