New industry group formed to try to purchase Verso mill
The shutdown of the Wisconsin Rapids mill is causing severe economic disruption
MADISON, Wis. -- The legal framework is in place for a unique cooperative spearheaded by the forest products industry to attempt to buy the huge Verso paper mill in Wisconsin Rapids and bring it back to life.
A steering committee of loggers and truckers from Wisconsin and Michigan has formed the Timber Professionals Cooperative, complete with articles of incorporation and bylaws.
Registered with the state of Wisconsin on August 4, it is the first element of what could become a multi-stakeholder cooperative to buy the mill and start making paper again.
“Everyone that has skin in the game could be part of this multi-stakeholder cooperative,” including landowners and paper industry suppliers, said Dennis Schoeneck, TPC president and a logger in the Rhinelander area for more than 40 years. “Our vision is that we would be able to get much of the community of Wisconsin Rapids and possibly workers' groups to form cooperatives for themselves” and become part of the multi-stakeholder group, Schoeneck said.
The concept of creating a co-op for loggers and truckers has been floating around for years, said Henry Schienebeck, executive director of the Great Lakes Timber Professionals Association. “Verso ignited the fire a bit,” he said.
Verso announced on June 9 that it would “indefinitely idle” the Wisconsin Rapids mill by July 31, blaming the COVID-19 pandemic for a sharp drop in graphic paper demand. The shutdown affects 902 mill employees and thousands of workers in related industries.
The Wisconsin Rapids mill, operating since 1904, can produce 540,000 tons of paper a year used for commercial printing, according to Ohio-based Verso. Its main paper-making machinery, installed in the 1990s, is among the biggest in the world.
The Verso mill consumed about 1.5 million tons of wood each year, with shipments from about 550 loggers, Schoeneck said. Those shipments halted on June 9, leaving loggers in a financial bind. They scrambled to find buyers for their lumber but found few takers. “Other mills don’t need that much additional wood,” Schoeneck said.
Loggers are often heavily leveraged, with as much as $2 million worth of machinery and $100,000 tied up in timber purchases, Schienebeck said. “A lot of the time, a logger buys timber (contracts) two to three years in advance. They have to have wood on the shelves,” he said.
The Wisconsin Economic Development Corp. (WEDC) could help fund a feasibility study to determine future market needs for paper products and the cost of converting Verso’s machinery, WEDC CEO Missy Hughes said, calling the multi-stakeholder concept an innovative idea. “The cooperative model is the concept of owning your destiny,” Hughes said.
There is a precedent, on a smaller scale. In a tiny logging town in Quebec, two worker co-ops and a community investment group joined forces to buy a bankrupt mill for $1.2 million in 1985. The mill is still operating today.
State Rep. Scott Krug, R-Nekoosa, and state Sen. Patrick Testin, R-Stevens Point, are optimistic the Verso mill will be purchased. “It’s a matter of when we get a new buyer, not if we have a new buyer,” Testin said.
Even if a multi-stakeholder cooperative does not purchase the mill, it could play a role in future industry developments, Schienebeck said.
“Ultimately, what this could be is a long-term plan to keep a sustainable business in Wisconsin,” he said.
Judy Newman was a full-time business reporter for the Wisconsin State Journal for 22 years and before that, a radio news reporter, anchor and news director, primarily in Madison. Newman is a graduate of Northwestern University's Medill School of Journalism.