“IT WAS A SURPRISE TO ME,” Dave Atkinson recalled of his July 1999 promotion to vice president of operations and plant manager of Groveton. “Probably three or four or five years sooner than I expected. Tom Howatt was on one of his visits to Groveton. He said, ‘Dave, I’ve got an opportunity for you. We’re going to be moving Tom Craven back to take over the Brokaw operation,’ which needed to improve dramatically. Tom was going to bring a lot of what he learned at Groveton back there. I can remember [Howatt] saying, ‘I’d like you to step up.’ I said, ‘I don’t know if I’m ready.’ Tom said, ‘You’re ready.’ Wausau was always very good to me, so it’s hard to say too much bad, although it didn’t end well. ‘You’re not going to be left alone. You know the operation; you’re going to have support.’ It was great. That was another good time. All of a sudden, I was in charge, and I was responsible. Before, I always felt a sense of responsibility, but there was always someone else in the front office. That certainly took some getting used to, but I was very supported both locally and at the corporate office, and never did I not like it, except at the end. As the end came, it was no fun.”
Atkinson especially treasured a letter from Jim Wemyss: “It was short—one or two sentences. It was on Groveton Paper Board letterhead. ‘Congratulations. I’m glad to see that Wausau has promoted a local boy.’ Something very nice that I remember today.”
Pete Cardin and Groveton Paper Board employees were delighted: “We were so glad when Dave was the guy who came into the mill because he was a local guy; he worked at this mill. I remember working with Dave when Dave was a college guy. Smart guy. Great guy. His father worked at the mill. This was a Groveton guy. When David and that team came into the mill, everybody was very optimistic. There was an awful lot of high morale at the mill at that time. You’ve got a local guy here, somebody who really knows this mill, knows the people; it’s wonderful.”
Dealing with energy costs would prove a constant challenge during Atkinson’s tenure as mill manager. After converting from wood chips back to oil in the mid-1990s, Wausau again changed its main energy source in 1998, this time to natural gas. In the late summer of 1999 Wausau and Groveton Paper Board began a pre-engineering study for a co-generation plant. Wausau executives in Wisconsin decided in November 1999 to spend $13 million to build a co-gen plant that would only serve Wausau’s energy needs.
The co-gen plant burned natural gas in a combustion turbine that powered an electric generator to produce electricity for the mill. The exhaust gases from the turbine, instead of being released into the atmosphere, were sent to a boiler called a heat recovery steam generator. There, mixed with additional gas, they produced enough steam to meet Wausau’s needs.1 Atkinson said, “Wausau wanted to be energy friendly, but ultimately they wanted to spend a lot less to make a pound of paper.” The co-gen plant, viewed as a “big cost-reduction project,” would be Wausau’s last major investment in the mill.
By the time the co-gen plant went online on November 30, 2001, the U.S. paper industry was in deep trouble. Between 1989 and 1999, fifty-two pulp mills in the United States had either shut down or converted to the production of recycled pulp. Between 1999 and 2002, 105 paper machines were shut down in North America.2 By 2004, nearly all the timberland owned by paper companies in northern New England had been sold off.
Competition with newer, faster mills in the southeastern United States and in China, coupled with rises in pulp prices, fuel costs, and declining demand for paper, caused Wausau’s earnings to yo-yo from one quarter to the next. Wausau suffered a $4.7 million loss in the first three months of 2001. The Groveton mill was burdened with high inventories (unsold paper products), and it was forced to make more low-priced commodity runs because it had been unable to expand the market for its higher-priced premium paper.
Atkinson was under relentless pressure from Wisconsin to make the Groveton mill more profitable. Groveton was earning a 7.5 percent return on investment—a respectable profit for a locally owned mill after factoring in all the other benefits it provided the community. This did not satisfy the demands of the directors and shareholders of an absentee-owned corporation who expected a 15 percent return. Atkinson wrote: “We have been in the black, however not ‘in the black enough.’” For the first time he addressed the growing concern that the paper mill might not survive. “Does this mean that we are in trouble and close to shutting the doors?” he asked. “ABSOLUTELY NOT! However it does mean that if we don’t make a change that longer-term we would be in trouble.”3
Wausau posted earnings losses in 2005 and 2006. Its Brokaw mill shut down its Number 3 paper machine for six months in September 2005. In March 2006, Berlin’s Burgess pulp mill closed; a week later Georgia Pacific shuttered the Old Town mill that Jim Wemyss had transformed in the early 1970s. The demise of the Berlin and Old Town mills forced Groveton to pay even higher shipping costs to purchase pulp from more distant mills.
Desperate to contain costs, Atkinson and his coworkers focused on “controllables,” such as reducing energy and water use, generation of broke (low-quality and waste paper), customer complaints, and workplace accidents. “We’d have monthly meetings that I would go to,” Atkinson explained. “I would say, ‘I understand your concerns [about the mill’s survival]. We need to stay focused on what we can control. We can’t control the market. All we can control is how efficiently, how cost-effectively we work. Focus on that, and we’ll be OK.’”
As the crisis intensified, Atkinson recalled, “There was a conscious effort to say, ‘We can’t control the price of natural gas. We can’t control the price of energy. We can’t control the price of diesel fuel. But we can control our usage. How can we use less to do the same thing?’” Engineer Tom Bushey had spent an exciting decade working on Wausau’s major capital improvement projects. Bushey’s last years at the mill, he said, were “spent exclusively trying to wring operating costs out of that place.”
The mill was using twenty thousand gallons of freshwater to make a ton of paper. That water, containing wood fiber and heated to 120° to assure optimal paper formation, was then flushed to the water treatment plant. Because Groveton ran mostly short orders and changed colors frequently, it used much greater amounts of water than if it had done longer runs with fewer color changes. The mill also wasted massive amounts of steam during the paper drying process.
Groveton engineers drew up an $8 million project to address water and steam waste, but Wausau’s board rejected it as too costly. “Groveton, in its can-do way, said, ‘All right, let’s go after it in small, incremental ways,” Dave Atkinson said. “‘What parts can we do? We can’t do the $8 million one, but we can spend $100,000 here.’ A lot of those things were done, and they saved our facility money, [and] probably kept us running longer than we would have otherwise.”
Bushey and his colleagues hit upon a strategy to reuse the “white water:” “By the simple addition of some three-way valves, we were able to take a lot of the existing tanks and make three major reservoirs for surplus water that was coming off the paper machine. One was dedicated to [Number 5 paper machine], one was for [Number] 6, and one was for non-dyed water that had come off [both] machines. That project was instrumental in us getting from twenty thousand gallons a ton of paper down to five thousand or six thousand gallons a ton, [and] in getting us from fifteen and eighteen mm [million] Btu’s per ton down to eight and nine mm Btu’s per ton. Huge, huge.”
The mill’s engineers also took steps to reuse steam. “That really resulted in many, many heat recovery projects,” Atkinson said. “We spent a fair amount of money. All that hot air that is used to dry the paper that goes up through the hood, that you see coming out as steam when you drove through town, how can you pump that back in to preheat some water that you’re going to heat up with raw steam?”
From January to June 2005 the Groveton mill used 93,000 dekatherms less gas than it had for the first half of 2004, and 176,000 dekatherms less than January to June 2003.4 Groveton’s waste-reduction projects were adopted in other Wausau mills. “Groveton was ahead of the curve on implementing projects like that,” Atkinson said with pride. “Many of the things that Groveton implemented became demonstration projects that we brought to the other mills.”
Wausau continued to pursue its policy of growth via acquisition despite the intensifying crisis in the United States paper industry. In 2003 it bought Laminated Papers Inc. of Holyoke, Massachusetts. In 2004 Wausau-Mosinee changed its corporate name to Wausau Paper. That autumn, Wausau acquired a shuttered mill in Brainerd, Minnesota, for $9.6 million. Brainerd’s two paper machines had been rebuilt in the previous decade. They were capable of producing seventy thousand tons of paper a year, about two-thirds of Groveton’s capacity. The mill also had its own small hydro facility.
“The kiss of death for Groveton was when they bought the mill in Brainerd,” Bill Astle asserted. “This [Brainerd] mill had some state-of-the art-equipment in it. It had been shuttered because they couldn’t sell paper. The idea was, oh, yes, they could fill that with the commodity grades that we were shipping out to the Midwest. When they bought the mill in Groveton, there was already a customer base. With Brainerd, there were no customers.”
“Everyone in Groveton was very much up in arms when they bought the Minnesota mill,” Tom Bushey remembered. “Time and again it seemed that that mill was going to be the death knell for Groveton.” The demoralizing impact on the Groveton community forced Atkinson into damage control. “The biggest question I’m hearing is, ‘Does this mean the Groveton mill will be shut down?’ ABSOLUTELY NOT!” Atkinson wrote in the Autumn 2004 issue of Wausau Happenings.5 Despite Atkinson’s public optimism, Wausau clearly was in trouble. In 2005 it sold off twelve thousand acres of “non-strategic” timberlands, mostly located in northern Wisconsin, to pay down debt.6
As superintendent of shipping, Bill Astle was one of the first to sense the growing crisis. Wausau had never garnered as much of the East Coast premium paper market as it had hoped, and after the acquisition of the Brainerd mill, Wausau mills produced much more paper than they could sell. “It just struck me, ‘God, inventory level is growing’ to where we had every square inch of space filled,” Astle recalled. “‘Why are we buying another paper mill at a time when we’ve got such huge inventories?’ From my perspective, we can’t keep running these paper machines full tilt if we are shipping out ten pounds for every fifteen pounds we produce. We’ve got a lot of product that’s got no place to go. We had the old Campbell envelope building there in Stratford. We finally had to get out because the roof was coming in. Every day it was just this revolving door. I’d have to send somebody up to Colebrook and then make arrangements to send eight or ten truckloads up to dump off, and then go up to try to inventory all of it. It was insane. We had way, way too much inventory.”
Astle escaped the excess inventory crisis by taking early retirement in October 2005: “There was almost a sense of dread every time a weekend was coming, because, ‘Where are we going to put all this paper?’ between Friday afternoon and Monday morning. It had to go someplace, and it was always packed full in Groveton. I’d end up working on weekends just to arrange to shuttle the stuff off-site. I was becoming disillusioned; ‘This isn’t making sense anymore.’ I was in there about quarter of six every morning and left about five every afternoon, Monday through Friday. By the time I came home, I just didn’t have anything left to give. I need something better than this. Then it worked out Regina was retiring. I need to look at the numbers. We live modestly, we don’t spend a lot of money. We have no kids. I guess that’s the real reason I left—a better life. I ended up agreeing to work an extra six months to give them time to replace my position.”
In its last years, Groveton enjoyed some success producing premium paper for annual reports for large corporations. Dave Atkinson recalled a large order from United Parcel Service: “Our sales people were out there beating the bushes to get the annual reports for the big corporations. I think [the UPS order] was twelve hundred tons. We’re talking eight days, seven days on the paper machine. It was going to be printed in Atlanta. It was done on Graphika Brilliant White, I believe. Lineal, which was an embossed pattern that had value added. It was a super bright paper. It had a good high selling price. Something happened, and [UPS] realized, as they were nearing the end of their run, that they did not have enough paper. They put an emergency order in, and they didn’t realize it until way way too late. We ended up saying, ‘Yup, we’ll go back on and make an additional forty tons.’ They didn’t need much; they needed two hours’ worth, or whatever the heck it was. But we’re going to keep that customer happy.” There was a problem, however. “It needed to be expedited shipping,” Atkinson laughed. “The only way we could get it there was via FedEx freight.”
Soaring natural gas prices ate up the savings Wausau’s Groveton mill had achieved in its relentless economizing efforts. Energy costs for most light industry are about 1 to 5 percent of operational costs. Energy traditionally had accounted for about 10 to 15 percent of paper mill costs. By 2005, Groveton was spending 15 to 25 percent of its monthly budget on energy. Atkinson termed this huge price jump “a big deal.”7
Mill engineers contemplated returning the boiler to wood chips. Could the mill have survived if Wausau had stayed with wood chips? “It would have certainly extended the potential life of Wausau-Groveton, in my opinion,” Atkinson responded. “When gas spiked to twelve, thirteen, and fourteen dollars a dekatherm, there were a lot of Monday morning quarterbacks, myself maybe one of them, saying, ‘Man, we should have stayed with chips.’ It wasn’t necessarily a local decision. It could have extended the energy cost viability of Wausau-Groveton. But, honestly, not for much longer.”
Wausau’s Groveton mill shut down for nine days at the end of 2005 at the time that Paper Board went out of business. “That’s a fairly typical time of year to shut down, because printers in the major metro areas shut down, especially if the economy’s not all that great,” Atkinson remembered. “There’s not a lot of people printing; it’s not an election year. Inventories were at record high levels.”
Early in 2006, Atkinson acknowledged that the preceding year had been “one of the most difficult and challenging years in our mill’s history.” To the list of “uncontrollables” that were relentlessly driving mill costs up he added “escalating health care costs.” “I felt tremendous pressure,” Atkinson remembered. “It wasn’t fun; but I didn’t feel like the end was as close as it was. We were reading about mills all over the country going down. The old mill—the oldest mill. The comeback to that was, ‘Yes, we’re an old mill, but we’ve got brand-new equipment. The shell is old, but the guts are efficient.’ I think in ’05, if you had said to me, ‘Will this mill be here ten or fifteen years from now?’ I probably would have said yes. But I wouldn’t have been as affirmative. If you had said, ‘Three years from now?’ ‘Absolutely.’ No question about it.”
Throughout the ordeal of 2005, 2006, and into 2007, Dave Atkinson remained publicly optimistic. Was this a public relations effort to mask a growing crisis, or did he believe the mill would pull through? “It was one hundred percent sincere,” he declared. “I knew that by ’05 we made the best-quality [paper], had the best, most modern equipment. We had the best infrastructure of all the mills in the corporation. We had the best paper mill efficiency and finishing efficiency in the corporation. We had a very good operation. In ’05 and ’06, certainly I was very optimistic, and it was one hundred percent sincere. I think there was no reason not to be.”
In the autumn of 2006 there was a flicker of hope. The mill made a profit in the third quarter (July–September) for the first time in nearly two years, owing to a dramatic improvement in the printing and writing business. In the spring of 2007, Atkinson was cautiously optimistic. The paper market had improved, “but not to the degree that supply and demand are balanced,” he wrote. He hailed efforts to control safety, efficiency, production, and the quality of Wausau’s paper products: “I am pleased with [the] momentum of our mill!” Complaints from customers had declined over the previous four years. Generation of broke had declined each of the past five years. Except for 2006, the mill had boasted excellent safety records every year since 2001. And, for the fifth consecutive year, paper machine crews had reduced the average time required to make grade changes from thirty-three minutes in 2002 to twenty minutes in 2006.
One upbeat story made the local press. The Groveton mill supplied the interleaf paper—the heavy, bright-red paper that was glued to the hardcover book’s board—for the seventh and final Harry Potter book that was released in August 2007. Two sheets of premium Groveton paper for every book printed. “They made a lot of books,” Atkinson said. “My recollection is that was maybe a hundred-ton order. It didn’t cost us that much to make, but we got paid probably three times the selling price for a more commodity-oriented grade.” It required about ten hours to run off that order, Atkinson estimated: “That was high profile; it got a lot of press. It was the right thing to do, but it literally occupied less than a day’s worth of production on the machine.”
A four-year union contract was successfully negotiated in the spring of 2007, but by summer, Atkinson gloomily reported that the market for fine papers “is out of balance and shrinking.” Manufacturing costs had increased 20 percent in the previous four years, while revenue from sales had risen less than 2 percent.