Wausau Paper is closing the Brainerd mill this spring, with production expected to cease in April.
The company announced the closure of the mill Thursday afternoon. Employees were told about 3:30 p.m. Thursday during company meetings. The mills employs 134 workers.
In a statement, Wausau Paper reported it explored a range of alternatives after deciding to divest itself of the technical specialty paper business to focus on its tissue business.
“It has become clear that Brainerd will not contribute to those alternatives and the closure will significantly improve the continuing paper segment operating results,” Wausau Paper stated. The mills other technical specialty paper business in Mosinee and Rhinelander, Wis. will continue to operate.
“A number of factors, including our accelerated exit from the print business, protracted global economic weakness and recent competitive paper capacity additions in Asia have impacted the viability of the Brainerd operations and created operational losses from the mill that were unsustainable,” said Hank Newell, Wausau president and CEO, in a news release. “Our employees and the community of Brainerd have done all we have asked in our efforts to create a long-term viable operation and we thank them for their support.”
How long the Brainerd mill will continue to operate before it is closed in the spring depends on current customer orders, said Perry Grueber, director of investor relations.
Grueber said care will be taken to close the mill and protect its future possibilities and maintain paper making equipment. Grueber said the company isn’t saying it won’t still try to sell the mill, but Wausau Paper thinks the mills in Wisconsin will be more attractive to the market.
Just two years ago, Wausau Paper invested $27 million to convert the Brainerd mill to technical specialty grades, such as those used in masking tape and to a limited degree packaging for the food industry. Grueber said the decision was based on market research.
“The weak economy we’ve all been suffering through proved those projections to be incorrect,” Grueber said.
Plant closures or layoffs of 50 people or more trigger additional state resources and a rapid response team, and Wausau’s competition in Asia opened the door for federal resources for training. Those resources will coordinate with Rural Minnesota Concentrated Employment Program (CEP) at the WorkForce Center in Brainerd.
Craig Nathan, Rural Minnesota CEP operations manager, said federal trade adjustment assistance (TAA) was awarded last week, bringing in a lot of additional resources to help employees make transitions. It’s a familiar story in Brainerd, including other large plant closings from Potlatch in Brainerd to the Weyerhaeuser plan in Deerwood. Nathan said some employees have been through this process two other times, when Potlatch first closed the mill and later when Missota Paper closed. All that came before Wausau Paper purchased the mill in 2004.
“We as community partners and that includes the Brainerd Lakes Chamber, Central Lakes College and Brainerd Lakes Area Economic Development Corp. (BLAEDC), we have all worked together in the past to see what each of our agencies can bring to the table and we will likely do the same,” Nathan said.
Wausau Paper management in Brainerd and the unions have been working with the Minnesota Rural CEP since layoffs were announced last year.
Nathan said employees are already calling the WorkForce Center and there will be early help in career exploration, job searches and talks with job counselors. But employees will need to stay with their current jobs at Wausau until they are actually laid off in order to take full advantage of retraining benefits, Nathan said.
“It’s a really tough thing,” Nathan said. “They just need to hang in there.”
On the plus side, the workers affected by the Brainerd mill closing represent a skilled workforce and are in an area where employers are looking for skilled labor. That, Nathan said, leaves him feeling more positive. Nathan said his program will help match workers and employers. On the other hand, Nathan said central Minnesota continues to have challenges with unemployment, people without particular skills in demand and lower wages. Sometimes employees who may not be able to support themselves on a lower wage end up leaving the area entirely.
Sheila Haverkamp, BLAEDC executive director, said the organization is disappointed Wausau Paper wasn’t able to capitalize on its investment in Brainerd.
“We are very concerned about the impact to the effected families and the community as a whole,” Haverkamp stated.
Haverkamp said BLAEDC will work with other organizations and the city to pursue economic development opportunities, employee training and re-employment needs.
“However, we are hopeful with the condition of the Brainerd plant, the workforce skill set and tremendous talent that we have in our area, that another paper company will consider our community,” Haverkamp said.
Grueber said the conditions that had the Brainerd mill facing losses for several months with no expected changes in 2013 were not related to the work force here. He cited a new competitor in Asia, an earlier exit from the printed paper market than first expected with the sale of the color brands as factors in the mill’s profitability. Products from the Brainerd mill were shipped globally to markets in Europe and Asia. Wausau’s plan was to increase its capacity to meet global demand with more capacity in Brainerd. But the weakness in the market combined with under performance from the Brainerd mill, in part because there wasn’t a longer revenue stream from the printed papers. The other two mills produce specialty grades Brainerd could not, Grueber said. And it appears time ran out on the plan to migrate the majority of tape production to Brainerd.
“We are not going to get a chance to execute that,” Grueber said.
With several months of losses, Grueber said the coming year didn’t inspire the likelihood those losses would be reversed.
“There should be no issue with the performance of the work force,” Grueber said. “The folks in Brainerd have been extraordinary. ... This is a very regrettable situation for us.”
Grueber said the company is connecting to state resources for displaced workers and Wausau has already heard from elected Minnesota representatives.
Grueber said Wausau Paper will continue to seek a buyer for the mill.
“The Brainerd mill is a quality asset capable of serving global technical specialty markets. It’s well positioned to succeed there.”