Old Mill Victim of Change in Paper Industry [and Greedy Owners] 23 Apr 2006

If ownership wasn't so intent on paying themselves those quarterly dividends, they would have been able to pay for the needed modern equipment that would have kept them competitive with the rest of the world's paper industry (and saved those 17,000 jobs).

Posted on Sun, Apr. 23, 2006

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Old mill victim of change in paper industry

300 workers lose good-paying jobs

BY ROBERT IMRIE

Associated Press

Tom Ratzlaff is mayor of a small town reeling from the closure of its more than 100-year-old paper mill. And he's among the 300 workers who lost a good-paying job — his livelihood for nearly three decades.

"Some days, I just wake up and I don't know what I am going to do, but you just got to keep going," said Ratzlaff, 45. "You can only cry in your beer for so long."

What Park Falls faces is not new among cities with strong links to an industry that has made Wisconsin the No. 1 paper producer in the United States for decades. The part-time mayor has plenty of company at the unemployment line.

New competition from foreign paper makers, a recession at the turn of the century and new technology — such as e-mail and online advertising that have tamped down demand for traditional papers — have hurt an overbuilt industry all over the United States, said John Mechem, a spokesman for the American Forest and Paper Association in Washington, D.C.

Nationally, 95 paper mills have closed and 123,000 jobs have been eliminated since 2000, he said.

Since the late 1990s, Wisconsin has lost more than 17,000 jobs, or 30 percent of the work force, at paper mills, pulp mills and converting operations, and five mills have either closed or are in the process of closing, according to the Neenah-based Wisconsin Paper Council, an industry group representing 25 paper companies with factories in the state.

Ratzlaff said he was aware of that trend but saw it as a positive for him and his mill.

"You were always hoping that was enhancing your ability to stay open," he said. "Many of those that have shut down were competitors for this mill."

Patrick Schillinger, president of the Wisconsin Paper Council, said more job cutting is likely, and the jobs — some of the highest-paying manufacturing careers in Wisconsin — are gone forever.

"You will probably see more consolidation or mergers within the industry," he said.

Recent developments highlight a trend that Schillinger said started at least seven years ago:

• SMART Papers LLC of Hamilton, Ohio, closed the Park Falls mill barely a year after buying it from Toronto-based Fraser Papers.

• Glatfelter Co. has announced plans to close by June 30 a Neenah plant that makes specialty papers, costing 200 workers their jobs.

• Riverside Paper Corp. has said it will close its mill in Appleton, founded in 1893, eliminating about 100 jobs making specialty papers.

According to Schillinger, paper- and cardboard-making jobs in Wisconsin peaked at 54,300 in July 1999 before plunging to 36,800 in January.

FOREIGN COMPETITION

The job losses, in part, occurred as a once mostly regional industry faced new competition and lower prices from paper makers in China and South America, industry experts say.

Printers can buy paper cheaper from China than walking down to a local mill, Schillinger said. For some products, prices have rolled back to 1996 levels just to compete, he said.

Tom Howatt, president and CEO of Wausau Paper Corp., which operates mills in Wisconsin, Minnesota, Ohio, New Hampshire and Maine, said prices for some writing papers are down 10 percent from just five years ago.

In addition, according to Schillinger, during the "roaring" economy of the 1990s, U.S. manufacturers expanded to produce more paper. Then a global recession hit, easing demand, followed by the growth of new technology unfriendly to paper makers, he said.

The business use of e-mail, companies doing more work online and the growth of online and Internet advertising reduced the need for paper, a drop that could not be offset by a growth in paper used in homes because of computers and printers, Schillinger said.

"It was sort of the perfect storm," he said. "All of those factors have meant a leaner paper industry."

For Park Falls — a city of 2,800 carved out of a forest in northern Wisconsin and nicknamed the ruffed grouse capital of the world — the mill's sale to SMART Paper a year ago rekindled hopes about the factory's future.

The sprawling mill sits just a block off the city's main street, dominating the downtown landscape along the Flambeau River. A yard is piled with 120,000 cords of logs — a mountain of wood waiting to be made into paper.

SMART Paper filed for bankruptcy in shutting down the mill, citing unprecedented high fuel costs and "rapid deterioration" of market conditions.

"Most people have the feeling that they just came in and bled the place dry and that was it," said Ratzlaff, whose wife, brother-in-law and sister-in-law also lost jobs in the shutdown. "A couple of weeks ago, somebody wrote on a piece of paper, 'Place for sale' and put it up front."

On average, the mill's workers earned $17 an hour, and jobs just don't exist to readily absorb them, Ratzlaff said. The ripple effect of the closure hits at least 300 loggers, he said.

OUTDATED MACHINES

Gerry Ring, professor of paper science at the University of Wisconsin-Stevens Point, the only college in the state offering such a degree, said the mill's closing has more to do with outdated, less efficient paper making machines than anything else.

"What should have happened a long time ago — at a lot more of the mills, if they wanted to keep the market — was reinvest in modern machinery," he said. "We could make good paper on old machines far longer than we should. Eventually, the costs get to you when the latest and the greatest comes on line, and then all of a sudden, 'Oh my God. They can make in a half a second what it takes us an hour to make.' "

Ring believes that the continuing rise in energy prices will ultimately lead to a resurgence of regional paper markets for the industry as transportation costs rise.

"You are not going to make paper in China and sell it in Wisconsin ultimately. They can do it for the short run, but oil prices will change that whole picture," he said.

Jim Stueber, owner of True Value Hardware in Park Falls, called the paper mill the life of the community, and said so far his business hasn't been hurt. In fact, it's picked up a little and that worries him.

"They are fixing their homes up," the businessman said. "I have a feeling they are fixing them up to move."