Wisconsin paper industry survives, hardly unscathed

Northwest Wisconsin’s two paper mills are rare bright spots in an industry under siege.

Flambeau River Papers in Park Falls had a good year in 2008, producing a record 151,303 tons of paper.

“As we continue to learn and grow, I expect all these production records will fall again in 2009,” said Robert Byrne, Flambeau’s president and chief operating officer.

On Jan. 19, 2009, the mill set a new 24-hour record, 521 tons.Byrne cautioned that orders often are made only weeks in advance, and it’s difficult to predict future business.

He said the company stays ahead through “significant improvements in quality.” The company also maintains a bare-bones staff of 305, slightly below the payroll when the mill closed temporarily in 2006, but just half the 1985 level.

Meanwhile, production at Cellu Tissue in Ladysmith has held steady. “If you can say that, that’s saying something,” said Keith Schenk, mill manager, adding, “no one knows what 2009 will bring.”

He said the plant is well positioned for the future because its parent company has made significant investment over the last two years. Cellu Tissue, which employs 75 in Ladysmith and 350 in Neenah, produces bath tissue, napkins, and paper towels. Demand for those products has not dropped like the market for office paper and packaging material. Over the past decade paper and pulp production worldwide has been battered by recession and competition from the Internet. Demand stagnated, supply exceeded demand and prices dropped.

In addition Wisconsin’s paper industry has lost business to foreign competition in China and South America.

In 2000 there were 52,000 employees in the Wisconsin paper industry. Today there are 32,500.

Last year alone, three mills closed in the state — NewPage plants in Kimberly and Niagara and Domtar in Port Edwards— taking 1,350 jobs with them.

Both Flambeau River and Cellu Tissue stand out amid the industry’s consolidation.

Georgia-based Cellu Tissue acquired the American Tissue plant in Neenah in 2002 and the Ladysmith’s CityForest paper mill in 2006.

The Park Falls mill changed hands from Fraser Papers to Smart Papers in 2005, which closed it a year later. It then was purchased and reopened as Flambeau River Papers by Butch Johnson of Hayward, a creditor in Smart Papers’ bankruptcy. Johnson partnered with Sweden-based Cellmark.

The state’s paper industry used to be highly fragmented. “It was not unusual for market leaders to have less than 20 percent of the market,” states a 2003 report by the Wisconsin Paper Council.

Green Bay’s Fort Howard Paper Co. merged with James River Corp. It was then acquired by Georgia-Pacific, which in turn was acquired by Koch Industries in 2005.

Wisconsin Rapids’ Consolidated Paper was acquired by the Finnish-Swedish company Stora Enso, which sold its North American operations in 2007 to Ohio-based NewPage Corp. NewPage promptly closed the Kimberly and Niagara plants.

The now-closed Port Edwards plant was acquired in 2001 by Canada-based Domtar, which merged with U.S.-based Weyerhaeuser Co. in 2007.

Jeff Landis, president of the Wisconsin Paper Council, said he’s not aware of any mill closures under discussion.

He notes consolidation’s positive side. “Companies are better positioned to deal with economic uncertainties. They’re larger and stronger,” he said.

Foreign competition has taken its toll on Wisconsin paper industry, which has fought back. In October 2008 Appleton Paper Co. won a decision by the International Trade Commission, which ruled that Chinese and German paper manufacturers had illegally flooded the American market with artificially low-priced products.