On a roll

Paper mills see increased investment

Posted on Nov 14, 2018 :: Cover Story
Posted by , Insight on Manufacturing Staff Writer

When Appleton Coated’s lender forced the Combined Locks paper mill into receivership in August 2017, it looked to be another tale of a paper mill closing in the Paper Valley — the name given to the communities along the Fox River from Green Bay to Lake Winnebago where multiple paper companies got their start. But determination from employees and the community gave this story a different ending: a reopened mill making an in-demand product and investment from its new owners.

The success of Appleton Coated — now known as Midwest Paper Group — is one of several in the region as companies are investing in their equipment and facilities, including Green Bay Packaging’s new $500 million paper mill, the first mill being built in Wisconsin in more than three decades.

“The industry is going through the most substantial transformation it has seen in many decades,” says David Buchanan, president of products and services for Voith Paper’s North American operations, which is building and installing the equipment for Green Bay Packaging’s new mill. “Packaging and tissue, in particular, are driven by demographic shifts and consumer trends that demand convenience and sustainability. This is evident by the increase in e-commerce and the subsequent need for boxboard and other paper-based packaging that is recyclable.”

Appleton Coated’s comeback largely is due to the mill’s switch from producing white writing paper to making brown paper used in packaging. Before being forced into receivership by its lender PNC Bank, the company’s leaders were researching the conversion to producing brown paper, which is more in demand right now, says Doug Osterberg, general manager for Midwest Paper Group. The company, however, couldn’t make the switch fast enough for its lender, which decided Appleton Coated had lost too much money. It immediately closed the mill, putting 600 people out of work.

PNC Bank sold the mill to Industrial Assets Corp. and Maynard Industries USA, which planned to dismantle and scrap the plant, for $21 million. Under the laws of receivership, the sale could be challenged by those with an interest in keeping the mill open. The United Steelworkers, which represented the company’s hourly workers, challenged the sale.

“I felt like we had to do everything we could to save this mill and its jobs,” says Outagamie County Executive Tom Nelson, who also wrote a brief opposing the sale. “They had a great workforce and were good at making paper.”

After listening to the workers’ challenge, an Outagamie County judge ruled just over a year ago that the new buyers had 90 days to find a buyer that would operate the mill. During that timeframe, the owners called back some employees to keep the mill in standby mode.

While that was going on, Osterberg — who previously served as Appleton Coated’s CEO — and other former plant leaders discussed converting the mill over to producing brown paper with Industrial Assets and Maynard officials.

“It was funny how it turned out. They saw our projections and saw the potential profit of making brown paper, so instead of selling us, they kept us as an investment,” says Osterberg, who rejoined the company with several other former leaders. “Working on brown paper fills the machines and keeps the jobs. It’s a simpler business and doesn’t have the complexity of white paper since there are no
grades involved.”

After looking at what they had with the Combined Locks mill, the new owners decided that instead of scrapping the plant or finding another buyer, they would run the plant themselves. Making that switch, the market opportunities for Midwest Paper Group increased immediately.

“On the packaging side, there is a huge demand,” Osterberg says. “We call it the Amazon effect — more people are shopping online, and it gets delivered in a brown box.”

All three paper machines are now up and running at Midwest Paper Group, and more than 300 employees have been called back to work. Since the mill no longer makes white paper, fewer workers are needed.

Manufacturing brown paper also is less complicated since writing paper requires different grades; the same machines that made white paper for years are now making brown paper with little modification, Osterberg says.

The plant’s new owners have announced plans to invest at least $30 million in the mill. A new pulper that takes old corrugated material and prepares it so it can be used to make brown paper already has been added.

“We’re grateful for the support of not only our customers, but also the community, which supported us along the way,” Osterberg says.

Investing in the future

Construction has already started on the new Green Bay Packaging paper mill, with completion scheduled by the spring of 2021. The mill is the largest private investment ever made in Brown County and will replace the company’s 71-year-old facility.

Matt Szymanski, vice president of mill operations for Green Bay Packaging, says the new mill will have a profound effect on the region’s economy.

“The new Green Bay mill will preserve more than 1,100 Green Bay Packaging jobs across Brown County, position the company to grow its local workforce, significantly increase our production and product quality capabilities and benefit the entire regional supply chain — all while operating as one of the most environmentally sustainable paper mills in the world,” he says.

One unique aspect of the project is that Green Bay Packaging chose Voith, which has its North American operations headquartered in Appleton, to supply all the mill’s paper machine equipment.

Buchanan says choosing one manufacturer for all the equipment will make initial construction and plant operations run more smoothly.

“The contract is of a breadth and scope previously unseen in the United States paper industry, as a complete mill order has never before been sourced from a single manufacturer,” he says. “Prior to this historic order, paper producers would select systems or machines from various manufacturers and then integrate them on-site. Our partnership allows them to work with one local manufacturer through the installation, startup and ongoing production to help meet their customer demands.”

The new plant will include the latest technology that will match up equipment and virtual systems, which will ensure high productivity, guarantee minimal downtime and provide useful performance monitoring.

Founded 85 years ago, the family-owned company employs 3,600 nationwide, including 1,100 in Brown County. Szymanski says it was important to choose area companies to be involved in the project, adding that besides using Voith to manufacture its equipment, Miron Construction Co. Inc. of Fox Crossing is the project’s general contractor.

A good investment

Since 2013, Expera Specialty Solutions, which was created by private equity firm KPS Capital Partners after its purchase of Thilmany Pulp and Paper Co. and Wausau Specialty Papers, has invested in ways to address new market and product needs while keeping its plants up-to-date with state-of-the-art technology.

With its niche products — from food packaging and processing papers to pressure-sensitive release liner products — Expera caught the attention of Ahlstrom-Munksjö of Helsinki, Finland, which finalized its $615 million purchase of the company in October.

The deal will not affect operations at the mills in Kaukauna, De Pere, Rhinelander and Mosinee, says Addie Teeters, marketing communications manager for North America for Ahlstrom-Munksjö. She says the deal is a growth step for both Ahlstrom-Munksjö and Expera, which employs about 1,850 at its Wisconsin mills.

“It is truly the beginning of an exciting new era for us,” she says. “By combining our expertise with Ahlstrom-Munksjö, we will be able to serve our customers better with a wider expertise and offering, in addition to stronger resources and sales innovation power.”

During the past few years, Expera made significant investments in its facilities to better meet customers’ needs, Teeters says. For example, in 2017, Expera spent more than $20 million on strategic capital projects, such as improving machine capabilities for clean manufacturing and flaw detection, improving quality and efficiency for highly technical food packaging operations and buying a new coater for the Rhinelander plant.

“The mills in Wisconsin will become more competitive, now being part of a global production platform,” Teeters says.

Challenges continue

While several paper companies are doing well right now, others still face hard times, and the number of people employed in the paper industry has declined dramatically in the past two decades.

• In early 2018, Kimberly-Clark Corp. announced it would close two mills in the Fox Cities — the nonwovens plant in Neenah and its Cold Spring plant in Fox Crossing. More than 600 will lose their jobs when the mills close.

To help keep Kimberly-Clark in Wisconsin, the State Assembly approved a bill last spring to provide tax incentives worth millions of dollars. The State Senate is voting on the measure in mid-November.

In addition to the tax incentive package, the union workers at the Cold Spring plant agreed to wage concessions.

Kimberly-Clark says even if the tax incentive package is approved, the Neenah plant will close, costing about 100 jobs.

• U.S. Paper Converters closed its Grand Chute facility in late 2017, putting 52 people out of work. Company leaders did not give a reason for its closure.

• Appvion, which is based in Appleton and makes labels and receipt paper, completed its bankruptcy process earlier this year. The process cost 200 jobs, and employee-owned shares of Appvion stock lost their value, which meant employees lost millions for their retirement.