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iPads, China: Twin Threats To Wisconsin's Paper Industry

Originally published on Tue January 8, 2013 7:11 pm

Deep in the Northwoods of Wisconsin, lumberjacks still cry "timber," just not as often as they once did. Across the state, milling lumber into good paper, the kind called "knowledge" grade for books, has employed thousands for more than a century, and created a distinct culture.

Then about six years ago, the mills started closing as a result of the twin threat of the iPad and China. Still, some hearty souls are surviving through grit and attitude.

Paper Cuts is the name of a series done last month by the Milwaukee Journal Sentinel with support from the Pulitzer Center on Crisis Reporting. Reporter John Schmid spoke with Jacki Lyden, host of weekends on All Things Considered, about his findings.


Interview Highlights

On the history of papermaking in Wisconsin

"There is a town called Hayward, Wis., where you can still go for the annual August international lumberjack competition. The entire reason that Wisconsin became the nation's leading papermaking state is because it's got the natural resources that you need for making paper. It's got a lot of rivers, which you need to power the mills. In a town called Appleton ... they made the world's first operating hydroelectric dam to power the paper mills. And you've got hardwood forests, which have been a blessing for the industry in northern Wisconsin. ... These yield these fine, tough fibers that are great for books, magazines, encyclopedias. That's what Wisconsin specialized in for over 100 years."

On paper surviving the beginning of the digital age

"A joke began to circulate in Wisconsin: 'This paperless society sure is good for business.' Amazing, astonishingly, the paper industry demand held up right around 2005, 2006. There is a beautiful old, 120-year-old mill on the Wisconsin River in a town called Nekoosa. It has to work extra shifts to make the paper for the recent biography of Steve Jobs by Walter Isaacson. The irony, of course, is that no industrialist has done more than Steve Jobs to create the touch screens that are putting the pressure on these paper mills."

On one surviving mill owner, Butch Johnson

"Butch Johnson is a second-generation logger, dyed in the wool, northern Wisconsinite. He is from the town called Hayward. ... One of the first questions we asked was, 'Have any of these mills that have closed down reopened?' There was just one. That's in Park Falls. Butch grew up there. It is the biggest employer in all the county. ... He saved the town. As soon as the mill closed down and the pink slips went out, the anecdotes that I had heard was that just about every other house on some blocks had put up a 'for sale' sign, and you could just see the town economy begin to collapse.

"Banks didn't want to extend loans to Butch. ... So he scrapped together a fairly complicated deal. It did involve some state subsidies from the state of Wisconsin, and he had the mill back up and running within a couple of months of closing. Butch will be the first to admit that they might be the next mill to close."

On following the paper trail to China

"No one expected them to dominate the industry that's just not sexy — an industry that is so 18th century. What China has had for so many decades were these quaint, old, highly polluting mills that made flimsy paper out of things like straw and reeds and bamboo. It began to strategically nurture a paper industry. In China, in the classroom, they learn about the four great inventions: They included paper, printer. ... It is a potent national symbol, and China felt like it was claiming an industry that belonged to China in the first place."

On Chinese paper subsidies

"It's not just subsidies that the Chinese have used as a competitive advantage. They are an innovation economy. They have had to compensate for a chronic timber deficit. They are crossbreeding and hybridizing and cloning species of trees that can grow to full height in four to six years. ... I think the greatest innovation that the Chinese have come up with, however, is that they have created the biggest and most efficient recycling scheme in the world. They scour the planet, literally, for recycled paper, which they then de-ink and re-pulp. The biggest supplier is the United States of America. Not only is Wisconsin losing an industry, but for all of its economic might, the biggest U.S. export is junk that we throw away."

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

JACKI LYDEN, HOST:

This is WEEKENDS on ALL THINGS CONSIDERED from NPR News. I'm Jacki Lyden.

Deep in the Northwoods of Wisconsin, lumberjacks still cry timber, just not as often as they once did. Across the state, milling lumber into good paper, the kind called knowledge grade for books, has employed thousands for more than a century and created a cherished culture.

Then about six years ago, the mills started closing, one after the other, as a result of the twin threats of the iPad and China. Still, some hearty souls are surviving through grit and attitude.

JOHN SCHMID: When I wake up every morning and lace up my boots to go to work, come with the right attitude, that's the one thing that we can control every day.

LYDEN: "Paper Cuts" is the name of a series done last month by the Milwaukee Journal Sentinel. Reporter John Schmid begins by saying it's hard to underestimate how iconic the lumber industry is in Wisconsin.

SCHMID: There is a town called Hayward, Wisconsin, where you can still go for the annual August international lumberjack competition. The entire reason that Wisconsin became the nation's leading papermaking state is because it's got the natural resources that you need for making paper. It's got a lot of rivers, which you need to power the mills.

In a town called Appleton, Wisconsin, they made the world's first operating hydroelectric dam to power the paper mills. And you've got hardwood forests, which have been a blessing for the industry in northern Wisconsin. These yield these fine, tough fibers that are great for books, magazines, encyclopedias. That's what Wisconsin specialized in for over 100 years.

LYDEN: So these wonderful pages survived a very long time. In your series, you start to really look at things from 2000 on, and then in 2006 on is when mills start to close. How did the paper industry survive the beginning of the digital age and then suddenly it didn't?

SCHMID: What happened was that with every recession that hit in the 1980s and throughout the 1990s and even into the past decade, the industry would bounce back and output and demand was greater than ever before. And a joke began to circulate: this paperless society sure is good for business.

Amazingly, astonishingly, the paper industry demand held up right up through about 2005, 2006. There is a beautiful, old 120-year-old mill on the Wisconsin River in a town called Nekoosa. It had to work extra shifts to make the paper for the recent biography of Steve Jobs by Walter Isaacson. The irony, of course, is that no industrialist has done more than Steve Jobs to create the touch screens that are putting the pressure on these paper mills.

LYDEN: And, like a mighty oak, there is one survivor here who you profile of this decline. Let's hear just a little bit from your video story, John. This is Butch Johnson.

(SOUNDBITE OF SERIES, "PAPER CUTS")

BUTCH JOHNSON: We're now just celebrating today, I believe, our sixth year of keeping this mill open. And it hasn't been easy. We feel a lot of pride in what we've been able to do where other people have just sort of thrown in the towel.

LYDEN: Love everything, from his accent to his obvious pride. Tell us about Butch Johnson.

SCHMID: Butch Johnson is a second generation logger, dyed-in-the-wool northern Wisconsinite. And he's from the town called Hayward. What we wanted to do at the very onset was avoid the journalistic cliche of reporting on a dying Midwest industry. One of the first questions we asked was, have any of these mills that have closed down reopened?

There was just one. That's in Park Falls. Butch grew up there. It is the biggest employer in all the counties around it.

LYDEN: I imagine he's quite a hero in Park Falls.

SCHMID: He is a folk hero locally. He saved the town. As soon as the mill closed and pink slips went out, the anecdotes that I had heard was that just about every other house on some blocks put up a for sale sign, and you could just see the town's economy begin to collapse.

Banks did not want to extend any loans to Butch. So he scraped together a fairly complicated deal. It did involve some state subsidies from the state of Wisconsin, and then he had the mill back up and running within a couple of months of its closure.

LYDEN: So how are they doing?

SCHMID: Butch will be the first to admit that they might be the next mill to close. But for now, he added some long overdue automation on the big paper machine. So they make more paper than they ever did, a higher quality paper than they ever did.

They are eking out a thin operating profit. When you talk to folks in the Wisconsin paper industry, usually off the record, when you set aside your notebook and you ask them the question, where do you see this industry going, some of them will say: We're just waiting to see who the last man standing is going to be.

LYDEN: John, "Paper Cuts" the series follows the whole mill trail overseas to China. And it's kind of amazing because for a long time, papermakers in Wisconsin assumed that the Chinese market just didn't have enough wood to make paper. You go to China, and you find out that that's not true. What else do you find out?

SCHMID: No one expected them to dominate industry that's just not sexy, an industry that is so 18th century. What China has had for so many decades were these quaint, old, highly polluting mills that made flimsy paper out of things like straw and reeds and bamboo.

So it began to strategically nurture a paper industry. In China, in the classrooms, children grow up learning about the four great inventions. They included paper, printing, the compass and gun powder. It is a potent national symbol. And China felt like it was reclaiming an industry that belonged to China in the first place.

LYDEN: So one of the fascinating parts of your story is that a prominent Wisconsin paper mill executive named Jeff Lindsay leaves Kimberly-Clark, which gave the world Kleenex, to go to Shanghai. Let's hear Jeff Lindsay's take on things in his new role. And here he is from Shanghai.

JEFF LINDSAY: It's been an incredible learning experience seeing what China is actually like versus what the West thinks China is. So many fallacies and misconceptions. It's amazing.

LYDEN: What does he think that China has going for it that Wisconsin doesn't?

SCHMID: Jeff is a engineer. He's a man who's used to speaking in empirical terms. He's the sort of guy who got into the paper industry because you can do so much with cellulose fibers and innovate with them and invent dozens of endless new uses for cellulose fibers. My interpretation of listening to Jeff is that the innovation culture in China, in the Chinese paper mills, is very active. While Wisconsin was a leader in innovation in paper, it lost that about two decades ago.

LYDEN: You found that the Chinese government doled out at least $33 billion in subsidies to its paper industry between 2002 and 2009. That's more than $4 billion a year.

SCHMID: But it's not just subsidies that the Chinese have used as a competitive advantage. They are an innovation economy. They've had to compensate for a chronic timber deficit. And they are crossbreeding and hybridizing and cloning species of trees that can grow to full height in four to six years and yield the same pulp that a Wisconsin hardwood needs in 10 times that same period.

I think the greatest innovation that the Chinese have come up with, however, is that they've created the biggest and most efficient recycling scheme in the world. They scour the planet, literally, for recycled paper, which they then de-ink and re-pulp. The biggest supplier is the United States of America. So think of all those recycling bins in homes and offices from coast to coast.

Every time you recycle a piece of paper, there's a pretty decent chance that it's not ending up in the United States. Not only is Wisconsin losing an industry, but for all of its economic might, the biggest U.S. export is junk that we throw away.

LYDEN: That's John Schmid. He's a reporter for the Milwaukee Journal Sentinel. His series about the Wisconsin paper industry is called "Paper Cuts," and you can see more of it at npr.org. John, absolutely fascinating. Thank you very much.

SCHMID: Thank you so much for letting me be on your show.

(SOUNDBITE OF MUSIC)

LYDEN: This is NPR News. Transcript provided by NPR, Copyright NPR.