You Had a Job for Life Page 23

  Bill Astle thought Wemyss encouraged Paper Board workers to scoff at JR: “I’m sure Jimmy kind of instilled it in the people—they were James River employees, but they were running Paper Board machines. And they kind of took it upon themselves, ‘Hey, we can do whatever we damn well want; James River can’t tell us what to do.’ And then there would be the issue of everything done on allocation. Everybody was using the same steam plant; everybody is using the same maintenance group. And how will you allocate the [wastewater] treatment plant? So the Paper Board would always come back, ‘You’re screwing us; you’re screwing us.’ So it became certainly a bone of contention.”

  Jim Wemyss Sr. died on November 24, 1991, at age eighty-eight. He had not been intimately involved in the operation of the mill for decades; however, he deserved credit for reviving and diversifying a rat-infested, moribund operation during the dozen or so years when he dominated every aspect of life at the mill.

  On December 15, 1991, James River shut down Number 3 and Number 4 paper machines and laid off one hundred employees. A week later, another 250 employees were out of work, and Number 6 went down as well. Workers could draw on their 1992 vacation time to help them through the gloomy holidays. Others applied for unemployment insurance.20 Most of the laid-off workers returned to work in early January, but on January 10, Number 6 paper machine shut down for a month, and when it restarted, only 25 of 110 laid-off workers were called back to work.21

  Unexpectedly, in mid-February, James River announced its corporate restructuring had been completed, and the Groveton, Berlin, and Gorham mills were no longer for sale. But more bad news followed. In May, twenty-six union and twelve nonunion jobs were eliminated.22

  Many younger mill workers faced the question: “Should I stay or should I go?” Tom Bushey had been working full time for only a couple of years. Even though he decided to stay, he could see that James River was starving the mill: “That was a really tough time. I was making good money, but you always had that dark cloud over your head, and you had to be careful about personal finances because no one really knew where we were headed. James River not giving any money for capital improvements to resolve problems that were causing financial losses month after month after month. They were so crazy about saving money. They would have all these meetings to sit down and talk about ways to improve the plant and whatever. If you couldn’t figure out how to go out there and do it without any money, you never did it. After two and a half years of this, it was just screaming that we needed money.”

  Dave Atkinson had been promoted to superintendent of Number 6 paper machine in 1990. By early 1992, he wondered: “Was it going to survive? That was prevalent throughout the organization. It was an awful way to work. It was not a fun environment.” He began receiving calls from executive recruiters. Initially, he wasn’t interested in changing jobs and leaving his hometown. Eventually, he “took the bait”: “It was for a product development chemist position at Rhinelander Paper Company, which was owned by Wausau Paper Company. I said, ‘Sounds interesting, send me some more information.’ I ended up going out for an interview and taking the job. That was absolutely gut-wrenching.” With two young children, he felt he “had to be ahead of the pack getting out.” The move turned out to be “the best thing I ever did.”

  NORTH COUNTRY ROCKED BY DIAMOND LAND SALE

  Sir James Goldsmith held on to the Diamond lands until the stock market crash in late 1987, when his French-based holding company, Générale Occidentale, quietly offered them for sale. The proposed sale of Diamond’s one million acres in the northeastern United States shocked the timber and conservation communities of Maine, Vermont, and especially New Hampshire. Ever since the 1890s, Wall Street investors had demanded that large paper companies, such as International Paper and Great Northern, acquire vast timberland holdings to assure an adequate supply of wood fiber for their mills. Throughout the twentieth century, paper companies had viewed their timberlands as “strategic reserves” that played a dual role of ensuring their mills a reliable supply of pulpwood while controlling the price paid to nonindustrial landowners for pulpwood. Before Goldsmith, paper companies did not worry if they managed their timberlands at a net loss, provided there was abundant, affordable pulp for their mills. Papermaking was where the profits lay. After Goldsmith, timberlands had to become “profit centers” or be sold off to avoid a hostile takeover.

  Diamond owned sixty-seven thousand acres in northern New Hampshire and another twenty-three thousand in Vermont’s Northeast Kingdom. Timber industry leaders, conservationists, and politicians in the two states worried that the selling price, $19 million, or $212 an acre, was nearly double the going rate for large parcels of timberland. They feared only a developer would be willing to pay such a steep price. Henry Swan, president of Wagner Woodlands in Lyme, New Hampshire, performed due diligence for a possible purchase of the New Hampshire and Vermont lands. To his chagrin, his foresters concluded that the Nash Stream had been so severely overcut that it was worth only $100 an acre as a timber investment.

  State political and conservation leaders claimed there was insufficient public funding to acquire the Diamond lands in New Hampshire and Vermont. At the end of May, an obscure Nashua developer, Rancourt Associates, stunned everyone by acquiring these lands. Within two weeks, U.S. senator Warren Rudman of New Hampshire and Paul Bofinger, president-forester of the Society for the Protection of New Hampshire Forests, brokered a deal with Rancourt. The public acquired roughly forty-six thousand acres from Rancourt for $282 an acre—a nifty $70 per acre publicly financed profit for a few weeks’ ownership. Nearly $4 million of the $12.75 million purchase price came from the U.S. government. The state established a forty-thousand-acre Nash Stream State Forest; the U.S. Forest Service would own a conservation easement on the state forest.

  Bofinger and Rudman, along with U.S. senator Patrick Leahy of Vermont and Carl Reidel, the dean of Vermont conservationists in the 1980s, were terrified that the Diamond land sale was the first of a series of paper company land sales that could transform the character and economy of the region. They secured an additional $250,000 from the U.S. Forest Service budget to fund a four-state study of the so-called “Northern Forest” region. Congress directed the Northern Forest Lands Study (NFLS) to assess the future of the vast undeveloped forests of northern Maine, New Hampshire, Vermont, and New York’s Adirondack Park and Tug Hill region. The greater Groveton region was in the heart of the study area.

  The commissioner of conservation in the state of Maine, Robert LaBonta, fearing that the NFLS would be a federal stalking horse to wrest control of central and northern Maine’s forests from private and corporate owners, threatened to keep Maine out of the NFLS process. To appease LaBonta, Senators Leahy and Rudman wrote a “Letter of Clarification” to the chief of the United States Forest Service on October 4, 1988. The key part of the letter read: “The current land ownership and management patterns have served the people and forests of the region well. We are seeking reinforcement rather than replacement of the patterns of ownership and use that have characterized these lands.”23 Although the intent of the NFLS was to search for a menu of economic, ecological, and political strategies to protect the region’s forests and economy, LaBonta’s threat effectively gave the Maine delegation to the NFLS, dominated by the chief lobbyist of the Maine Forest Products Council, veto power over the work of the NFLS. He and LaBonta’s successor would block any meaningful examination of the condition of the region’s forests and the habitat needs of rare, threatened, and endangered species such as wolves, lynx, and cougars. They also kept the Northern Forest Lands Study from conducting an in-depth analysis of the economic weaknesses of a region that relied almost exclusively on the declining paper industry.

  The Northern Forest Lands Study, released in the spring of 1990, dealt a blow to those hoping to salvage the status quo. It warned: “The forces and conditions that have given us the Northern Forest of today can no longer insure its perpetuation.” “One of the most
important challenges will be to convince those within the region that some kind of change is inevitable. Without intervention a series of incremental actions is likely to permanently alter the landscape and lifestyle of this region. Ignoring the problem will not make it go away.”24

  The NFLS recommended that its work continue under the auspices of a Northern Forest Lands Council (NFLC) for another four years. Most council members shared the timber industry’s belief that the NFLC’s mission was to prop up the status quo. They sought to promote a favorable business climate via lowered property, capital gains, and estate taxes. The council agreed to operate by consensus. Timber industry representatives were not bashful about exercising their “right” to block consensus on any subject they opposed.

  The council delegated its work on the timber economy to the “Local Forest Based Economy” (LFBE) subcommittee. The LFBE needed to ask tough questions, such as: Is the region’s economy healthy? How competitive are our paper mills with mills in the Southeast and the tropics? How well has the region developed its local value-added manufacturing potential? Are citizens, communities, and schools prospering? How secure are paper mill jobs? Are loggers earning a fair wage? What is the condition of the industrial forest? Will current forest practices promote economic prosperity for timber communities? It asked none of these questions during its three-year existence.

  Instead, the LFBE commissioned a study designed to offer strategies for more fully plugging the Northern Forest into the global economy. Mitch Lansky, author of Beyond the Beauty Strip, a tour de farce critique of the myths of industrial forestry, submitted a series of questions to the committee: Who benefits from globalism? Who pays the costs? What are the impacts of the global economy on local economies, environment, labor force, and land ownership patterns? What opportunities exist for the Northern Forest region to buffer itself from the adverse impacts of the global system? And, if we are assessing globalism, should we not study the likely ecological and economic impacts of global climate change on the region? Those questions were of no interest to the committee.

  The council issued its final report in the fall of 1994 and disbanded. Two weeks later, Scott Paper sold its Maine mills and 930,000 acres of timberland to a South African paper company, SAPPI. Throughout the following decade, seven million acres of timberland owned by paper companies in 1988 were sold at least once. Most of these lands changed owners two, three, even four times via hostile takeover, merger, sale of mills, or divestiture of a mill’s lands. The new owners were mostly wealthy timber investors, endowments, and hedge funds. Several of these speculators resold the former paper company lands within five or ten years after another round of intensive cutting to defray the purchase price.

  Public policy failed the communities of northern New England at a time when it was abundantly clear the dominant industry was in deep trouble. When northern New England paper mills began closing early in the twenty-first century, affected communities and political and economic leaders were unprepared for the magnitude of the collapse of the twentieth-century status quo.

  Jack Hiltz, “New Records Set,” Papermaker, June 1983, 2.

  Peter Riviere, “James River: From Wood Chips to Blue Chips,” Democrat, January 4, 1984.

  Funding Universe, “Fort James Corporation History,” c. 1997, http://www.fundinguniverse.com/company-histories/Fort-James-Corporation-Company-History.html.

  Democrat, August 24, 1983; September 4, 1985.

  “Campbellettes,” Papermaker, May 23, 1985, 5.

  “History is Made in Northern Mountains,” Papermaker, August 1, 1985, 1.

  Democrat, August 7, 1985.

  Democrat, January 1, 1986; February 19, 1986.

  Democrat, January 15, 1992; March 11, 1992.

  Bill Sleeper, “Bill’s Corner: The Challenge That Lies Ahead,” Papermaker, April 21, 1988, 2; Greg Cloutier, “What Is Co-Generation and How Does It Affect Us?,” Papermaker, October 29, 1987, 1; Bill Sleeper, “Bill’s Corner: The Beat Goes On,” Papermaker, August 18, 1988, 2.

  Harold A. Goldsberry and James E. Maher, “North American Fine Paper Producers Continue Alkaline Paper Conversion,” Pulp & Paper Magazine, April 1993, http://www.risiinfo.com/db_area/archive/p_p_mag/1993/9304/93040124.htm.

  Kasy King, “The Alkaline Challenge,” Papermaker, May 3, 1990, 1, 3.

  John Kushe, “John’s Corner,” Papermaker, August 31, 1989, 2; John Kushe, “John’s Corner,” Papermaker, November 2, 1989, 2; Jim Bailey, “Manager’s Notebook,” Papermaker, May 3, 1990, 2.

  James M. Matheson, “James River Restructuring: An Opportunity for Groveton,” Papermaker, November 8, 1990, 1.

  Democrat, August 22, 1990.

  Democrat, September 12, October 10, November 21, and December 5, 1990. Jim Bailey, “Manager’s Notebook,” Papermaker, December 20, 1990, 2.

  Democrat, January 23, 1991; April 24, 1991.

  Democrat, November 6, 1991.

  Donna Jordan, “James C. Wemyss and Groveton Paper Board,” Coös Magazine, November 1991, 4–7.

  Democrat, December 18, 1991.

  Democrat, January 15, 1992; February 5, 1992.

  Democrat, February 19, 1992; April 8, 1992; May 20, 1992.

  Senator Patrick Leahy and Senator Warren B. Rudman, “Letter of Clarification,” in The Northern Forest Lands Study of New England and New York, by Stephen C. Harper, Laura L. Falk, and Edward W. Rankin (Rutland, VT: U.S. Department of Agriculture, 1990), 90.

  Harper, Falk, and Rankin, Northern Forest Lands Study, 3, 164.

  Chapter Thirteen

  THE BEST YEARS

  WAUSAU WAS A LEAN and hungry company looking to expand. Wausau’s executives had very much liked the Groveton mill when they visited in January 1991. With the proper investment, they believed, Numbers 3 and 6 paper machines could produce the colored, premium fine papers Wausau specialized in, and Groveton could give the midwestern firm an entrée into lucrative eastern markets. Wausau’s Rhinelander, Wisconsin, mill produced pressure-sensitive labeling, packaging papers, and technical papers. Its mill at Brokaw, Wisconsin, turned out specialty printing and writing papers, 65 percent of which were colored papers. The Brokaw mill was running at full capacity and could not keep up with orders. Early in 1992, Wausau’s board of directors had authorized CEO Arnold Nemirow to spend $100 million on a new paper machine and related mill expansions for Brokaw.

  Around that time, a senior vice president of James River contacted Nemirow and told him the Groveton mill was on the verge of shutting down. He urged Wausau, Groveton’s best customer, to take a second look. Jim Wemyss had also renewed his courtship of Wausau: “I went out and saw [Nemirow] again and said, ‘They’re getting worse by the hour. It’s terrible.’ They were going to junk the mill practically. Shut it down. He flew in and met them, and then I took him out to my house for lunch, and I said, ‘You’ve got to move, now.’ And I guess he did.”

  Dave Atkinson had started work at the Rhinelander mill on June 1, 1992. In August of that year, as he recalled, Arnie Nemirow telephoned him: “He said, ‘Dave, I’m calling to see if you would be interested in being on the due diligence team. We’re looking at the mill in Groveton, New Hampshire. I understand that you used to work there.’ Of course I was a nervous wreck; the CEO’s calling. I said, ‘I only started here two months ago. I’ll have to check with my boss,’ ‘Don’t worry, Dave. I’ve already talked with them; they know I’m talking with you.’ I don’t think I even knew then what due diligence meant. I said, ‘Yes, I would be interested in that.’ My contribution was knowing an awful lot about machines, the people, the culture, the capabilities of the operation. I wasn’t involved in ‘What are they going to pay?’ Just ‘What is it capable of?’ Wausau was pretty much a regional supplier—Chicago, Minneapolis, St. Louis, Denver, and wanted to repeat what was successful for them in the East. That was the reason they bought Groveton.”

  In October, James River cut the running time for its two fine-papers machines to five days a week, and it laid off one of th
e four paper machine crews, calling it a “temporary layoff” of twenty employees. The following week, another nineteen workers were laid off for at least a week as Number 6 paper machine shut down.1

  The due diligence team, led by Wausau vice president Tom Howatt, concluded the Groveton mill was a good buy for Wausau. On October 28, Wausau Paper Mills Company announced it was buying the fine-papers operation at Groveton for $20.2 million, one-fifth the amount authorized for a new paper machine for Brokaw. Wausau would own no timberland and would continue to purchase pulp from Berlin, Old Town, and other mills. Groveton gave Wausau twice the mill capacity of its planned expansion, and the $80 million in savings allowed Wausau to invest heavily in Groveton. The editors of PaperAge were so impressed with the transaction that they hailed the deal as the “buy of the decade” and named Arnold Nemirow 1993 paper industry “executive of the year.”2 PaperAge was especially awed by the maintenance of the Groveton mill. “Even the windows on the hooded dryers were sparkling clean,” editor and publisher Jack O’Brien later marveled. “Have you ever seen that in a mill? Unbelievable maintenance.”3