Older mills face challenges in conversion to new ways of doing business

Near-century old mills can require large capital investments for reinvention

U.S. Department of Agriculture Photo

MADISON, Wis. -- When the first generation of pulp and paper mills in the U.S. close their doors, like the giant Verso mill in Wisconsin Rapids announced plans to do earlier this summer, there may be an opportunity to repurpose them to other products.

Some of the 172 pulp and paper mills in the U.S. are 70 to 90 years old and may require large capital investments to allow them to manufacture different products where demand is growing, according to Brooks Mendell, president of Forisk Consulting, who spoke at the recent American Forestry Conference. Forisk is a leading global consulting firm to the forest products industry.

Mendell pointed out that wood use has been growing in the U.S. South (in contrast to other regions of North America), but that most of the growth is not from new mills. Most of the growth is attributed to reopening closed mills or expanding capacity at an existing mill.

(While Wisconsin ranks 1st in the U.S. in the number of mills among states, Mendell said that 75% of capacity is in the southern region in the U.S.)

Repurposing a mill can involve converting it from making newsprint or magazine stock to manufacturing cellulose fibers or industrial sugars. (In a statement, Verso said that options it had explored including converting it to make different types of paper had been “unsuccessful in finding a viable economical and sustainable alternative”, according to a recent lengthy Washington Post story.)

During a separate conference session, Jeremy Stecker, owner of Jatco, offered an additional perspective on the Verso mill closings in Wisconsin Rapids and of a smaller mill in his home city of Duluth. He said the quick and drastic reduction in pulpwood markets has made it difficult to navigate timber sales. He said loggers hate to waste lower grade wood, but they may have to cut around it or just leave it on the ground if there is no buyer for it.

He said loggers will be seeking flexibility on what and when to cut wood under public contracts. They may be lobbying public entities for contract extensions or amendments to gain flexibility.He added that the shock of the Verso shutdown should signal state and local governments to “help mills that are here to stay here”.

In the Post article, Missy Hughes, CEO of the Wisconsin Economic Development Corporation (WEDC) said that a developing plan for a cooperative being formed by the Great Lake Timber Professionals Association was a particularly intriguing option. She said that it would allow a long-term sustainable plan “so there is not someone just coming in and selling it for parts or closing it.”

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