NewPage paper mill closing has left Kimberly, Wisconsin fighting for its life

The village of Kimberly, on the northern edge of Lake Winnebago in the Fox Valley, epitomizes the small, almost idyllic Wisconsin town.

Kimberly is a hybrid of the nostalgic past and the fast-paced present, combining an old-fashioned soda fountain at a local pharmacy right out of a Norman Rockwell painting with the standard modern shopping mall. It has two elementary schools, a middle school and a high school. Every three years, the community's Sunset Point Park hosts an international softball championship series. Fierce loyalty to the Packers in nearby Green Bay is highly visible, with flags and banners fluttering throughout the community.

But the heart of this community of 6,000 is a single employer - the paper mill originally founded by the Kimberly-Clark Corp. in 1889.

It's the mill that has driven Kimberly's economy and sustained its solidly middle-class lifestyle. The mill also provides Kimberly its deeply rooted sense of civic identity. The village's website (which touts Kimberly as "The Progressive Community") says Kimberly "celebrates the prosperity it has derived from the paper industry with an annual Paper Arts Festival." Even its high school sports teams are called the Papermakers.

Though regarded as one of Wisconsin's most advanced and productive paper mills, the Kimberly plant was shut down Sept. 8 by its new owner, NewPage, which cited an excess of coated paper on the market. The closing was a devastating shock to the plant's workers, whose years of experience were key to the plant's longstanding success.

"It was like family, so many people had been there for so long together," says Sue Anderson, who put in 31 years at the mill. "It hurts. They [NewPage] threw it in our face like it didn't matter to them. All your hard work all those years meant nothing."

Anderson's father retired after 44 years at the mill, so her family's ties to the plan reach back 75 years.

In all, 600 people lost their jobs, all having worked at the mill for at least 28 years. (Lower-seniority workers had lost their jobs as other departments were shifted out or eliminated over the past decade, from a peak of 1,100 workers in 1997.)

The workers and their allies remain mystified - and infuriated - that the Ohio-based NewPage seems determined to keep the plant closed, spurning offers by other corporations to buy the facility and keep it operating.

"Our village administrator has heard from three companies that are interested in buying the plant, and the union has been contacted by another potential buyer," says Andy Nirschl, the thoughtful, tousle-haired president of United Steelworkers Local 2-9 (the hyphenated name is the product of a past merger of two unions). "But even if a new owner wouldn't make competitive product, they [NewPage officials] say it's not for sale."

Shawn Hall, a spokesperson for NewPage, says the company has "not heard from" these prospective buyers. Nor does it seem all that interested. While NewPage president Mark Suwyn has said the company is willing to lease the plant to a noncompeting firm, Nirschl questions his sincerity.

"If they're going to lease the plant, who is out publicizing that?" he asks. "They won't be able to lease it unless they're letting companies know it's available and are actively marketing it."

Asked whether NewPage has a marketing plan for the plant, Hall responds in a word: "No."

Not without a fight

The mill closing has left Kimberly fighting for its life. Hundreds of "Run It or Sell It" yard signs dot the local landscape, a defiant challenge to NewPage. The signs seem a bit incongruous in such a solidly middle-class town of neat, immaculately kept homes and tree-lined streets.

"People take a great deal of pride in their property and vehicles, and have the money from the mill to maintain them," observes village administrator Rick Hermus, whose grandfather, father and three brothers all worked at the Kimberly mill, with his brothers among the victims of the closing.

Now the entire community seems to recognize that its affluence has been built on the union's strength, and its future depends on the workers' ability to pressure NewPage. The "Run It or Sell It" message has even appeared on electronic billboards run by the local credit union and other businesses.

A rally sponsored by the Steelworkers on Sept. 6, just before the plant closed its doors, drew a turnout of some 5,000 people. Among the elected officials in attendance were three members of Congress: Wisconsin Reps. Tom Petri (R) and Steve Kagen (D) and Hawaii Rep. Neil Abercrombie (D).

The message was clear. The town of Kimberly will not accept the loss of its main industry without a fight.

"To paraphrase Dylan Thomas, we cannot lock up and go quietly into that good night," union official Jon Geenen told the rally. "We cannot watch industry after industry leave with no industry to replace them."

The Steelworkers have been staging vigils and rallies, meeting with elected officials and building alliances with NewPage customers and the local business community. This included an Oct. 2 rally at the state Capitol. The union also sent a contingent of more than 100 workers by bus to NewPage's headquarters in Miamisburg, Ohio, a Dayton suburb.

On Sept. 24, Wisconsin Sens. Herb Kohl and Russ Feingold and Reps. Petri and Kagen met with NewPage president Mark Suwyn in an effort to persuade him to either keep the plant running or sell it to someone who would continue operating it. The union is also trying set up a meeting between Wisconsin lawmakers and John Snow, the CEO of Cerberus Capital Management, which is NewPage's owner.

The Steelworkers' battle over Kimberly is significant for several reasons:

• NewPage's decision to shut the plant, but refusal to sell it to eager buyers, symbolizes for many the height of corporate indifference to the fate of workers and communities. Wisconsin has already suffered the closing of 11 paper mills and the loss of about 16,000 (roughly a third) of its papermaking jobs since 1997. Long the nation's leader in paper production, the state is now facing the decline of another key source of family-supporting jobs.
• The Steelworkers local is waging Wisconsin's highest-profile and most ambitious battle to save a plant in two decades. The last all-out effort was the 1988 campaign by United Auto Workers Local 72 to prevent the loss of 5,500 jobs in Kenosha.
• The shutdown of the Kimberly plant brings into sharp focus the economic policies of George W. Bush, just before the Nov. 4 election. Bush, supported by John McCain, has presided over a period of outsourcing, "free trade" and financial deregulation. NewPage's parent company is the New York-based Cerberus private equity fund, led by Bush's former Treasury Secretary John Snow. (Cerberus' CEO, Stephen Feinberg, pocketed a staggering $330 million in 2007.) Private equity funds are one product of financial deregulation, along with the current meltdown.
• The "Paper Valley" region of Wisconsin, which includes Green Bay, Kimberly, Appleton and the rest of the Fox River Valley, will be one of the state's most crucial political battlegrounds. This region has generally voted Republican in presidential elections, but Democrats managed to eke out narrow victories in 2000 and 2004. This year, the area is getting unprecedented attention from Barack Obama and Joe Biden, who often refer to the Kimberly situation.

Ulterior motives

What's behind NewPage's decision to close the plant, and its resistance to offers of assistance from both the union and the state?

According to NewPage spokesperson Hall, "demand for our products is off significantly due to the poor economy - down roughly 12% in the first half of the year." The company is also facing "rapidly rising, volatile inflationary costs for energy, raw material and transportation" and competition with "low-priced imported paper."

NewPage's June 30 statement announcing the Kimberly plant shutdown also cited the absence of an onsite pulp mill: "While the Kimberly mill has first-class paper machines and is operated by an excellent workforce, it doesn't have a pulp mill to support the paper operations."

But Nirschl says NewPage rejected Gov. Jim Doyle's offer of state assistance for building a pulp mill. According to Hall, "The price to build a sawmill far exceeds the offer of assistance from the state."

Similarly, NewPage showed little interest in a union plan to reduce transit costs. Explains Hall: "There are a number of issues that drove the decision to close the Kimberly mill."

The union suggests the decision is driven less by necessity than calculation. Local 2-9 President Nirschl speculates the company "may be seeking a monopoly to manipulate the market." In other words, by reducing the coated-paper supply, it can drive up the price its other plants can charge.

NewPage, which acquired the Kimberly plant in December 2007, is about five years old and a relatively new entrant to the paper industry. CEO Suwyn's compensation shot up from $1,206,440 in 2006 to $5,018,304 in 2007, a year in which the firm posted losses of $22 million.

Meanwhile, the Kimberly plant alone earned a profit of $66 million in 2007 under former owner Stora Enso, before NewPage bought its Wisconsin plants, according to documents presented at "business condition" meetings with the union, Nirschl says.

NewPage's 10-K filing with the Securities and Exchange Commission credits coated paper sales for its increase in sales volume: "Net sales for 2007 were $2,168 million compared to $2,038 million for 2006. The increase was driven by higher coated-paper sales volume...offset in part by lower average coated-paper prices."

The filing said these lower prices - from $893 per ton in 2006 to $886 per ton in 2007 - owed to "lower demand for coated groundwood paper and...the continuing negative effects of low-priced imports of coated free sheet paper from China, Indonesia and South Korea."

But Nirschl notes that other industry giants are not reacting to this slight decrease with similar alarm: "Neither International Paper nor Georgia Pacific have been complaining about too much coated-paper capacity."

NewPage has suggested it may reopen the plant if conditions improve. Nirschl considers this unlikely. He says the highly skilled workforce will rapidly scatter out of the Paper Valley area to find work elsewhere, and restarting the plant with inexperienced workers will prove impossible. And the plant itself, he warns, "will just become a blight on the community."

Facing the future

The impact of the shutdown on Kimberly and the surrounding area is already being felt. The village's volunteer fire department, which heavily depended on mill workers, will likely be disbanded and replaced with a much more expensive arrangement for fire protection.

"If you worked in the mill, mill owners always agreed that volunteers could leave any time there was a fire," notes village administrator Hermus. "But we had our fire chief and two assistant captains all working at NewPage," and now they may be tempted to move elsewhere in search of work.

Tom Vandevyver, who followed his father into the paper mill and put in 31 years before the recent closing, sees the effects of the shutdown rippling across the area.

"Business at the supper club is down 20% to 30%," he says." Myself, I haven't been out to eat in months. Right now, I'm looking at selling my new truck and my boat."

Vandevyver, a 49-year-old with gray flecking his black hair and beard, sees little cushion coming from the severance package offered by the company (26 weeks of pay and six months of health and dental coverage) or in the Trade Adjustment Assistance (TAA) lined up by Rep. Kagen and Sens. Kohl and Feingold. While TAA's extended unemployment benefits and training funds are appreciated, the program doesn't address the shrinking supply of family-supporting jobs.

"Any wage you see offered out there is between $10 and $15 an hour," says Vanevyver. (The average annual income of the workers at NewPage was about $56,000; the job required lots of overtime and work was regularly scheduled for weekends and holidays in order to keep the presses running.) "I'll probably wind up taking a second job, too."

He sees continuing the fight against NewPage and its parent Cerberus as his best shot at maintaining a life with some security. "We've got to fight to keep manufacturing in this country," he declares. "We're going from a middle-class country to just the rich and the poor."

'We were totally blindsided'

The booklet records the workers' feelings, accompanied by photos at happier moments like family celebrations. They express despair about finding a decent income and health insurance (the average age of the 600 layoff workers is about 49, the union says), coupled with bewilderment and outrage at NewPage's decision and the government policies that permitted it.

Some excerpts:

• Al Spaulding, 30 years at the mill: "After working 30-plus years in the same mill, everything changed in a single day.... Now we talk about want ads and surviving on a salary that will be cut from $50,000-$55,000 to one of about $25,000 - that is, if you can find a job.
  "For [my wife and I], the most devastating part of this is the loss of our health insurance. Because of a liver/pancreas transplant and a chronic depression/anxiety disorder, we are both 'uninsurable.' The transplant anti-rejection medication alone is $2,000 a month."
• Pam, wife of Gary Lee Schiedermayer, 35 years at mill: "We feel that we are being physically suffocated by this lack of certainty, fear of the unknown and the lack of control regarding our family's future.
  "This emotional roller coaster and the financial instability have not only affected our immediate and extended families and friends, but will create tremendous hardships to our community, schools and parish."
• Daniel Sonderegger, 31 years at the mill: "We worry about the possibility of losing our home and the effects it will have on our children. We were totally blindsided."
• Dick Miller, 39 years of service: "It's time to sell the things I worked for."
• Earl Baumgart, 32 years of service: "There will be no retirement or early retirement that were bargained for in this mill through three generations - my grandfather, my father and myself.... Just the stress alone is a killer."
• Jerry Jansen, 41 years: "I feel like my life has been sucked out of me."
• Jody Fries: "This changes all our plans for the future, including retirement, location, standard of living, vacations and our daughter's college fund."
• Joe Lewandowski, 28 years: "Short term, it's thrown my life into turmoil. It's difficult not to become easily depressed.... This is simply a shame and a waste of good equipment and good people."
• Joel Swedburg, 31 years: "I feel I let my family down. All I worked for is being taken away, because of greed."
• Karl Van Eperen, 29 years: "I know that life offers no guarantees. However, a decision is being made to turn out the lights and walk away from a mill that is profitable and filled with people who are dedicated to continue to work hard."
• Mark Van Stappen: "My grandfather John VerVoort started at the mill in 1892 at age 16. He worked there until his death at age 62.... That mill is part of us all."
• Paul Vermeen, 30 years: "I'm diabetic and on blood thinners, so I might not be able to find health insurance. It seems a shame to shut down a profitable and productive mill just to control the supply and price of paper."
• Randy Gossens, 32 years: "We do not live an extravagant lifestyle and are careful with our money. With only a high school diploma, finding a comparable-paying job is not going to happen, especially being over 50 years old."
• Richard Schiebe, 31 years: "I don't know where to go next. I was planning for retirement, but I don't know when that will come now. How could corporate America do this to the mill and the village of Kimberly?"

Collateral Damage

Kimberly-area residents are worried about the effects of the shutdown on their cost of living. The shutdown will mean substantially reduced taxes on the paper plant, thereby shifting the local property-tax burden to workers displaced by the closing.

Residents are also concerned about the impact on property values. With the nation's housing market reeling due to the sub-prime mortgage crisis, a drop in home values, rising unemployment and falling wages, the Kimberly shutdown could hardly have come at a worse time.

The worst scenario would be for large numbers of the discarded paper workers to try to sell their Kimberly and Appleton-area homes in order to move to areas with more job opportunities. That could cause a glut of houses on the market and a precipitous decline in home values.

But Al Lamers, who has run a local realty firm for 23 years, says the current situation is surprisingly stable. "We've weathered that storm [of falling values] pretty well around here," he says. "We've seen values level off, but not drop off. Our sales have not been too bad compared with other parts of the country."

Lamers says it's too early to make predictions about the housing market's condition. "I don't see a panic right now," he says. "But six months from now, when the severance and insurance are gone, then we'll see what the real effects are.

"This could have a serious effect throughout the Fox Valley."