Wausau Paper announces layoffs
Nearly eight years to the day after Wausau Paper began production at the Brainerd mill, it announced the end of its print paper production here — meaning layoffs for 48 hourly and seven salary employees. The mill currently employs 137 hourly staff and 34 salary workers.
The majority of the layoffs of hourly staff is expected by Dec. 31, with some salaried positions staying on until July. Wausau Paper reports this layoff is the impact as the company leaves the last vestiges of its print business.
“This is not indicative of any kind of new event that is facing the company or the business related to Brainerd,” said Perry Gruber, director of investor relations with Wausau. “This was part of the strategy to convert the mill and leave the printing and writing business behind.”
Sheila Haverkamp, executive director at the Brainerd Lakes Area Economic Development Corporation (BLAEDC), said a coalition of forces — BLAEDC, the city of Brainerd, the Brainerd Lakes Chamber and WorkForce Center with the Department of Employment and Economic Development (DEED) and Rural Minnesota Concentrated Employment Program (CEP) — would all be working together to support dislocated Wausau workers.
“We’ll gather together to see what services we can provide as far as retraining and job seeking,” Haverkamp said, noting Wausau Paper and union representation will also be at the table.
The coalition has worked together in the past for Brainerd mill layoffs, perhaps most notably when the then Potlatch Mill closed putting 616 people out of work in 2002.
Haverkamp said Wausau Paper’s announcement comes at a time when the community is seeing potential opportunities for two area manufacturing related business additions.
“We are seeing some really positive projects come forward,” Haverkamp said. “I’m hopeful we can continue to create job opportunities in our marketplace.”
In 2011, the Brainerd mill completed a $27 million capital investment that rebuilt the No. 7 paper machine to make technical and specialty grades, such as those used to produce masking tape and to a limited degree packaging for the food industry.
“While the local impacts are regretful — and we do regret them,” Gruber said the nature of the market has changed dramatically. He said the broader reach of the technical paper grades will be better than printing paper and provide more opportunity for the Brainerd facility in the long term.
Gruber said the effort to convert the Brainerd mill to the technical and specialty grades was the result of a changing product strategy for the mill. Now, he said, as the mill will no longer produce printing and writing grades of paper, the staff dedicated to that effort are the ones affected with the job losses as Wausau Paper exists that side of the business.
“We remain very confident in the long-term strategy of converting the mill to technical specialty grades,” Gruber said, adding the difficult economic environment of the last three to five years leaves the company with the conclusion that move was the right strategy for Brainerd.
When the mill produced printing and writing grades — including paper sheets sold to businesses and homes — it converted paper from the rolls into retail and commercial sized packages. Gruber said the technical grade paper is shipped to customers in the roll form removing the need for staff to convert it into packages.
Wausau reports the market for white and color paper declined precipitously during the last five years. Gruber said the market for color paper grades declined more rapidly in North America than the demand for white paper.
Gruber said Wausau Paper looked at the quality of the Brainerd mill from the paper machine to its staff and knew it could create a strong technical paper here but the transition does affect the community as the mill moves to a more focused output.
Moving to the tape production and re-sizing the work force is a way to ensure the ultimate profitability of Brainerd’s operation, Gruber said.
“It’s difficult to look forward and say the (economic) turn around is just ahead, but we are positive we have — in taking these steps — we have positioned the Brainerd mill as the best possible for a successful future,” Gruber said.
In Wausau Paper’s third-quarter results, the company reported its tissue segment is improving with a operating profit of $7.5 million and shipment growth. The paper segment, the company reported, was proving to be a challenge with slowing demand for industrial and tape markets at a time when the company was commercializing its new technical capacity in Brainerd.
“Despite these pressures,” Wausau reported, “technical volumes are up 6 percent this year and specifically tape sector volume is up 14 percent, the result of new customer business and new product introductions.”
Gruber said the Brainerd mill is intended to play a key role in the company’s technical paper production.
Wausau reported a year-to-date net loss from continuing operations of $1.5 million compared to net earnings of $10 million for the same time period in 2011. The company’s paper segment reported a third-quarter operating loss of $7.9 million (which included a pre-tax expense of $7.7 million related to settling a pension plan with its former Jay, Maine, facility) versus an operating profit of $5.9 million for the same time period in 2011.
For the first nine months of 2012, adjusted net earnings — which Wausau reported is a useful analysis of ongoing operating trends — show $12.3 million in adjusted net earnings this year compared to the previous year’s $13.2 million.
Wausau Paper timeline
■ Wausau Paper started paper production at the Brainerd mill at 5:24 p.m. on Nov. 17, 2004.
■ By 2005, the mill was making pastel shades in expectation of expanding from the white paper production it was known for into color lines.
■ In 2006, the mill employed 160 people. By the winter of 2011, employees numbered 190.
■ In late 2011, Wausau reported the sale of the premium print and color brands to Neenah Paper. The deal included the brightly colored Astrobrights, Astroparche and the Royal family of products. The Astrobrights line in 23 bright colors came on paper sheets, three-hole punched paper, envelopes, note cubes, easel pads, cardstock, posterboard and self-adhesive paper. The paper was sold to business and home customers and those interested in scrapbooking and crafts.
■ In 2011, Wausau completed a $27 million capital investment in the Brainerd mill to make technical and specialty grades. The tape and industrial papers included markets in healthcare, food and beverage, packaging, automotive, home construction, office and school supply, graphic arts and label converters. Food service customers included popcorn, pan liners, bacon layout and grease resistant papers, which is used in fast food — such as sandwich and burger wraps — deli and carry-out, bottle labels, french fry bags and ice cream cone sleeves.
■ Wausau Paper, which was founded by Norman Brokaw and brothers W.L. and E.A. Edmonds in 1899, reported it is the last paper company headquartered in Wisconsin. The company introduced its Astrobrights line, led by the Brokaw, Wis. mill, in 1976.