April 20, 2019

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The Great American Cardboard Comeback

The Great American Cardboard Comeback
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COMBINED LOCKS, Wis. — As he watched the No. 7 paper machine hiss and hum for what he thought was the last time, Rick Strick felt a lump well in his throat.

It was Sept. 21, 2017, and the paper mill that had employed Mr. Strick, his father and his grandfather was shutting down after 128 years. Demand for the glossy white paper that the mill produced for brochures was plummeting as advertising continued its flight to the internet.

The village of Combined Locks, Wis., founded when the mill opened in 1889, braced for the loss of its largest employer and feared that the community would be left with a hulking industrial wasteland, just like the other failed paper mills dotting the state. And for the first time since high school, Mr. Strick, who was then 58, started looking for a new job.

Then something unexpected happened: Amazon and China, two forces that are often blamed for destroying American employment in retail and manufacturing, helped Mr. Strick get his job back.

“No one is shocked when a paper mill closes anymore,” said Kyle Putzstuck, the president of Midwest Paper Group, which bought the Combined Locks mill soon after it was shuttered. “The shocking thing is when one reopens.”

The reason for the revival has to do with the millions of packages that Amazon and other online retailers ship around the world — specifically, the humble cardboard used to construct them. Over the past five years, e-commerce has fueled demand for billions more square feet of cardboard.

An industry that has struggled mightily during the digital age has a rare opportunity for growth. Since reopening, the mill in Combined Locks has switched most production from white paper to brown, installed equipment that can crush used cardboard to make new paper, and hired back about half of the 600 workers laid off during the shutdown.

The smooth brown paper they produce goes to cardboard-making vendors, who sell it in turn to Amazon and other retailers, who ship them to your doorstep.

“Brown is the future,” Mr. Strick said one morning this winter at the mill, where he had resumed his job as a maintenance supervisor.

Brown paper sales slowed following the Christmas e-commerce rush, but industry analysts say the conditions are still ripe for long-term growth. That’s where China comes in. Until early last year, much of the used cardboard consumed in the United States was being shipped to China, where it was recycled into new boxes.

Then, in January 2018, China stopped accepting most used cardboard imports. The material was mixed with so much trash and food contamination that it was causing serious environmental issues.

The policy change has disrupted residential recycling programs across the United States, forcing some communities to bury or burn materials they previously recycled. But for American paper companies that make new cardboard out of used boxes, China’s clampdown has been a boon. It has created a glut of cardboard scrap that is allowing American mills to obtain their most vital raw material at 70 percent less than it cost a year ago.

In Combined Locks, paper drives not only the local economy, but the mill’s identity. Its workers almost never say they are “manufacturing” or “producing” paper. They say they are “making” paper, reflecting how the process is still thought of as a craft with a history that dates back to China in 105 A.D.

The mill has a powerful presence — as if a sci-fi city has landed in a blue-collar suburb. The facility comprises 1.2 million square feet of cavernous buildings, winding tunnels and snaking railroad tracks. It operates 24 hours a day, its lights blazing and towering stacks steaming even in the dead of night.

Across the street is the Lox Club, one of Wisconsin’s traditional “supper clubs.” The bar and restaurant was founded in 1965 by a retired paper mill worker and his wife in a space attached to their house, and the club still has the warm feeling of someone’s home. There are soft reading lamps standing next to comfortable armchairs and an oil painting of two white-tailed deer.

Sitting at the bar one night were Steve Gilsdorf and his wife, Karen. They were sipping the club specialty: Old Fashioneds garnished with brussels sprouts. They both work in the paper industry.

“Around here, we’ve got the Packers and paper,” said Mr. Gilsdorf, 54, who works for a supplier of paper sheets used to cover exam tables in medical offices.

One woman at the bar said she worked part-time for a hand surgeon whose clients often include patients injured in the mills. Another patron bragged about the local high school football team, the Paper Makers, winners of multiple state championships.

On some days, the odor of rotten eggs hangs over the village, a smell some residents attribute to another mill in a nearby town that uses sulfur to break wood down into pulp.

“I’ve heard,” said Ben Fairweather, head of operations at the Midwest Paper mill, “some people say that is the smell of money.”

A few miles down the Fox River, in the city of Appleton, sits the Paper Discovery Center museum and the Paper International Hall of Fame. Located in a former mill, the modest shrine honors those whose “accomplishments have truly revolutionized civilization.” Johannes Gutenberg, the inventor of the printing press, has a plaque on the wall. So does Wang Zhen, creator of the world’s first mass-produced book in 14th-century China.

Wisconsin has contributed its share of greats to the pantheon of paper. Morris Kuchenbecker, a retired package design engineer from the city of Neenah, patented a series of frozen-food cartons. Ernst Mahler, a chemist, invented the technology that makes tissues soft.

The region’s paper history dates to the years following the Civil War, when mills sprung up on along the Fox River to feed the industrializing nation’s demand for reading and writing material and disposable towels. “It was like the Silicon Valley of its time,” said Dan Clarahan, a board member of the Paper Discovery Center. One owner’s home was the first in the nation illuminated by Thomas Edison’s light bulbs.

You can still see remnants of paper’s glory years. Stately Victorian homes line many Appleton neighborhoods. The adjoining village of Kimberly is named after one of the founders of Kimberly-Clark, the maker of Kleenex and Huggies.

Wisconsin remains one of the nation’s largest paper producers, and much of it is still made in giant mills along the Fox. Today, huge conglomerates like Georgia Pacific, along with a handful of smaller companies, produce paper in the Fox River Valley area. But the industry has been contracting for decades, and it is not only because of the internet. Pricing pressure from giant retailers depressed the profit margins on brand-name paper towels, tissues and toilet paper.

In 2000, there were roughly 49,600 paper manufacturing jobs in Wisconsin, according to state figures. By 2017, that work force had declined to about 30,000; the paper industry in the Fox Valley shed half its workers over that time period. Last year, Kimberly-Clark closed one of its Wisconsin plants and received a $28 million state tax subsidy to help keep another location open.

In her 23 years in the industry, Airica Hendriks has watched the changes at the mill in Combined Locks with growing unease. Ms. Hendriks, 44, worked her way up from the lowest rank to the role of “coating tender,” applying the starch that make paper more rigid.

“Was this my dream job? No,” Ms. Hendriks said. “But it is a job I learned to love. This is just what I do now. I am a paper maker.”

Over the years, the mill’s products reflected the world’s evolving uses of paper: phone books, carbon-copy paper, paper for large inkjet printers. The company also had a string of owners. A cash register company. A British tobacco conglomerate. A French investment firm.

In recent years, demand for glossy brochures, the mill’s biggest moneymaker, kept falling. Ms. Hendriks said she knew the situation was dire in summer 2017, when her supervisors started “harping” on her not to waste any starch.

“They have never cared about these things,” she remembered thinking. “What is going on?”

That August, the bank called its loan and required immediate repayment from the mill, citing a technical term in its loan agreement. The paper company filed for receivership, and all 600 workers were told that they were out of a job.

The shutdown was a shock. The mill had never closed for more than a week of maintenance, not even during two world wars.

Ed Ver Voort, 50, started working at the mill when he was 18. His first job was as a “broke hustler” who scrambled to pick up sheets of paper that would spew off the machine when a roll unexpectedly broke.

“I owed everything to this place,” said Mr. Ver Voort, now an assistant superintendent at the mill. “My car, my food, my home. I was able to send my daughter to college working here.”

When the mill closed in 2017, most of its workers were able to find manufacturing or warehouse jobs. But these typically paid less than their unionized jobs at the paper mill.

Ms. Hendriks got a position at a plastics factory earning about $17 an hour, about $11 less than she made at the paper mill. She canceled cable, quit smoking and sold her plasma to a blood bank for $300 a month. She did that as long as she could — until her arm got sore.

The mill appeared destined for the scrap heap. In September 2017, it was purchased out of receivership by a pair of companies that specialized in liquidations.

The village quickly passed an ordinance seeking to prevent the new owners from abandoning the property and leaving an environmental mess. The union representing the paper makers and the county executive also filed legal petitions seeking to keep the mill running.

The mill’s new owners, who called themselves Midwest Paper Group, eventually agreed that it should be in operation. Across the country, failed white paper mills were being converted to brown to feed the cardboard-box boom, and Midwest followed suit.

The Chinese paper company Nine Dragons has acquired a handful of paper mills in Maine, Wisconsin and West Virginia and increased brown pulp and paper production. With China constricting imports of used cardboard, Nine Dragons bought the mills in the United States partly to get closer to the country’s plentiful source of scrap paper. Another major player is the Kraft family, which owns a paper mill and a cardboard boxing plant, in addition to the New England Patriots.

“I go into companies where the writing is on the wall, but not in this case,” said Mr. Putzstuck, Midwest Paper Group’s president.

A 31-year-old turnaround expert from Chicago, Mr. Putzstuck always seems to be in motion, even when seated. He had worked on a failed mattress company, a refrigerator recycler and an oil-services company, but never a paper maker.

But there he was in winter 2017, living in a hotel room near the mill, about to ask dozens of employees whose lives had been upended by the mill’s closure just months before to return to what amounted to a start-up.

“It’s a big deal asking people to come back to work when they had gotten other jobs,’’ he said.

A big step was persuading the union to agree to a new set of working conditions. The pay stayed largely the same — an average hourly wage of $25.50 — but the company would not contribute to 401(k) funds. Most significantly, the workers would be required to take on duties that previously had been performed by several employees.

“Everybody is doing multiple jobs now,” said John Corrigall, the mill’s head of “people, legal and environmental affairs.”

Union officials said they were willing to make concessions because the mill needed to get back on its feet. The alternative, the union said, was losing another paper plant forever.

Under the new business plan, the mill was not only a paper producer, but also a large recycling facility. The new owners installed an old corrugated container machine, known as an O.C.C., a towering vat of swirling warm water, where large bales of used cardboard boxes are dumped and then ground into the stock that makes the new brown paper.

Recycling used cardboard is wet, messy work. One worker said he wanted to vomit while unloading used boxes this summer. “They smelled like fish,” he said.

The bales of used boxes, which typically come from homes and large retailers, often contain unpleasant surprises like soda bottles, propane tanks and soccer balls. The workers on the O.C.C. were all required to have tetanus shots.

The O.C.C. turns the boxes into a thick, brown gruel. That mixture is then strained of plastic tape, staples and other debris before being pumped into the paper machine.

At first, Ms. Hendriks was skeptical about the turnaround plans. “You get kicked in the pants like that — do you trust to go back?” she said.

But after touring the mill and seeing new investments like the O.C.C., she called her manager at the plastics factory and told him she was headed back to making paper.

“I took a leap of faith that this would be all right,” she said.

The plan to convert the mill to brown paper made business sense to the laid-off workers. They all shopped online and saw the opportunity in cardboard — or containerboard, as it’s known in the industry.

But many questioned whether the mill would be able to make brown paper after decades focused on white. The fibers are coarser, which puts more wear on the machines. The Combined Locks mill also lacked a “shoe press” that traditional brown mills use to wring out water.

“Brown is a different bird,” said Jerry Meulemans, who is known around the mill as Grizz because of his personality on the job. (“I can be a bear to work with.”)

Papermaking is almost entirely automated. But the product is still largely a byproduct of nature, and the process can easily be foiled by the slightest variable.

The key is getting the wood fibers in the pulp to bind by using a combination of heat and pressure. With belts and rollers moving at about 25 miles per hour, the machine transforms the soupy pulp into a giant roll of rigid paper that resembles warm, earthy-smelling bread in seconds. If one element isn’t calibrated correctly — too much moisture, a splotch of bacteria — the paper can tear and the roll has to be made again.

At 7 a.m. on Dec. 11, 2017, workers gathered for an all-hands meeting in a large, wood-paneled conference room. Speaking to the staff, Mr. Fairweather, the head of operations, listed the Wisconsin mills that had closed recently, including a nearby plant that had been torn down to make way for a housing development called Paper Mill Estates.

“Most mills don’t get a second chance,” Mr. Fairweather told those assembled.

After the meeting, the workers signed their names on a wall outside the conference room in a show of solidarity. Then they spent the day preparing the idled machinery to restart.

The next morning, the workers watched anxiously as the brown pulp flowed into the paper machine. Later in the day, a sample of the mill’s first batch of brown paper was brought to a lab about 20 miles away. The sample was used to make a small section of a cardboard box and then put through a series of strength tests.

It was around 5 p.m. when the mill got the results. “It’s good,” the lab reported.

The mill was making paper again.



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