Northeast Wisconsin’s paper industry looks to new direction with high demand for corrugated packaging products
Story by Lee Marie Reinsch
Futurists have been predicting a paperless society for years, and while it’s true that technology has decreased Americans’ hard-copy reading habits, we’re using more paper products in other ways.
“You cannot take your iPhone and blow your nose into it,” joked Jeff Landin, president of Wisconsin Paper Council, an advocacy group for the state’s paper industry.
Although the word ‘paper’ might conjure the image of the thin, flat white stuff we eventually cover with words through some means, the writing paper market is just 10 percent of the state’s total paper industry output, according to Landin. The other 90 percent falls into three paper-grade categories: tissue paper, packaging and specialty papers. And despite more than a decade of paper mill closures, consolidations and cuts, a number of positive things are happening in northeast Wisconsin’s paper industry.
The pinnacle of the paper industry in Wisconsin was around 2000, when the industry employed some 52,000 people. But from there, circumstances from global competition to changes in consumption conspired to take a scissors to that number.
“All those things took a toll on the industry, not only in Wisconsin, but across the United States,” Landin said. “It’s a nationwide and even global experience of losing jobs in the paper industry.”
Today, an estimated 31,000 people in Wisconsin work in the paper industry, about 40 percent fewer than in the year 2000.
It’s a steep drop, but Landin likes to see the Starbucks cup – made in Wisconsin, by the way – as half full. “There are still 31,000 jobs and that’s a very large number,” he said.
Compare that with the hot topic of the day: the coming Foxconn development in Racine County.
“It will do a lot of great things, but they’re talking about peaking at 13,000 jobs, which is less than half of what we have in an industry that’s been established in the state since the mid-1800s and will be here for another 170 years,” Landin said. “We’ve been the No. 1 papermaking state for over 50 years and still are, and we’ll continue to hold that distinction.”
It’s a misconception the paper industry was dead and is now coming back, Landin said.
“People thought that because mills were closing and there was consolidation going on that it was dead and dying. It was just going through evolution and consolidation, which is not unlike what we’ve seen in the automotive and healthcare industries. Those aren’t industries people think are going away,” Landin said. “It was evolving with the economy we have now and right sizing the industry to make sure it can compete with other competitors within the United States and around the world.”
Turning lemons into packaging
Many paper companies are responding to the shift in consumer habits by making more of what those consumers demand and less of what they don’t. Midwest Paper Group of Combined Locks, formerly known as Appleton Coated, is among those.
“We’re moving away from printing- and writing-grade paper to brown packaging grades,” said Doug Osterberg, general manager and managing director of Midwest Paper Group.
It would be simplifying the industry dynamics too much to say Amazon and online shopping are to thank for this shifting trend, but it’s an easy metaphor to explain the cultural change that’s led to an increased demand for packaging.
“Obviously the paper and writing (market) is in decline because of the internet – people are getting their information electronically, and that’s the trend for communications,” Osterberg said. “But counter to that is that everybody’s now going online and ordering things and receiving them in a box, so that market is growing. And we’re making that change here.”
It’s created a high demand for corrugate containerboard – or what’s often more simply referred to as cardboard.
“Supplies are not keeping up. (Demand) is growing faster than people are converting or building new machines to support it,” Osterberg said. “And the printing and writing market is doing just the opposite, so the timing couldn’t be better for what we’re doing here. Our machines trim the market really well – in other words, our machines fit the corrugators – and it took a relatively small investment to get started.”
Destined to remain open
Appleton Coated went into receivership last fall when its lender didn’t renew its loan. A liquidator purchased the plant, intending to sell.
Osterberg said rumors that Appleton Coated went into bankruptcy or that the price of pulp went up weren’t true.
“We did not run out of money. We did not even have all the line (of credit) drawn on the loan,” he said.
But once the new owners identified that it made sense to keep some machines running while they sought out buyers, they realized the machines were perfect in scale and size to adapt to this surging market for corrugated containerboard.
“We convinced them it would make more sense to get back on track and continue the conversion we were trying to do to move away from printing- and writing-grade into packaging, and that if we did it successfully, they would be well rewarded, because the place would be worth more when they do get around to selling it,” Osterberg said.
Of the 600 onsite employees as of last fall, almost half have been brought back.
“That’s what’s important. They’re good paying jobs – the kind that (each) have, I’m told, six or seven other jobs supporting it in the community,” Osterberg said.
Since they’d never had a pulp mill onsite, they’ve had to buy all their own pulp, Osterberg said. The initial investment earlier this year is helping Midwest Paper Group shift from using double-lined kraft paper (known as DLK, which is die-cut trimmings from box companies) as the fiber source, toward using old corrugated containers as the fiber source.
“That’s a virtually unlimited supply,” Osterberg said. In fact, Midwest Paper Group is slated to start its own pulping processes using recycled corrugated containers later this summer. “We’ll put them into a pulping operation that takes the tape, staples, glue and garbage out, and cleans that fiber up so we can use it to make a new sheet of paper that will go back out and be made into a box again.”
A greener Green Bay Packaging
Green Bay Packaging hopes to enter the old corrugated container market as well with its new $500 million facility in Green Bay. Its current mill setup is more than 70 years old.
“Technology has changed and is beyond us now,” said Bryan Hollenbach, executive vice president of the diversified paper products manufacturer.
Company leaders knew they had to make some investment to keep up with the times.
“We looked at a lot of different options, including getting out of the paper making business. We seriously considered just buying paper,” Hollenbach said. “We looked at building another mill in another state in the lower Midwest because they were just performing a lot better.”
Construction crews are expected to break ground on the expansion project this fall. It’s believed to be the largest business development project in Brown County’s history. The proposed project will replace the old mill on North Quincy Street, which would remain operational during construction.
The new facility will feature a 300-inch paper machine – almost twice the size of the current machine – that would enable it to handle 100-percent recycled material, meaning old corrugated containers and mixed-weight material.
“It will be an environmentally-friendly mill,” Hollenbach said.
Green Bay Packaging will also replace its coal-fired boilers with natural gas boilers and put in a water reclamation system.
“So there’ll be zero discharge to the Fox River,” Hollenbach said. “We believe it’ll be one of the most, if not the most, environmentally-friendly mills in the United States.”
Green Bay Packaging employs 3,600 people across the country, including 1,500 in Wisconsin, some 1,100 of which are based in Brown County.
“We committed to retaining those positions in the state, and then, over a period of time, we’d add another 200 jobs throughout the state,” Hollenbach said.
Hoping to support an industry that’s suffered closures and layoffs in recent years and add balance to the $3 billion in incentives the state committed to Taiwanese electronics manufacturer Foxconn, Democrats in the Wisconsin legislature earlier this year introduced Assembly Bill 1004, known as the Papermaker Fund.
Through Wisconsin Housing and Economic Development Authority, the program would establish a $60 million fund providing five-year, interest-free loans to paper-related companies in Wisconsin for certain projects. Half the money – $30 million – would be earmarked to update facilities for improved energy efficiency, and the other half would be designated for converting paper mills to make products in greater demand.
AB 1004 is a response to what Rep. Gordon Hintz (D-Oshkosh) said is the state’s lack of a long-term strategy to support jobs in Wisconsin’s paper industry.
Hintz called the bill a starting point to discuss “a forward-thinking program that wasn’t reacting to the closures … by chasing them with cash payments.”
He and other state Democrats fear there’s already a glut in the market of the LCD screens made by Foxconn, and feel the funds supporting the incentive package could be better used elsewhere.
“The most important thing that state government does in people’s lives is really long term,” Hintz said. “It’s not about what you do today for tomorrow. It’s infrastructure, education, quality of life, growing existing businesses, small business development – not throwing money at foreign companies with a product that is already no longer in demand.”
However, since AB 1004 was introduced near the end of the last legislative session, the next opportunity for it to proceed will be in January 2019.
Lee Reinsch of Green Bay worked 18 years at daily newspapers before launching her freelance business, edgewise, in 2007.