Paper industry in transition

Editor's note: This is the second installment of a three-part report on the transition of the local economy. On Thursday, the Daily Tribune published a story on the roots and history of the south Wood County industrial sectors. Today's article looks at the changes and challenges in the local papermaking industry. See Saturday's Daily Tribune for the conclusion of this report, which will focus on local industries that could grow, diversifying and strengthening the local economy.

With a declining demand for domestic paper, leaders of south Wood County's largest employment sector are looking for ways to sustain their industry.

Unfair trade imports by overseas papermakers have hurt, leaders have said, causing challenges for Wisconsin Rapids-area paper mills, which have been the dominant local employer since the 19th century. At least 700 local residents lost their paper sector jobs within the last year and a half, although the industry and supporting businesses continue to employ thousands in the central Wisconsin area.

Gov. Jim Doyle, during a visit to Wisconsin Rapids last week, highlighted the value of research and development for businesses to find new and more-efficient ways of using alternative and sustainable energy. The state's biennial budget proposal includes tax credits for companies that conduct such projects.

Scientists at NewPage's research and development facility in Biron are working to develop several projects with the help of state grants.

"Through these grants, our R&D team will be researching projects in the areas of biofuel production, which addresses a strategic need of the country, as well as energy efficiency opportunities within the paper industry," said Dean Benjamin, director of research for the company, which has local paper mills in Biron and Wisconsin Rapids.

NewPage, the Miamisburg, Ohio-based papermaker, moved its research and development headquarters from its Chillicothe, Ohio facility to Biron last year.

Almost half the company's energy consumption -- 47 percent-- comes from renewable energy sources, such as biomass, which has led to the garnering of $45 million in federal tax credits already this year.
"We're helping to develop even 'greener' manufacturing processes by exploring how to use more recycled fiber in our products and further reduce energy, water use and our carbon footprint," Benjamin said.

Along with its Lean Six Sigma program and a new partnership with paper distributor Unisource -- a collaboration that will lead to about 100,000 tons of more production -- NewPage continues to explore the feasibility of building an ethanol plant in Wisconsin Rapids, company spokeswoman Shannon Semmerling said.

In January 2008, the company received a $30 million grant from the U.S. Department of Energy for the project, which it must complete by 2012 in order to retain the funding.

This isn't the first time local paper mills had to deal with slower market conditions brought on by international competition, said Marshall Buehler, a local historian and former employee of the Nekoosa-Edwards Paper Co.

Around World War I, the government removed tariffs from Canadian newsprint coming into the United States. At that time, many local companies made the transition from producing coarse, newsprint paper to making higher-grade, coated papers, Buehler said.

"That's what saved the paper industry in this area," he said. "If they would have stuck with newsprint, you would have seen failure of all these mills."

Instead, the companies used the new products to their advantage, seeking out a different customer base -- magazines and catalogues. Local mills soon attained contracts with Time and Life magazines, said Dave Engel, local historian and author of the River City Memoirs series.

Montreal-based Domtar, which owns the former Nekoosa-Edwards Paper Co. facilities, continues to research new products and markets that could lead to cost savings, said Craig Timm, a local company spokesman.

"All of the Domtar facilities have been working hard on cost -- especially costs of operating our facilities," Timm said, adding that the company, which operates a mill in Nekoosa, has programs similar to NewPage's to increase quality and efficiency.

With last year's closure of the Port Edwards Domtar mill, which employed 501 people, village leaders continue to work with economic development leaders to study possibilities for reusing the property if the papermaker decides to sell it, Village Administrator Joe Terry said.

Doyle praised the efforts of municipal officials and economic development leaders for their vision to prepare for the future, as well as local workers who, he said, hold a strong work ethic.

"Wisconsin has one of the best work forces in the world," he said.