Where has all the lumber gone?

A log yard in Tony leased by Verso Corporation is idle since a June decision by the paper manufacturer to close mills in Wisconsin Rapids and Duluth, Minn. 

There appears to be no end in sight for a paper mill shutdown that has idled an area log loading rail yard.

After months of exploring possibilities, Verso Corp. announced it would slow down its effort to find a buyer for its Wisconsin Rapids mill.

According to a story in the Wisconsin Rapids Tribune, David Sams, Verso’s vice president of environmental health, safety and sustainability, told members of the Wisconsin Rapids Together Task Force last Wednesday that, the economic environment and the continued COVID-19 pandemic have made it difficult to find a buyer.

The Tribune reported Sams said it has become apparent that a sale in the near future will be “impossible.”

Last June, Verso officials announced they would take immediate actions to offset unprecedented market decline due to the COVID-19 pandemic and to reposition the company for future success. As a result, production was stopped at its paper mills in Wisconsin Rapids and Duluth, Minn., while “exploring viable and sustainable alternatives for both mills,” according to a statement. Options include restarting the mills if market conditions improve, selling the mills or closing them permanently.

Verso expected to idle the Duluth Mill by the end of June, and the Wisconsin Rapids Mill by the end of July, resulting in the layoff of approximately 1,000 employees. Verso will continue to supply graphic and specialty papers in roll and sheet form, as well as packaging papers and pulp.

According to the company website, the Wisconsin Rapids mill employs around 914 people and produces 540,000 tons of paper per year.

According to the company website, the Duluth mill employs around 235 people and produces 270,000 tons of paper per year.

Verso leases from Rusk County a rail yard for loading logs in Tony after relocating to that site from its prior yard operation in Ladysmith northwest of U.S. 8 and W. Fifth Street N.

Verso has provided the county with a notice of termination per the lease agreement, according to Rusk County Administrator Andy Albarado 

“They will continue to have the yard under lease into next year, but I don’t anticipate any logs being landed there,” Albarado said.

Estimating the county’s economic loss from the Verso shutdown is difficult because the county contracts its timber sales through local loggers who bid on sales and not directly through any mill. The loggers determine who they sell to when they harvest the wood, and typically they know who they are going to sell to when they bid.

Earlier this year, Albarado estimated about 50 percent of logging activity in the county is tied to Verso.

“With the mill closed the loggers still have contracts with the county, but they could market the wood to somebody else.  We do expect loggers may wait to cut these sales until more is known,” Albarado said. “It’s still a little early to know how the overall market is going to adjust to the mill closure, however we have projected less overall stumpage revenue in the county budget anticipating the decline.”

Over the previous 5 years, the Verso mill in Wisconsin Rapids has accounted for 15.92 percent of the county forest’s stumpage revenues, according to Rusk County Forest Administrator Jeremy Koslowski. He said direct and indirect loses moving forward are anticipated in the near and long term future, adding these loses will vary depending on whether the mill comes back online and if so, at what capacity. 

“Currently our logging contractors are in a tough predicament, needing to harvest wood to maintain their business, but not having full and open markets to deliver product to,” Koslowski said. “We anticipate a slower near-term harvest within the County Forest, however we are hopeful the situation will improve as we move into 2021 and beyond. Our revenue stream from timber harvests will be depressed unless and until a solution occurs at the Wisconsin Rapids mill.”

U.S. Senator Tammy Baldwin announced last week she will send a letter to the Verso Corporation Board of Directors to call on them to honor their commitments to their employees and either run the mill, or sell it to a buyer that will be committed to the Wisconsin Rapids community. 

“The facility directly supports more than 900 workers in the region, as well as thousands of workers and many small businesses throughout Wisconsin,” she said in a statement.

Baldwin also wrote previously to Verso Corporation and urged them to find a buyer that is committed to keeping the proceeds from the facility’s operations in the community. 

“Many in the community were hoping for a quick sale to a buyer that would operate the mill and preserve its nearly one thousand jobs. The disappointing news that the sale is on hold raises concerns that Verso will close the mill instead of selling it to an operator,” Baldwin wrote. “I write to request that you resume active marketing of the mill, giving full and fair consideration to local buyers, and honor your commitment to treat the employees of the Wisconsin Rapids mill with “fairness and respect.”

Senator Baldwin also raised concerns that a group of activist investors has gained seats on the board and is pushing decisions that benefit shareholders and executives at the expense of workers at the Wisconsin Rapids facility. On July 31, the Wisconsin Rapids mill idled and 902 workers were laid off. On Aug. 6, just one week later, Verso announced that it would spend $100 million on a special dividend and $150 million on stock buybacks. Baldwin noted the Board waived the stock performance requirements to allow Verso’s executives and directors to earn millions in bonuses despite not hitting stock price targets. The Board claimed holding the executives responsible for the decline due to the pandemic could lead to the executives leaving Verso.

“It is hard to find a clearer contrast between the stakes for executives versus rank and file workers. The workers lose jobs after decades of service and must wait in agonizing limbo, while the bar is lowered to pay executives millions to ensure they don’t quit. The actions of the board show sympathy for the plight of executives and directors who could lose millions in bonuses (while retaining their half million dollar annual salaries) yet little concern for their workers who have lost their livelihoods,” Baldwin wrote.

According to Verso’s website, the Wisconsin Rapids mill started out as Consolidated Water Power Company in the 1890s and began making paper in 1904 as Consolidated Water Power & Paper Company. The mill started operating with the first electrically powered paper machines in the world.

 The Duluth Mill began operating as Lake Superior Paper Industries in 1987 and was a joint venture between Minnesota Power and Pentair, Inc. The M.L. Hibbard Steam Station, unused since the 1970s, was re-commissioned to provide the steam needed to make paper. In 1993, the Duluth recycled pulp mill, built by Minnesota Power, was added to the paper mill.

On Oct. 1, Verso Corporation announced Adam St. John has resigned as President and Chief Executive Officer and as a member of the Board of Directors, effective as of Sept. 30.

 

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.