The 100-year-old Smart Papers mill dominates Park Falls in every way possible. It defines the town’s skyline. Sprawling along the west bank of the Flambeau River, it anchors the east side of the downtown business district.

And since its closure in March, eliminating 310 of the best-paying jobs in this town of 2800, the shuttered mill is a constant reminder of the challenges ahead. The impact is rippling throughout northern Wisconsin and into northern Minnesota where an estimated 300 loggers have lost an important customer.

Smart Papers LLC, based in Hamilton, OH announced the permanent plant closure on March 18 and subsequently filed for chapter 11 bankruptcy protection. Smart Papers executives cited soft markets, rising energy and transportation costs, and stiff competition from mills in China and South America for the decision.

Smart Papers purchased and reopened the mill in February 2005 after former owner Fraser Papers had closed it.

Conditions in the U.S. pulp and paper industry have been declining for a decade. It has lost 175,000 jobs since 1996, according to the U.S. Bureau of Labor Statistics. That decline came a little later to Wisconsin, the nation’s No. 1 paper producer, but has hit with a vengeance. The state’s pulp, paper and paper converting industry has lost 30 percent of its work force since 1999 when employment peaked at 54,300, according to the Wisconsin Paper Council, an industry group. Current employment is about 37,000.

The Park Falls mill closure is the fifth in Wisconsin since 1999, and the fallout was apparent at the annual Northwest Wisconsin Business Development Conference held April 26-27 at Lakewoods Resort near Cable.

Gov. James Doyle sent two cabinet secretaries — Commerce Secretary Mary Burke and Workforce Development Secretary Roberta Gassman — who pledged their agencies’ support in forging what is shaping up as a four-county local recovery response.

Park Falls is in northern Price County, and the largest contingent of

dislocated workers live in neighboring Ashland County. Many others also commuted from Sawyer and Oneida counties.

Price County Board Chairman Dan Racette, a retired 30-year employee who worked in the mill’s natural gas-fired power plant, views conversion of its boilers to burn wood waste as critical to reopening the mill. Energy costs amounted to 60 percent of the entire operation’s operating expenses when Smart Papers closed the mill, he said.

If the mill can’t reopen, a wood waste-fired power plant would be an important generating addition to meet Wisconsin’s growing appetite for

electricity, he said. Preliminary estimates for that conversion are about $40 million over a two-year period, he said.

Meanwhile, the affected communities and their state ally have to deal with a long list of related issues: It includes helping local mill creditors file their claims for unpaid bills; identifying and recruiting expanding businesses that can provide new tax base and employment; retraining to help dislocated workers fill those new jobs and stay in the area; and guiding already-strapped public schools through a likely decline in enrollment.

The lead organization in this recovery effort is the newly-created Park Falls Area Community Development Corp. Leading the new 501(c)6 nonprofit is interim director Frank Kempf, a resident of southern Ashland County and neighbor to many dislocated Smart Papers workers.

In 2005 Kempf retired as executive director of the Ashland Area Economic Development Corp. He was at its helm in 1998 in similar circumstances when the Fort James paper mill closed in Ashland.

“This not only affects Park Falls; hundreds of loggers in the area are effected. About 700 people drive in every day from southern Ashland County,” he said. “The community has been awesome. People are upset, but optimistic that

they can work through it, and the local business community is stepping up to the plate,” he said.

The development corporation has pulled together a two-year recovery strategy.

The obstacles are formidable, Kempf said. “Smart Papers is in bankruptcy. Many of the businesses in town are owed money, and are now creditors in that proceeding. The health benefits are now in COBRA, and we do not know yet about the status of the employees’ pension benefits,” Kempf said. “The company has hired a firm to prepare a prospectus on their property here, but we are not sure it will be shared with us. The bankruptcy of the parent company is complicating communication.”

The corporation has begun the process for hiring a full-time coordinator/planner and clerical staff.

“We want to help employees stay in the area, through job placement or helping them start their own businesses. We have a fair amount of other manufacturing in the area, in town and in Phillips, Prentice, and Mellen,” Kempf said. “Businesses in the area are letting us know about their expansion plans and hiring needs, so that we can get some of the Smart Paper employees into those slots.”

Meanwhile, the Northwest Concentrated Employment Program (Northwest CEP) is stepping up to help with retraining and education, counseling, financial and healthcare problems.

On April 19, the development corporation’s board of directors appointed an “action team” to steer the emergency response.

It’s also responding to inquires about the mill property, including one unidentified potential buyer. The nonprofit also will commission a pre-feasibility study investigating the potential for an Employee Stock Option Plan (ESOP) mill buyout.

“We need to gauge employee interest in this route, and confirm funding for the exploration of this option. This is complicated by the parent company bankruptcy though,” he said.

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Park Falls Wisconsin

Northwest Wisconsin Concentrated Employment Program

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