You Had a Job for Life Page 25

  When Wausau bought Groveton, it ran only the venerable Number 3 paper machine because it was more versatile and reliable than Number 6. Wausau renamed the eighty-five-year-old machine “Number 5” so as to avoid confusion with its Number 3 in Wisconsin. (This caused Groveton Paper Board to change the name of “Love in the Afternoon” from “Number 5” to “Number 1.”) Joe Berube, a machine tender on old Number 3, marveled at the variety and quality of the paper he helped produce: “We made over five hundred grades of paper, which is the most grades of any paper mill in the world at that time. We made printing papers, writing papers, computer papers, advertising papers, index cover grade papers. In all different finishes. Over a hundred different colors probably. These real bright neon colors would pull your eyeballs right out of the sockets; they were so bright. They were used in advertising to get people’s attention.”

  In the first eighteen months, Wausau operated Number 6 for only a month and a half. Atkinson said, “The runability of Number 6 paper machine was horrendous. Very challenging machine to keep the sheet threaded, to keep it running all the time. Tears and breaks. Any little upset on the machine’s system, and there would be a break. The drive control was 1970s vintage.” James River refused to upgrade it. In 1995, Wausau installed a new drive system for the Queen of Diamonds: “I think it was a two and a half million dollar capital expense. That made Number 6 as good a machine from runability and predictability standpoint as what Number 5 was in the last few years.”

  Ted Caouette appreciated Wausau’s investment in production: “They were focused on making paper. ‘What do we need to make better paper?’ So now, you’ve got new equipment coming in. Everybody was, I think, tending to their job better because the focus was on production. I think [Dave Atkinson] did a very good job when he was managing the paper machines, but he was doing such a good job, they asked him to do a lot of other jobs, and the focus got lost in the shuffle. Not instantly, but over time. He still did a good job. He did a good job whatever he did.”

  Atkinson saw things differently. “We certainly grew in the early years—’93 to ’95 or ’96—when I was truly paper production superintendent. That is when we developed tons of different grades and became much more efficient at doing it and really honed in on those things; but then we came to a point where the development work, learning to make the Wausau family grades, was done. Now it was a question of maintenance and some of the other things that needed to be worked on. I think that is when my responsibilities were broadened to overall production superintendent, so now all of a sudden I had finishing operations under me. [The production crews] were very good at what they did, and it was very easy to say, ‘OK, I’m going to focus now on the finishing operations. That’s where the efficiency gains need to be had. You guys are going to handle [production] well.’ And they did. There was never a slip-back.”

  In July 1994, Wausau’s president and CEO, Arnold Nemirow, resigned to take over Bowater, a much larger corporation that specialized in newsprint. During his four-year tenure, Wausau’s income had increased 42 percent.9 Late in 1994, Tom Howatt was promoted to vice president and general manager of Wausau’s Printing and Papers division, and he returned to Wisconsin after less than two years in Groveton. Tom Craven, head of purchasing, succeeded Howatt.

  Wausau was not happy with Groveton’s wood chip boiler. In 1994 the company had conducted a three-month study on the feasibility of converting the mill’s Number 1 boiler back to oil. At the time, wood chips were eighteen dollars a ton. The mill’s appetite for chips pumped $3 or $4 million into the local economy, and according to timber industry estimates, 225 logging jobs depended in part or entirely upon supplying the mill with chips. The mill ceased using wood chips on April 29, 1997. The decision, made in Wisconsin, was based on the relatively low cost of oil at the time and the higher maintenance and capital costs required by a wood-chip-burning boiler.10

  Portland Natural Gas Transmission announced plans in 1996 to construct a pipeline from western Alberta that would run by the mill on its way to Portland, Maine. Wausau signed a twenty-year agreement to purchase natural gas to power the mill. The conversion to natural gas at the mill was completed by September 1999. Initially, the mill paid $3.50 for a million Btu’s (one dekatherm) of natural gas. Tom Craven characterized natural gas as a “cost competitive fuel alternative to oil.”11

  Jim Wemyss, one of the largest private timberland owners in New Hampshire, was infuriated by the switch from chips to oil to gas: “It was a beautiful wood-burning boiler. Then some geniuses got the idea to start burning gas because the gas line went through. I had nothing to do with that. I would never have allowed it. We’re in the woods business. Let’s stay with it.”

  Four years into the Wausau era, the mill was profitable and making some of Wausau’s highest-quality paper. As the 1997 labor contract negotiations approached, union leaders were determined to reverse concessions they had made to James River and Wausau and share in the mill’s profits. Wausau had just enjoyed record second-quarter shipments and earnings, and the union reminded Wausau of its 1993 pledge that if Groveton was profitable, “concessions would not be sought and future contract settlements would be competitive.”12

  Late in January 1997, the rank and file rejected Wausau’s first offer by a vote of 263–63, even though union leadership had recommended acceptance. Union president Richard Goulet warned, “The plant is tense.” Union members complained that workers at the Otis, Maine, plant, acquired by Wausau in February 1997, earned $16 per hour versus $12.49 in Groveton. The union argued that the disparity in wages paid in other mills would widen under Wausau’s proposal, and it demanded an additional thirteen cents an hour increase for each of the five years covered by the contract.

  Dave Atkinson explained Wausau’s 1997 negotiating stance: “It isn’t just wages, it’s the overall operation of the mill. I can remember: ‘How come they’re making $2.50 more an hour than us? We’re doing the same thing.’ My response was, ‘Hey, the cost of living is different. Look at what they’re spending here.’ I probably said to many employees: ‘I hear you, but if you’re expecting a $2.50 an hour increase, then you’re going to be disappointed. That’s why you negotiate.’ He added that periodically “out-of-contract adjustments” were granted to some employees.

  When I pointed out that Groveton was the lowest-paid paper mill in the country, he responded: “You know why? Each contract that got bought and sold was because of Jimmy [Wemyss]. It stayed that way for whatever reasons. I’m not knocking Jimmy at all, but the wage scale—the base started somewhere.” The concessions to James River and Wausau had exacerbated those pay discrepancies. Nevertheless, the average weekly wage of Northumberland residents, $621, was significantly higher than that in any other neighboring town.13

  In March, by a vote of 211–117, with 34 abstentions, the rank and file rejected a second Wausau offer that raised wages 16 percent over the duration of the five-year contract. The Berlin Daily Sun reported “a number of votes against the contract yesterday were voided because comments were written on the ballot.”14 Murray Rogers confirmed my suspicion that the comments had been obscenities.

  A day later, the union voted 195–165 to go on strike, but since a strike vote required a two-thirds majority, the vote failed, and, by default, the contract was accepted. Union president Goulet bitterly complained: “The contract in no way was accepted by the workers. They have to accept it because it was shoved down their throats.”15

  In 1997, at the union’s request, production workers, but not maintenance, finishing, or shipping employees, went on twelve-hour shifts that began at 7 a.m. and 7 p.m. Each of the four crews would work either three or four days consecutively, then be off for three, seven, one, and three days over the course of four weeks. Each crew would work seven days on the day shift, seven nights on the night shift, and enjoy a total of fourteen days off. Most younger workers liked the change. Joe Berube, a veteran of more than thirty years by then, grumbled, “That was another thing that
was wished upon us.” Some of the shift supervisors and tour bosses also resented the change because, as management, they had no say in the union vote for the twelve-hour shifts, but they were now required to work those longer shifts.

  In February 1997, Wausau bought Otis Specialty Papers in Jay, Maine, for nearly three times what it had paid four years earlier for Groveton. Steve Schmitt, a vice president of Wausau, said, “We intend to grow through acquisition.”16 That December Wausau merged with Mosinee Paper Corporation, a firm that specialized in making tissue paper—an irony not lost on Grovetonians still smarting from the loss of Number 4 paper machine. The new corporation, Wausau-Mosinee, employed thirty-five hundred workers at nine facilities.

  The debt incurred by these moves, combined with troubling trends in the paper industry, such as rising pulp and energy prices, low commodity paper prices, and mill closings and downsizings around the country, ended the free-spending days of Wausau’s first four years in Groveton. The new mantra became “cut costs.”

  Early in 1998, Wausau announced one cost-cutting program—a generous early retirement buyout to employees age fifty-five and older. Dave Atkinson explained the corporation’s rationale: “There needed to be a downsizing. Groveton was right-sized. Brokaw, Rhinelander, and the other [Wausau] mills were way overstaffed. Groveton was able to produce 330 tons a day on two paper machines with a paper machine crew size of five. Why do [other mills] have sixth hand, seventh hand, beater room helpers? The Wisconsin mills, I think, didn’t really like the Groveton mill all that much. [Our workers] really were a high-performing work team.”

  A consultant proposed the “voluntary early retirement package” (VERP) that included severance pay, retirement and medical benefits, and a financial bridge until the retiree became eligible for Social Security. It would be paid as a lump sum that extinguished the employee’s future pension claims against Wausau (but not against James River).17 Some employees received $150,000–$200,000.

  Labor law required that Wausau offer the early retirement package to workers at all its mills, not just its Wisconsin mills. The company expected half of those eligible to accept VERP. When 98 percent opted for retirement, Wausau fired the plan’s authors and paid out a great deal more money than anticipated. All but two of the 104 eligible Groveton workers accepted the buyout. One of the men who declined had two or three ex-wives. “Why aren’t you taking it?” Atkinson asked. “He said, ‘Oh, Dave, I’d end up with none of it, so I’m going to keep working. They’re going to have to wait for it.’”

  The union reluctantly acquiesced to the buyout. “It was pretty much indicated that if they didn’t get ’em from the upper age group, they were going to cut manning, and it would be in the bottom,” Murray Rogers said. “Our take was: Let the older people go if they want to go. We’re going to need the younger people to run this thing. You get an aging workforce, it’s going to catch up to you. That buyout was a blessing for some because they were, I’d say, beyond their peak on ability and things of that nature, especially maintenance guys.”

  Initially, the buyout hurt Groveton. “It was a major mistake on Wausau’s part,” Ted Caouette asserted. “It was good for the guys who could retire and get out of the mill. But it was very difficult for years to come to get that experience back. Jobs weren’t being automatically filled by experienced workers. After a while, it got better. For us, it was not a disaster, but it made everything very difficult.” Customer complaints about poor-quality paper jumped in the fall of 1998 and remained very high for the next six months. February 2000 was the worst safety month in fifteen years.18

  Atkinson acknowledged the mill suffered from the loss of experienced workers. But, he noted: “It created tremendous opportunities for some of the younger workers. I know that we recovered pretty quickly from it. [Younger workers] were open to trying newer things. You were a much quicker operation. More nimble, which you need to be.”

  The buyout was a good deal for the people who took it, but many of them invested in the stock market, and the 2007–2008 market crash hit them hard. Fred Shannon was one who lost his buyout money. When I reminded him in 2010 that the market was recovering, he replied: “It’s too late for me.”

  Although Wausau had saved the Groveton mill, there was a dark side to Tom Howatt’s dynamic leadership. Dave Atkinson called Howatt a wonderful mentor but conceded, “I never considered him a resident. He built a home in Littleton,” a half-hour drive south of Groveton. Bill Astle said, “He was an upwardly mobile guy. He didn’t want to end his career at Groveton. He was looking to be CEO.”

  During the transition period, Louise Caouette sensed the incoming management team—with the exception of Dave Atkinson—did not place a high value on community relations. She was especially troubled by Tom Howatt’s attitude toward fraternization between management and labor at the mill: “One of the things that was told to me was, ‘There won’t be the socialization between the upper ranks and the lower ranks.’ It challenged a lot of relationships. Everybody sort of bought on because everybody was glad to still have a job, [but] it was uncomfortable. It hurt relationships. In the mill, social things became strained.” She added that after Howatt was promoted and returned to Wisconsin in late 1994, this policy was relaxed, but “by that point, a lot of damage from an emotional standpoint had already happened.”

  Democrat, October 21, October 28, 1992.

  Jack O’Brien, “Wausau Papers Makes Dream Acquisition—Acquires Groveton from James River,” PaperAge, September 1993, 10; Jack O’Brien, “Wausau Paper Mills’ President and CEO Arnold M. Nemirow Named PaperAge Papermaker of the Year,” PaperAge, December 1993, 8.

  O’Brien, “Wausau Papers Makes Dream Acquisition,” 12.

  Democrat, April 14, 1993.

  Democrat, March 3, 1993; March 10, 1993.

  Martha V. Creegan, “Colored Paper Still Coming from Mill,” Caledonian-Record, May 7, 2001.

  Edith Tucker, “Wausau Union Voting on Labor Contract,” Democrat, March 26, 1997.

  Peter Riviere, “Paper Mill Expansion Will Allow Overnight Deliveries,” Caledonian-Record, August 28, 1993.

  Journal staff, “Wausau Paper Loses CEO,” Milwaukee Journal, July 21, 1994.

  Peter Riviere, “If Paper Mill Changes to Oil Woodsmen’s Jobs Could Be Lost,” Caledonian-Record, April 26, 1994; Peter Riviere, “Workers Are Called Back as Paper Demand Increases,” Caledonian-Record, September 30, 1994.

  Pam Bouchard, “Natural Gas Pipeline a Step Closer to Reality,” Berlin Daily Sun, January 30, 1996; Edith Tucker, “Wausau Will Invest $8 Million at Mill,” Democrat, July 23, 1997; Tom Craven, “No Correlation?,” Wausau Happenings, April 1999, 1.

  Edith Tucker, “Wausau Union Voting on Labor Contract,” Democrat, March 26, 1997.

  “Go to Groveton for County’s Best Pay,” Berlin Reporter, April 4, 2000. Berlin, another paper mill town, averaged $600, Lancaster averaged $440, and Colebrook $368.

  Barbara Tetreault, “Wausau Contract Rejected,” Berlin Daily Sun, March 27, 1997.

  Edith Tucker, “Wausau Union Voting on Contract,” Democrat, March 26, 1997; Peter Riviere, “Union Vote Today on Five-Year Wausau Paper Mills Contract,” Caledonian-Record, March 26, 1997; Barbara Tetreault, “No Strike at Wausau,” Berlin Daily Sun, March 27, 1997; Peter Riviere, “Strike Vote Fails,” Caledonian-Record, March 28, 1997.

  Eoin Cannon, “Wausau Papers to Buy Mill in Maine,” Berlin Reporter, February 13, 1997.

  Editorial, “Painful Decision Will Pay Off for Paper Company,” Wausau Daily Herald, March 25, 1998.

  Tom Craven, “Pretty Scary Stuff . . .” Wausau Happenings, October 1998, 1; Tom Craven, “Our Customers Are Talking . . .” Wausau Happenings, November 1998, 1; Tom Craven, “No Correlation,” Wausau Happenings, April 1999, 1; Dave Atkinson, “S.O.S.,” Wausau Happenings, March 2000, 1.

  Chapter Fourteen

  A BATTLE WE COULDN’T WIN

  “IT WAS RATHER TRAUMATIC, to say the least,” Shirley MacDow said of the formal spli
t-up of Wausau and Paper Board in 1993. “That mill was like Siamese twins. You had to decide, ‘This pipe is yours, and this one is mine, but this one has both so we have to pay you 50 percent.’ It was a tough show. There was a lot of antagonism because we were like the enemy, so to speak.”

  Pete Cardin welcomed the split: “Wausau had a strict focus. Paper Board wasn’t part of that focus. When it happened, I said, ‘We’re going to have to fly on our own, and that’s a good thing.’ Of course, it’s much more complex than that. We discovered that immediately by having to set up our own administration. This is where it started getting a little bitter. The sale had to go through at the same time that they negotiated the contract with the union, and the operating agreement with Groveton Paper Board was dissolved. So all of those things had to happen at exactly the same instant. It was very complex.”

  A surgical separation, however, was not possible. As long as the two separate companies shared the same mill complex, there would be, Cardin said, “bones of contention.” “Wausau realizes that anything that we’re involved with that they operate is going to be challenged because we operate on such a slim margin. We look at our budget item by item by item. Every month we’d sit down and go over it and say, ‘What’s the reason for this few extra thousand dollars?’ If that seemed to be coming from something they were doing, we would challenge them. Nobody likes to be challenged in their management, especially in what they would consider petty. But for us, it wasn’t petty.”

  Dave Atkinson thought the operating agreement Wausau inherited from JR “was very good for Groveton Paper Board.” The new agreement negotiated with Wausau was not as favorable for Wemyss’s outfit. “Wausau took the negotiation much more seriously than great, big, large James River Corporation,” Atkinson explained. “I don’t think [JR] paid much attention to the operating agreement, and therefore the Groveton Paper Board got a lot of costs not assigned to them that should have been probably. Wausau basically provided steam, electricity, maintenance services. The first operating agreement that Wausau negotiated with Groveton Paper Board made Groveton Paper Board’s costs of manufacturing paper go up considerably. A lot of the things that they got for free, or weren’t allocated properly, were allocated more properly by Wausau.”