PAPER MILLS IN BRAINERD

Dedication

This page is dedicated to the workers and families of the paper mills who contributed mightily to the prosperity of the city of Brainerd for over a hundred years and to my grandfather James Alfred McCarthy whose father owned a small sawmill in Nova Scotia. James immigrated to the United States about 1893 and worked as a lumberjack and stave maker among other things.

Ann M. Nelson

James A. McCarthy, ca. 1896. Source: Ann M. Nelson

1890

Surveyors have been looking over the grounds on the west side of the river this week to ascertain the feasibility of putting in mills on that side. (Brainerd Dispatch, 01 August 1890, p. 4, c. 3)

1893

Mayor Hemstead is corresponding with Mr. Frederick Weyerhauser in regard to the location here of a large mill by the syndicate. It seems to us that this would certainly be the most available point for the location of the mill taking everything into consideration. (Brainerd Dispatch, 17 February 1893, p. 4, c. 3)

The board of directors of the Industrial and Commercial Union of this city held a meeting in J. M. Elder’s office last Saturday evening. Mayor Hemstead read a letter from Frederick Weyerhauser, and after some discussion a committee consisting of W. S. McClenahan, J. J. Howe and Dr. J. Camp was appointed to confer with the members of the syndicate with a view of getting their proposed large saw mill located here. A letter was read from the land commissioner of the St. Paul and Duluth railroad stating that an illustrated pamphlet was about to be issued by his company, and that if information was furnished concerning the resources of Brainerd and Crow Wing county, besides cuts of our principal industries, he would insert them free of charge. On motion the board appointed J. M. Elder, A. J. Halstead and the chairman of the board a committee to comply with the request of Mr. Clark, the land commissioner of the above mentioned road. This company owns a great deal of land in this county which it desires to sell. (Brainerd Dispatch, 24 February 1893, p. 4, c. 4)

1902

September

GIGANTIC MILL DEAL IS CLOSED

_____

Brainerd Will Have One of the

Largest Pulp and Paper

Mills in Northwest.

_____

WORKMEN ARE ON THE GROUND

_____

Figured That Ultimately the Cost

Will Reach the $700,000

Mark.

It will be good news to the people of Brainerd whose interests are here to learn that a mammoth pulp and paper mill is to be built here, which will be a boost to the business interests and will place Brainerd on a footing beyond the hopes and most sanguine expectations of those who have been let in on the inside figure.

The facts concerning a gigantic deal which has been on for a month or two have been well guarded against the public and it was not until Wednesday that the matter was laid before the businessmen of the city who met in the office of the First National bank on a call from President A. F. Ferris. Not even some of the most interested businessmen in the city were next to the deal until it was made public yesterday, but they took to the idea unanimously and without a discussion and the deal is now a sure go.

It seems that the capitalists interested in the mills, similar to the one that is proposed to be built in Brainerd, now located in Cloquet and Little Falls have been keeping an eye on Brainerd for some time with a view of erecting the largest mill under their control in this city. Brainerd has been deemed one of the most desirable points for a paper mill in the northwest, largely on account of its excellent water power, and again on account of its central position from a commercial standpoint. Brainerd is centrally located and especially well equipped with railroad facilities leading out to the great west and north country.

The parties interested have been negotiating for some time for a site near the dam on the west side of the river and it is understood that the only concession they asked of the city was for it to furnish the said site. It will required in the neighborhood of fifteen acres of ground and at the meeting yesterday the businessmen pledged enough to buy the tract desired.

It is proposed to start work on the new mill at once. In fact a grading outfit has already arrived in the city in charge of Robert Lang and work will commence perhaps in a day or two. A canal will be build at the site to cost in the neighborhood of $125,000 and the company will perhaps expend in the next year or two close on to half a million dollars in improvements. The pulp mill will be put in shape at once and the mill will follow. It is estimated that a plant costing $700,000 will finally be put in.

This means much to Brainerd, which has already grown important from the fact that the two large sustaining institutions established here, are the best in the land, and this one in addition will bring more prestige and more revenue, placing Brainerd in the column of one of the most important cities in the state, certainly the most important in the northern part of Minnesota.

Her water power has made Brainerd prominent in the eyes of those seeking to establish large plants of the nature of the one proposed and it would not be surprising if some day the Mississippi river would be lined with industries of various kinds.

It is not know what capacity the new plant will be or how many men will be employed but those interested have given it out that it will be one of the largest paper and pulp mills in the northwest when completed and the most modern. (Brainerd Dispatch, 19 September 1902, p. 1, c.’s 3 & 4)

October

WORK ON CANAL IS PROGRESSING

_____

The New Brainerd Paper Mill Will

Be a Complete One in

Every Respect.

_____

HAS PLENTY OF GOOD BACKING.

_____

The Mill Will Make Several Grades

of Finished Paper Besides

Manufactured Pulp.

The contractors who have been working at the new pulp and paper mill site near the dam have made good progress the last two or three weeks and the work is beginning to have a telling effect on the embankment on the west side of the river. Of course the first piece of work that they have to do, and it is an arduous performance, is digging the canal through the west embankment some two or three hundred feet long. This has required the removal of thousands of loads of dirt and naturally the water backs so rapidly that it makes it very difficult to make as rapid progress as they would like.

Little has been known regarding the project of erecting this big mill but it is now definitely stated that the Northwest Paper Co., operating a mill at Cloquet, is backing the enterprise here. A dispatch from Cloquet to the Minneapolis Journal states that the mill will be a complete one, to make several grades of finished paper. The supply of wood for a mill on the upper river tributary to Brainerd is very large and it is easy of access. The Dispatch states that the product of the Brainerd mill will be handled by the Western Paper Co. The Weyerhaeuser interests are back of the new enterprise also. (Brainerd Dispatch, 24 October 1902, p. 6, c. 1)

1903

January

IT LEAKS OUT WHO OWNS THE POWER

_____

Weyerhaeuser Interests Said to

Have Purchased it from North-

ern Power Co.

_____

City Attorney Fleming reported that he had learned through good authority that the water power or dam had been transferred to the Northwest Paper Co., the company which is now building the large pulp and paper mill at the dam. This was rather a surprise to the members of the council as it will be to all Brainerd citizens. It confirms more fully the assertions already made that the above company has a permanency which means much more for Brainerd than the average citizen realizes. Besides securing the site for the new mill the company has secured absolute control of the power at the dam from the Northern Power Co. A representative of the company will be in Brainerd in a few days and a special meeting of the city council will be held to consult him regarding future rental of the power. (Brainerd Dispatch, 09 January 1903, p. 6, c.‘s 2 & 3)

June

COMMISSIONERS’ REGULAR SESSION

The matter of granting a crossing at the west end of the bridge over the Mississippi river to the Minnesota & International Railway company, was taken up and the following resolution was unanimously adopted:

1. That the Northwest Paper company own and operate a pulp mill located on the west side of the Mississippi river, near the Brainerd dam and immediately west of the road heading to the upper Mississippi wagon bridge from the north.

2. That the Minnesota & International Railway company is willing to make and maintain proper and sufficient track connections with its existing tracks near said pulp mill, for the shipment of the product of said pulp mill, provided the necessary right of way over or across the public highway immediately west of the of the approach on the west end of said north Mississippi wagon bridge shall be granted without condemnation proceedings, be it

RESOLVED, That the privilege be and the same hereby is granted to the Minnesota & International Railway company and to the Northwest Paper company and to their respective successors and assigns, to extend the spur now abutting on the east side of said highway over and above said highway at the west end of said upper Mississippi wagon bridge in a direct line to said pulp mill, provided that such crossing shall at all times be kept and maintained in perfect condition without expense to the county, and that the public easement in said public highway shall not be invaded, impaired, impeded or violated in any manner or to any extent beyond the proper and lawful use of said crossing by said companies. (Brainerd Daily Dispatch, 04 June 1903, p. 3, c. 1)

Contractor Robert Lang has completed his work for the present at the pulp mill of the Northwest Paper company, Louis Vincent, who has been foreman for Mr. Lang, left for his home at Eau Claire last night. (Brainerd Daily Dispatch, 24 June 1903, p. 2, c. 2)

July

The engineering department of the M & I has now completed the landing track to the pulp mill and the large supply of pulp on hand will be shipped by the Northwest Paper company. They have something like 400 tons now on hand. (Brainerd Daily Dispatch, 14 July 1903, p. 2, c. 2)

September

PULP MILL IMPROVEMENTS.

_____

Extensive New Improvements Made at

Northwestern Paper Co.’s Pulp

Mill in this City.

In order to connect the pulp mill with their side track on the hill a high tower was built and a covered bridge put in from the tower to the hill, ca. 1903. A 836x412 version of this photo is also available for viewing online. Source: Crow Wing County Historical Society

The Northwest Paper Co. has painted and otherwise improved its pulp mill at the dam. In order to connect with their side track on the hill a high tower was built and a covered bridge put in from the tower to the hill. The sheets of pulp are now taken from the rollers to the elevator, hoisted to the top of the tower and trucked to the cars and loaded.

Day and night shifts are at work and the company is shipping quite extensively. A visit at their mill impresses one with the absolute cleanliness displayed on all sides. From the grinders in the basement to the saws, tanks and rollers above, everything looks bright and clean, without a vestige of waste or refuse scattered about. (Brainerd Daily Dispatch, 29 September 1903, p. 5, c. 4)

October

A BIG BREAK DOWN AT THE PULP MILL

_____

On Account of Too Much Water

A Big Flume was Washed

Out Yesterday.

_____

THE MILL WAS IN DANGER

_____

For a Time But a Force of 75 Men

Was Put to Work Yester-

day Afternoon.

There was an alarming breakdown at the pulp mill of the Northwest Paper company near the dam yesterday afternoon and for a time it was thought that the plant would be totally wrecked.

It seems that on account of the high water, giving too much head, one of the big flumes was washed out and the water rushed through and beneath the mill with terrific force, it being more than the men in charge could do to handle the gates.

After the flume had washed out the water poured in and began to eat its way through the inner walls of the pit and for a time it was thought the whole plant was destined to go. Quick action on the part of the management, however, averted this catastrophe. Some seventy-five men were put to work and were kept at it nearly all night. It is now thought that the stream is under control and no further trouble is anticipated. The mill will be closed down as a result of the accident for at least six weeks. (Brainerd Daily Dispatch, 12 October 1903, p. 3, c.’s 1 & 2)

THE REPAIR EASILY MADE

_____

While the Break Down at the Pulp Mill is

Bad, it is Thought the Break Will be

Fixed in a Short Time.

A crew of men is at work making the repairs at the pulp mill of the Northwest Paper company after the break down of a few days ago. It is thought now that it will be possible to make all necessary repairs so that the mill can start up again in two weeks. The men have been able to control the flow through the channel so that it was possible to get to work in the pit. (Brainerd Daily Dispatch, 13 October 1903, p. 5, c. 3)

1904

January

NOW GRINDING NIGHT AND DAY

_____

Plenty of Wood and Plenty of

Water Gives Pulp Mill Plenty

To Do.

_____

TURNING OUT LOTS OF PULP

_____

Turn Out About Forty Tons a Day

Making about Fifteen Tons

When Dried.

This is an unusually busy season of the year at the Brainerd pulp mill of the Northwestern Paper company, and they are running night and day, Sundays not excepted. This is done to keep things from freezing up around the place, but even outside of this, the company find it very profitable to keep the mill running, as the pulp wood is very plentiful and the capacity of this mill is such that a large amount of the product is turned out each week at a minimal cost.

The mill has been running about a year and thousands of tons of pulp have been shipped out of the city. Very few realize the capacity of the mill. The repairs have all been made and Foreman Johnson announces that everything is running along very smoothly. (Brainerd Daily Dispatch, 08 January 1904, p. 3, c. 3)

1905

March

03 March 1905. The Commercial Club of Brainerd is pulling strings to secure a paper pulp mill for that city. It is rumored that the Northwestern Paper Company is on the string. (This Was Brainerd, Brainerd Dispatch, 03 March 2005)

June

HIGH WATER THREATENING MENACING PROPORTIONS

_____

The Pulp Mill of Northwest Pa-

per Company Was Forced to

Shut Down

_____

WATER STILL RISING IN RIVER

_____

Minnesota Water Works Com-

pany Can Stand But Few

More Inches

The pulp mill, dam and wagon bridge. A 1200x773 version of this photo is also available for viewing online. Source: Postcard

The gradual rise of the water in the Mississippi river is now assuming dangerous aspects and there is no telling what the outcome may be for Brainerd.

The most vital point is at the pumping station of the Minnesota Water Works company. Already the water at this point is eight or ten inches higher than it has been for the last eight years, and a rise of three or four inches more would, it is thought, necessitate the closing down of the plant and the city would be without water, a condition that would be most deploring.

There was a rise this morning of about half an inch and it is thought that there will be rise of at least an inch before midnight tonight.

The conditions at the pulp mill of the Northwest Paper company at the dam are even worse. The mill has already been shut down and there is six feet of water in the basement. The inundation will keep the mill closed down for at least ten days.

The condition north of here is very serious and the individual losses of the farmers from the overflows will amount to a large sum.

So important is this matter that the following telegraphic news item appeared in the Washington dispatches today:

“The floods in the upper Mississippi river and the part the dams on the headwaters of the river had in increasing those floods, were the subject of a conference between Congressman Bede and General Mackenzie, chief of engineers, today. The latter was well informed on the situation and told Mr. Bede he did not believe anything could be done under present conditions. A suggestion for the construction of a canal to connect Pokegama and Leech lake dams was talked over and endorsed by General Mackenzie, and it is probable that recommendations for its construction will be made to congress at its next session. General Mackenzie also adopted a suggestion made by Bede that he make a personal inspection along the upper Mississippi this season or appoint a board of engineers to investigate and report on conditions and suggest means for the prevention of floods in rainy seasons. This report will be laid before the rivers and harbors committee next winter or will be used by Bede as a basis for congressional action. The investigation probably will not be made until July or August.” (Brainerd Daily Dispatch, 28 June 1905, p. 3, c. 1)

July

CAUSE FOR ALARM

IN BRAINERD

_____

Water Still Rising in the River and

It is Thought the Worst is

Yet to Come

_____

FEAR FOR THE PULP MILL

_____

Water Works Plant Can Stand

More Water Before Pumps

are Shut Down.

The water is still rising in the Mississippi river. It rained this morning one and one-half inches and before 12 o’clock tonight it is thought that it will have raised at least four inches. The situation is getting somewhat alarming and while those interested in the dam are hoping there will be no serious results there is considerable anxiety felt. The greatest danger is that the pulp mill may go out and if it does there will be little hope for the dam.

The greatest danger is yet to come, according to reports from the U. S. engineer’s office in St. Paul. The letting of the water out of the dams up north will be a serious thing, it is thought, and this has not reached Brainerd yet.

There was one report from St. Paul that the engineers had told President Tighe, of the water works company, that they were not going to let any of the water out for the present, but there is a telegram from the north that 2,000,000 cubic feet of water is being let out of Winnibigoshish dam every minute and that it is the intention to increase this from 2,000,000 to 6,000,000 cubic feet per minute.

The following is taken from the Minneapolis Journal:

“Through June the great storage reservoirs in the northern part of the state, have for all practical purposes, remained closed. As a result these reservoirs have caught the great flood of the upper Mississippi valley, and the present high condition of the river is due simply to the water which has drained in below the great dams. If July, however, gets the same downpours that June did the reservoirs will be unable to hold the floodwaters, which will rush down the stream in an unrestrained deluge.

“Last Wednesday the great Winnibigoshish reservoir reached it storage limit, 42,000,000,000 cubic feet. So far it has been partially open, but releasing only an amount of water that has been caught by the dams below before getting to the main river. Pokegama reservoir is now closed and full. Its capacity is 7,000,000,000 cubic feet. Leech lake reservoir is not yet up to its limit, 22,000,000,000 cubic feet, but is rapidly rising and has already reached a point where it holds 18,000,000,000 cubic feet. Water is being released only for the necessary sluicing of logs.

“Sand lake reservoir has reached its limit, 3,000,000,000 cubic feet. As a rule the water on the upper side of the Sandy lake dam is 8 to 11 feet higher than that of the river below, but at present, because of the swollen condition of the stream, the water on the upper side of the dam is but two or three tenths of a foot higher.

“At present the Pine river reservoir dam is being rebuilt, so instead of its holding back 8,000,000,000 cubic feet of water—its capacity—it now retains only 2,500,000,000 feet.” (Brainerd Daily Dispatch, 05 July 1905, p. 3, c. 3)

Foreman Johnson, of the pulp mill, states that the water does not recede very fast above the dam. It has only gone down about an inch and a half since the high mark was reached. Below the dam this water is going down more rapidly and has fallen several inches in the last two or three days. (Brainerd Daily Dispatch, 13 July 1905, p. 2, c. 1)

October

BRAINERD MILL IS TO EXPAND

_____

Northwest Paper Company is

Forced to Expand on Account

of Increase in Business

_____

ENLARGED TWICE ITS CAPACITY

_____

Figure That a Clear Profit of

More Than $10,000 Annually

Has Been Earned

The following from the St. Cloud Journal-Press will be of interest:

“Information from a reliable source has it that the pulp mill at the Brainerd dam is soon to be enlarged to twice its present capacity.

“The company is now unable to fill its orders, and will, it is said, soon commence to enlarge the works.

“They figure a clear profit of more than $10,000 that has been earned by the present plant, and by doubling the output, the cost of manufacture will be reduced so that the net earnings will be still greater.

“After completion of the projected enlargement of the plant, it is the intention of the company to commence the manufacture of paper.

“This will be of benefit to residents of Northeast Brainerd and partly compensate them for the shutting down of the saw mill.” (Brainerd Daily Dispatch, 24 October 1905, p. 2, c. 4)

1906

January

SOLD THE BALANCE

_____

The Public Spirited Business Men Who

Bought Pulp Mill Site Met Last

Night

There was a meeting last night of the business men who were interested in the purchase of the site for the pulp mill. The land that was purchased at that time was really more than the Northwest Paper company wanted but what they did want could not be secured without the whole tract being bought. There was a balance of some 80 acres which was sold last night to Wilmer Holmes. This land lies west of the river near the wagon bridge at the dam. (Brainerd Daily Dispatch, 03 January 1906, p. 3, c. 1)

July

First Northwest Paper Company Mill built on the west side of the Mississippi River just below Ahrens’ Hill, ca. 1908. Source: Postcard

23 July 1906. Messrs. McNair and Jacobson, who were in Brainerd a few days ago, were in consultation regarding the erection of a paper mill here by the Northwestern Paper Co. It has been definitely decided to erect a mill here. (This Was Brainerd, Brainerd Dispatch, 22 July 2006)

1907

March

PULP WOOD SCARE

_____

W. K. McNair Talks of Conditions Surrounding

the Paper Manufacturing

Industry

W. K. McNair, of the Northwest Paper company, who was in the city on business Saturday was seen by a DISPATCH reporter concerning the possibility of the enlargement of the pulp mill. In answer to a question as to whether or not they were any nearer the new building than a year ago replied that they were a year nearer it. Mr. McNair was here looking after the matter of getting cars to move their accumulated pulp. He states that they have 200 carloads that they have been unable as yet to ship for lack of cars and that they are very anxious to get it out at once so as to sell it while other mills are short of stock. He secured 11 cars yesterday and has the promise of several more at once. He states that the paper business is in a very peculiar condition at present, the demand having increased much more rapidly than the output. Papermills which had made contracts which they anticipated would take 65 per cent of their output had proven so much larger than was expected that they had taken up over 90 per cent of this output of the mills, leaving but a small portion of the output for the free market. On top of this unprecedented demand came a year very unfavorable to getting out pulp wood, which has curtailed the supply of raw material very materially. Mr. McNair states that these abnormal conditions render the entire business on an uncertain basis that tends to retard changes in equipment. The mill at Brainerd, however, he states has been especially lucky in the matter of pulp wood and has an ample supply to run the coming season. (Brainerd Daily Dispatch, 20 March 1907, p. 2, c.’s 3 & 4)

1908

January

THE PULP MILL

Another of Brainerd’s industries which means much for the city is the pulp mill of the Northwest Paper company. This plant, which is established on the west bank of the Mississippi river in the northern portion of the city, is one of the Northwest Paper company’s plants which are scattered through northern Minnesota and Wisconsin, with headquarters at Cloquet. The company now controls the entire water power of the Mississippi river at Brainerd. At present the plant here is turning out about 25 tons of pulp per day which is shipped to various points in Minnesota and Wisconsin. There are about 35 men employed during the summer, divided into two shifts, the plant running day and night. During the winter months a crew of from 50 to 60 men is employed. The payroll at present amounts to about $1500 per month. For some time the company has talked of establishing a paper mill in this city and that they intend to do so in the near future is indicated by the fact that when the lease of the city on water power to the extent of 500 horse power, which is used for the purpose of furnishing the city with electric lights, expired last March, the company refused the lease for any set period of time, only consenting to furnish power with the privilege of discontinuing at any time with six months notice. In fact one of the officials stated to the city authorities that the company, if its plans matured as expected, hoped to need the entire power of the river for its own use in the near future. (Brainerd Daily Dispatch, 16 January 1908, p. 4, c.’s 2 & 3)

The water in the Mississippi river is reported as falling very rapidly and it will probably be necessary to put flash boards on the dam, it is said, in order to supply water for the pulp mill and electric light plant. (Brainerd Daily Dispatch, 27 January 1908, p. 2, c. 3)

February

MARKET IS GLUTTED

_____

Market for Pulp Wood is Glutted

According to Report of Inter-

national Paper Company

W. C. McCann, of Anoka, a representative of the International Paper company, was in the city today and in conversation with a DISPATCH representative stated that the market for pulp wood was glutted at the present time. Mr. McCann stated that the fact that there was no market at all for cedar and very little for ties had stimulated the cutting of large quantities of pulp wood and as a result there was more being offered than the paper manufacturers were able to use at the present time. There has been, he said, a drop of about two dollars a cord on pulp wood as regards the price two years ago. He said also, that the repeal of the tariff on pulp wood would not, in his opinion affect the price of pulp wood in this section. (Brainerd Daily Dispatch, 01 February 1908, p. 3, c. 2)

May

BRAINERD, COMING CITY OF CENTRAL MINNESOTA

_____

THE PULP MILL

_____

Another of Brainerd’s industries which means much for the city is the pulp mill of the Northwest Paper company. This plant, which is established on the west bank of the Mississippi river in the northern portion of the city, is one of the Northwest Paper company’s plants which are scattered through northern Minnesota and Wisconsin, with headquarters at Cloquet. The company now controls the entire water power of the Mississippi river at Brainerd. At present the plant here is turning out about 25 tons of pulp per day which is shipped to various points in Minnesota and Wisconsin. There are about 35 men employed during the summer, divided into two shifts, the plant running day and night. During the winter months a crew of from 50 to 60 men is employed. The payroll at present amounts to about $1500 per month. For sometime the company has talked of establishing a paper mill in this city and that they intend to do so in the near future is indicated by the fact that when the lease of the city on water power to the extent of 500 horsepower, which is used for the purpose of furnishing the city with electric lights, expired last March, the company refused the lease for any set period of time, only consenting to furnish power with the privilege of discontinuing at any time with six months notice. In fact one of the officials stated to the city authorities that the company, if its plans matured as expected, hoped to need the entire power of the river for its own use in the near future. (Brainerd Daily Dispatch, 26 May 1908, p. 2, c. 3)

1910

February

FEW NIGHT WORKERS

_____

Brainerd Has Few Men and Women

Who Toil at Night to Earn

Their Daily Bread

Did you ever stop to think how few night workers Brainerd has for a city of her size. Probably not to exceed 50 men and women work regularly the night through to earn their daily bread. Not to exceed 20 men, mostly firemen, roundhouse men, etc., are employed nights at the Northern Pacific shops. The pulp mill employs about five at night. The bakery uses two or three, there are a couple of train dispatchers working nights and one or two short order cooks, but outside of that and the night nurses at the hospitals there are very few people who work steadily night after night to earn their living. (Brainerd Daily Dispatch, 05 February 1910, p. 3, c. 2)

July

29 July 1910. The superintendent of the Northwest Paper mill at the dam north of the city, said water in the Mississippi was very low but did not cause them a problem. The city pump station says if the water drops another foot there will not be enough water to fight a big fire. (This Was Brainerd, Brainerd Dispatch, 29 July 2010)

October

MAMMOTH PAPER MILL WILL BE BUILT HERE

_____

Northwest Paper Co.

to Build Next Year

_____

WILL ALSO RAISE DAM

_____

In Order to Develop More Power for

Their Mammoth Paper Mill that

Will be Built, Which Will Mean

the Expenditure of Many Thous-

ands of Dollars Next Season

For sometime there have been indications that some enterprise was on tap to be located at the dam, but what it was no one knew, except that it has always been the general belief among the farsighted that the Northwest Paper Company would sometime use the great power going to waste at the dam to run a paper mill. This belief has been confirmed from time-to-time, when the city light plant was located there, and that efforts would be made to secure a long time contract for power, the company always refusing to make longer than a short six months contract. This fact gave strength to the general belief that a paper mill is a future probability.

The Dispatch is pleased to now state that it has learned from a reliable source that active preparations are now underway for the construction of the one of the largest paper mills in the country by the Northwest Paper company, the owner of the pulp mill. The plans also contemplate the raising of the Brainerd dam from four to six feet in order to develop more horse power. Since the information came in an unofficial round-about way the details are unknown, but we are fully convinced of the reliability of the information, and we have no doubt that another season will see the expenditure of a great many thousands of dollars at the old dam site.

This will be pleasing news to everybody in the city, but especially to property owners in that vicinity, whose property has been almost worthless since the Brainerd Lumber Co.’s mill was torn down and moved away. (Brainerd Daily Dispatch, 25 October 1910, p. 3, c. 1)

1911

January

20 January 1911. The Northwest Paper Co. will soon commence to erect a large paper mill on 40 acres of ground recently purchased in Northeast Brainerd. The company will start construction in the spring. The mill will employ 150 men and get its electricity from the dam. (This Was Brainerd, Brainerd Dispatch, 19 January 2011)

31 January 1911. The big paper mill for Brainerd is an assured fact. It means that a modern steel and cement mill is to be built at a cost of $450,000 and will, in total, add $500,000 to the city tax rolls. This is dependent on them gaining the flowage rights to the water at the dam. (This Was Brainerd, Brainerd Dispatch, 30 January 2011)

July

The tower and tramway at the pulp mill in Northeast Brainerd at the plant of the Northwest Paper Co., was never rebuilt. Pulp is now hauled to the cars above by teams. It is believed, in the near future, that some change may be made in the tracks about when the city bridge is built, as it is planned to have the new bridge cross the tracks. (Brainerd Daily Dispatch, 29 July 1911, p. 4, c. 3)

September

ELDER WANTS LIGHT IN SECOND WARD

Attorney A. D. Polk appeared for the Northwest Paper Co. and asked that a clause be changed in the company’s contract with the city substituting a 20-ton paper and pulp mill for a 40-ton paper mill. The new mill, said Mr. Polk, would be a 20-ton print paper mill employing more men and paying better wages than the mill originally specified. After some discussion a change in the contract was authorized and the line “to have in operation paper and pulp mills that shall be equivalent to at least the capacity of twenty tons of newsprint per day” was added to the original document. (Brainerd Daily Dispatch, 06 September 1911, p. 3, c. 1)

1912

September

GETTING READY FOR PAPER MILL

_____

Activity on the Part of the North-

west Paper Co. Leads to the

Conclusion that the

_____

MILL WILL SOON BE BUILT

_____

Messrs. McNair, Weyerhaeuser and

Oldenburg Were in the City

Inspecting Property

From the work shown in perfecting their title to their land in Northeast Brainerd at and near the east bank of the river and from the progress being made by the attorneys of the Northwest Paper company, it would indicate that active work will soon be commenced on the paper mill.

Recently C. I McNair, of Cloquet, the superintendent of the paper company; R. M. Weyerhaeuser, of Cloquet and Attorney H. Oldenburg, of Carlton were in Brainerd and examined the property of the company.

No information could be gained from any of the gentlemen as to when the mill would be built, but the fact that they are attending to all the court work necessary to perfect their title shows the company is not idle and that they must figure on the building of the mill in the near future.

This industry will do much to rejuvenate Northeast Brainerd, to improve property values and to stimulate business in that section, which will also have a beneficial effect on the city as a whole. (Brainerd Daily Dispatch, 25 September 1912, p. 3, c. 1)

1915

November

NORTHWEST PAPER COMPANY TO BUILD A

BIG PAPER PLANT IN BRAINERD

_____

Chamber of Commerce Secures Location of Large

Paper and Pulp Mill for this City—Ground Broken

This Morning—Work is Commenced

_____

AN INVESTMENT OF OVER $300,000 IS TO BE MADE

_____

It Will be the First Convertible Mill of its Kind which Can be Changed

to Manufacture Book Paper—Best News Brainerd has Heard in

Many Years—Mill to Operate Day and Night Year Round

_____

WHAT THE NORTHWEST PAPER CO.

MEANS TO BRAINERD

_____

70-Ton paper and pulp mill.

An investment of $300,000 to $400,000.

Employing 150 men year around.

A convertible mill which can be changed to book paper mill.

Makes Brainerd an important point in print paper trade.

Increases Brainerd’s commercial importance.

Gives railways here more freight business.

_____

In the presence this morning of a committee from the Chamber of Commerce and officers and engineers of the Northwest Paper Co., there was laid out the location of Brainerd’s new industry, a paper and pulp mill of 70-tons capacity to be built at an expenditure of $300,000 to $400,000 by the Northwest Paper Co. at their power site in Northeast Brainerd.

For five years a special committee of the Chamber of Commerce including George D. LaBar, W. H. Gemmell, James M. Elder and Dr. Walter Courtney has worked unceasingly to bring about this great addition to the industrial field in Brainerd and this morning in the rays of a November sun, as Charles A. Weyerhauser of Little Falls, C. I. McNair and W. K. McNair of Cloquet, Engineer T. T. Whittier of the George F. Hardy company of New York city, E. P. Callaghan [sic] [Callahan], expert construction engineer, were grouped on the east bank of the Mississippi river near the dam, there was marked an epoch in Brainerd’s history for it meant the utilization of the thousands of horse-power of water tumbling over the dam, the harnessing of this tremendous power, its turning of water wheels, the spinning of machinery, the operation of the pulp mill of 35-tons capacity to be located at the base of the bank, the working of the big paper mill of 35-tons or more capacity to be situated on top of the hill.

Engineer T. T. Whittier, who has built 100 paper mills throughout the United Sates and is an authority in this regard, has planned for Brainerd the first mill of its type, a convertible paper mill. At present the mill will be on a print paper basis, but at any period it may be converted into a book paper mill of four machines, a plant four times as large as the present print paper mill to be first constructed.

The paper mill, operated by electricity, will be a building measuring about 410 feet long and some 80 feet in width and will be of brick, steel and concrete construction and in operation in less than a year. The whole plant will give employment to 150 men daily the year around.

Plans provide for trackage, warehouses, etc. all laid out with a view of possible expansion in the future. Nothing has been left to chance. The best engineering skill has been employed.

At the base of the east bank of the river near the dam there will be excavated 30,000 yards, extending also 15 feet under the water level of the river. A large concrete retaining wall will be built. Alterations at the dam, all hydraulic work including the installation of the ten pairs of water wheels, will be done under the supervision of E. P. Callaghan [sic] [Callahan], an expert dam constructor, who will be remembered as having built the Little Falls dam.

The Northwest Paper Co. is one of the largest paper manufacturers in the northwest. Their sulfite mill at Cloquet will supply the local mill with that product.

The equipment at the dam will include ten pairs of water wheels, two electric units and in the pulp mill eight pulp grinders. Excavation work will soon be underway, crews working day and night, taking advantage of the low stage of water.

The announcement of the construction and operation of this paper and pulp mill is the best news Brainerd has heard for many years and it cannot but have an instant effect on business in general and makes the prospects of Northeast Brainerd of the brightest kind.

With the building operations inaugurated this morning there has been taken the first steps to utilize that fine water power which for years has been going to waste at the doors of Brainerd. It will make of the Northwest Paper Co. plant the greatest industry outside of the Northern Pacific railway shops. The location of this large industry here will be the forerunner of more and Brainerd may well mark down and remember this bright day of Thursday, November 4, when the Northwest Paper Co. commenced its present operations. (Brainerd Daily Dispatch, 04 November 1915, p. 1, c. 3)

BRAINERD WELCOMES A NEW INDUSTRY

The Chamber of Commerce should be given full credit for securing the magnificent new paper and pulp mill for Brainerd that is to be built in this city by the Northwest Paper Company. The matter has been under consideration for sometime and a committee consisting of G. D. LaBar, J. M. Elder, W. H. Gemmell and Dr. W. Courtney have had charge of the details covering a long period, and while the Northwest Paper company have had the project in mind for several years only through the efforts of the local committee of the Chamber was the final decision reached.

The people of this city will receive with enthusiasm the news item conveying the details of the establishment of this industry in Brainerd at this time, the building of one of the largest paper and pulp mills in the northwest, and the fact that the work of laying out the grounds and the location of the buildings that will house the new industry was begun this morning.

The location of this large industry here means the building of an up-to-date paper and pulp mill at the dam on the east side of the river that will be operated day and night, summer and winter, and will be second only in importance to the business life of the city to the Northern Pacific railroad shops. The pulp mill will be located at the base of the bank of the river while the paper mill will occupy a position on the bank just east of it. The building of this industry will give employment to local labor and as work will be commenced at once it means much to the industrial life of Brainerd.

The coming of this industry means that others will follow as surely as day follows night and the ordinary layman can scarcely realize the importance of the new acquisition to the business life of the city.

Brainerd welcomes with open hands this new industry and the gentlemen connected with it in whatever capacity they occupy and wishes them every possible success in the enterprise to be established. (Brainerd Daily Dispatch, 04 November 1915, p. 4, c. 1)

PREPARING FOR WORK AT THE DAM

_____

Northwest Paper Co., Engineers,

Messrs. Bennett and Callahan to

Arrive Saturday and Monday

_____

NO INCREASE TO HEIGHT OF DAM

_____

Considerable Material for the Com-

pany’s Construction Work is

Now on Way to Brainerd

The announcement that the Northwest Paper Company was to put in a large pulp and paper mill in Brainerd and expend from $300,000 to $400,000 on the plant, has been followed by action on the part of the company in commencing construction work and it is now believed the entire plant will be ready for operation within a year’s time, thus giving to Brainerd a permanent industry employing 150 men or more and contributing much to increase the commercial and business life of the city.

Engineers of the company will make Brainerd their residence during construction work. Engineer Bennett of the George F. Hardy Co., of New York City, is to be the resident engineer and he and his family are expected at Brainerd Saturday.

E. P. Callahan of Eau Claire, Wis. the noted engineer who built the Little Falls dam and who is also an expert in installing water power machinery, will arrive at Brainerd Monday and will make this city his home for many months. The work of Brainerd includes the excavation of 30,000 yards, the digging into the east bank of the river and also fifteen feet under the river, the building of this section of the dam and the remodeling of the present dam, the installation of ten pair of water wheels, etc.

Tom Johnson will be the local representative of the Northwest Paper Co., during the construction work period. Mr. Johnson and family have arrived from Cloquet. The proposed installation of water wheels, said Mr. Johnson, will generate as high as 8,000 horsepower.

The company has made the definite announcement that no raise will be made in the height of the dam, as it has been found impossible to secure additional flowage rights. The paper and pulp mills have accordingly been planned to conform to the present height which will make no change in the state of water now backed up by the dam. However, the most modern methods will be used to utilize every particle of power generated by the dam without increasing its present height.

Considerable material to be used by the company in construction work is now on its way to Brainerd. All things point to the fact that the water power site of the Northwest Paper company will soon be humming with industry, giving employment to 200 to 300 men in construction work throughout the fall and winter and thus contributing to give labor in Brainerd work at a time when most needed. (Brainerd Daily Dispatch, 12 November 1915, p. 5, c. 1)

December

NORTHWEST PAPER COMPANY ACTIVE

_____

107 Men Employed at the Water-

power Site, Preparing for the

Installation of Machinery

_____

BIG STEAM SHOVEL IS COMING

_____

Narrow Gauge Track at Water’s Edge

to Transport Overburden to

the Flats Beyond

At the Northwest Paper Co. water-power site 107 men are employed and work has commenced on the big power plant, pulp and paper mills representing an expenditure of $300,000 or more. Two switches have been put in by the Northern Pacific railway, one leading to the mill site and one to the edge of the river bank for the unloading of equipment, etc. The men are preparing ground for the placing of a big steam shovel, concrete mixers, and excavating machinery. A narrow gauge railroad track has been laid near the water’s edge and to the flats beyond. Numerous buildings have been laid out on the site, tool house, warehouse, cook house, bunk house, etc. The first meal was served Dec. 2, fifty partaking of a well prepared dinner.

The company is advertising for building rock to be used at the dam. An office is now maintained at the works, provided with telephone, stenographer, etc.

Visiting Brainerd Friday were C. I. McNair and W. K. McNair of Cloquet, and H. Oldenburg of Carlton. They were well pleased with the progress made.

Supplies and material are being bought in Brainerd. The Koop Mercantile Co. is furnishing groceries, feed, etc. D. M. Clark & Co. sold mattresses, etc.

The payroll of the company will be a considerable addition to the city’s general income from manufacturing industries. (Brainerd Daily Dispatch, 04 December 1915, p. 5, c. 2)

1916

January

A communication from C. P. McNair, vice president of the Northwest Paper Co., in regard to the closing of the approach to the Mississippi river bridge at and above the dam was read. The street committee was requested to investigate and report at the next meeting. (Brainerd Daily Dispatch, 04 January 1916, p. 5, c. 2)

April

The Northwest Paper Co. has a big crew at work at the dam in Northeast Brainerd, the site of their large paper and pulp mill. This will be the first convertible mill of the kind in the United States, being able to shift from print paper making to manufacturing the finest kinds of book paper. The building specifications include the expenditure of more than $300,000. (Brainerd Daily Dispatch, 15 April 1916, p. 5, c. 3)

August

FLYING CABLE CUTS FOREMAN TO PIECES

_____

Back Broken and Eviscerated, Peter

Champaux, Meets Death When

Pile Driver Falls

_____

AT THE NORTHWEST PAPER CO.

_____

Champaux’s Son Witnessed Grim

Tragedy, Member of His Father’s

Crew, Coroner Called

Back broken and eviscerated, Peter Champaux, age 60, of Cloquet, pile driver foreman of the Northwest Paper Company, was instantly killed when a seventy-foot derrick used in construction work fell down and a coil of cable tightened about the foreman, almost cutting him in two.

In Champaux’s crew was his son Ed, age 22, who saw the accident. Slack was being taken up, one of the guy lines extending across the Mississippi river. The derrick had been moved successfully and with dispatch several times before and was gradually worked over to its proper station.

Chris Hendrickson, a member of the crew, said it was an accident. Another member of the crew is D. E. Simmons.

Coroner C. A. Nelson was called and after an examination declared it an unavoidable accident.

Champaux leaves a wife and eight children. he had been working two months for the company which is engaged in building a big paper and pulp mill in Northeast Brainerd. (Brainerd Daily Dispatch, 08 August, 1916, p. 5, c. 1)

1917

February

BRAINERD FACED CATASTROPHE

SECTION OF OLD DAM WENT OUT

_____

FLUME AT THE OLD PULP MILL LOCATION

_____

Broke Away at 3 O’clock This Morn-

ing, Releasing Head of 16 Feet,

Nearly Drowned Pump House

_____

Waters Crept Within Inch of Fire Boxes of

Pumping Station, Supplies City and

Shops with Water

HIGH WATER SUBSIDING

_____

At 3 this afternoon the river had receded 23 inches at the city pump house and it will soon be possible to drive teams across.

Brainerd faced a catastrophe at 3 o’clock this morning when the old flume at the old pulp mill went out at the west end of the Mississippi river dam and the rush of water, a sixteen foot head, nearly submerged the city pump house below.

The water crept within 6 inches of the fire box at the pumping station and the crest of the flood appears to have passed. Ice has been dynamited out below to reduce any possible gorge forming.

The section of the dam out will have to be coffer dammed. The water rose and reached the grinder room of the Northwest Paper Co.’s new plant.

Stations south of Brainerd were warned to prepare for the rush of water. The city pump house men are working valiantly at the plant which is a tiny island in a water waste. If submerged Brainerd would be without water and Northern Pacific shops would have to lay off.

The city pump house men were heroes. They stuck to their post as the water raised to within an inch of the fire box. The water is now receding and is 16 inches from the fire boxes. The city plant supplies Brainerd and the Northern Pacific railway shops with water.

Rice lake, an arm of the Mississippi north of the dam, fell five feet and ice cutting operations were abandoned. The island in the river below the dam is nearly submerged.

The water is flowing under the ice and raising it. The worst danger appears over at 10 o’clock.

At 3 o’clock Monday morning the old pulp mill flume at the west end of the dam at the Northwest Paper Co. plant on the Mississippi river in Northeast Brainerd went out, carrying with it a section of the west bank of the river, the site of the old pulp mill and some material stored on the bank.

The break released a 16-foot head of water which quickly submerged the flats below and came within an inch of putting out the fire box of the city pumping station.

The island directly below the dam is covered with water, only tree tops being visible. Considerable working equipment, pile drivers, engine etc. are under water at the new plant.

The log chute was being repaired and a week more would have witnessed the cutting open of the west bank so as to bring the water to the new power plant. The old pulp mill flume, however, was not able to stand the pressure centered there and gave way.

The old wagon bridge, directly north, has given way in the center and may wash out any time.

At Boom lake water forced the ice up five feet or more. The hockey rink, where Ironton and St. Paul Northern Pacifics played at the Brainerd Outdoor Carnival, is now an elevated one. Below Boom lake the flats are rapidly filling up.

Ice piling up at the Northern Pacific railway hospital bridge was dynamited early in the morning.

E. E. McQuillin, engineer at the pumping station, went to his work by paddling out in a boat. Charles H. Varner stayed at his post all night, keeping pumps going when the water was within an inch of the fire box.

Ice above the dam is holding and the natural flow of the river is now following the new channel cut through at the west side.

At 11:30 in the morning the water had fallen 10 inches and no more danger was feared. (Brainerd Daily Dispatch, 12 February 1917, p. 1, c.’s 1 & 2)

RESOLUTIONS PASSED

_____

Regarding Break in Old Dam at the

Site of the New Paper Mill by

Chamber of Commerce

The following resolution, offered by W. A. Spencer, was unanimously passed by the Chamber of Commerce at its regular meeting, February 14, 1917.

RESOLUTION

Whereas: The Northwest Paper Company has sustained serious damage and delay by reasons of a break in the old pulp mill flume at the west end of the dam across the Mississippi river at this point and

Whereas: This loss and delay in the work of the company is considered as affecting the progress of an important industry of this city, therefore

Be It Resolved: That the Brainerd Chamber of Commerce hereby extends to the Northwest Paper Company its sympathy for such loss and the earnest tender of its good will and desire to assist the company in any manner within its power, and further

Be It Resolved: That this resolution may be made a part of the records of the Chamber of Commerce and the secretary be instructed to forward a copy of the same to the superintendent of the Northwest Paper company’s work at this place and to other officials of the company.

Unanimously passed by the Chamber of Commerce this fourteenth day of February, A. D. 1917. (Brainerd Daily Dispatch, 16 February 1917, p. 5, c. 1)

NEW CREW OF 100 AT THE PAPER MILL

_____

Bunk Houses Built by Northwest

Paper Co. to House the Men Re-

pairing the Old Flume Break

_____

Corporation to be Commended for its Energetic

Spirit, Never Dismayed over Construc-

tion Difficulties

The Northwest Paper company is building new bunk houses, etc., to house the crew of 100 extra men who are engaged in the work of repairing the old pulp mill flume break which occurred on the west end of the dam in Northeast Brainerd.

In spite of many delays and quicksand, the company is continuing with its work and will soon turn out paper at its half-a-million dollar plant, the first convertible mill in the United States, which can easily be changed from print paper to manufacturing book paper. (Brainerd Daily Dispatch, 19 February 1917, p. 1, c. 1)

April

FIRST PAPER RUN OFF ON APRIL 16

_____

The Northwest Paper Co. Machines

Will be Put Through Their Paces

Early Monday Morning

_____

125 Men Employed, Is First Convertible Mill

in U. S. , Can Switch from Print

to Book Paper

The Northwest Paper Co. mill will make its first run of paper on Monday, April 16. For some weeks the machines have been tried out. As with all machinery there may be adjustments to be made after Monday.

It is the first convertible mill in the United States, easily shifting from print to book paper.

The company has a considerable amount of pulp wood and pulp on hand. It will employ 125 men and the mill may be described as a one machine 40-ton mill. Its cost is estimated all the way from $300,000 to half a million.

In its construction the company encountered numerous obstacles in the way of foundation work, a stratum of quicksand causing a vexatious delay. A section of the dam gave way too and had to be replaced, all entailing additional expense.

Without a murmur the company kept on its work. The Northwest Paper Co. utilizes water power at the dam in Northeast Brainerd which had previously been running to waste for years. It is an industry which will help build up Brainerd and which has already, through its officers, shown an interest in civic affairs. The Weyerhaeuser interests are identified with the company.

The making of the first paper is to be commemorated in Brainerd by the Chamber of Commerce whose manufacturing committee is now at work on details of a civic celebration. (Brainerd Daily Dispatch, 14 April 1917, p. 1, c. 1)

PAPER TO BE MADE APRIL 18

_____

C. I. McNair of Cloquet and other officers of the Northwest Paper Co. were in Brainerd today and it is expected to make paper early Wednesday morning. A run of pulp was made today.

Under the direction of the manufacturing committee of the Chamber of Commerce, of which Mons Mahlum is chairman, a celebration commemorating the first paper making is to be carried out soon.

The Duluth Herald made and inquiry about the first paper to be run off, and many other newspapers of the Northwest are interested in the Brainerd mill. (Brainerd Daily Dispatch, 17 April 1917, p. 5, c. 2)

PAPER MILL WHEELS STARTED

_____

FIRST PAPER MADE AT PAPER MILL HERE

_____

First Product Made in Presence of

Gen. Mgr. C. I. McNair and Other

Officials and Newspaper Men

_____

Mrs. C. I. McNair Opened the Valve Which

Let in Flow of Paper Stock at

10:15 this Morning

In the presence of Mr. and Mrs. C. I McNair, C. I. McNair, Jr., W. K. McNair, general superintendent of the Northwest Paper Co., N. W. Reay of the St. Paul Daily News, John Burges of the Minneapolis Daily News, the Brainerd Dispatch man and others, the first paper was made at the new paper mill of the Northwest Paper Co. this morning.

At 10:15 in the morning Mrs. C. I. McNair, wife of the general manager of the company, opened the valve which let in the flow of paper stock.

The men employed at the mill number 150. The forty-ton news machine, high speed and of the latest type, was installed by the Beloit, Wis., Iron Works, and their representative, George A. Macklen, was present to observe the machinery set through its paces. It has an automatic device for taking the paper from one set of rolls to the other, a great many of its rolls are run in roller type bearings, there are devices on the wire for moving suction boxes giving long life to the wire and being run at high speed, the machine gives increased production. It is what is known as a 124-inch fourdrinier paper machine and from 300 to 400 horsepower are required to run it full speed.

Eight grinders handle pulp, having a capacity of six tons every 24 hours. Two hydro-electric units of 500 horsepower each drive the motors of the mill. The paper machinery is the only section run by steam engine, the exhaust steam being used for drying paper.

The industry means much to Brainerd, as it utilizes Mississippi river water power which previously for years had been allowed to run to waste over the dam. In its construction work the company surmounted many difficulties including quicksand and the loss of a section of the dam.

The pulp made is of good clean, clear quality and the paper accordingly will be of the best. The mill is the only convertible one of its kind built, being able to shift quickly from manufacturing print to making book paper.

At the request of the Dispatch, C. I. McNair, Jr., described the progress of a pulp wood stick through the mill to finished paper.

The pulp wood is received in eight foot sticks. These are cut into two foot lengths in the wood room. They are put into the barking drum, a cylinder 10 feet in diameter and 30 feet long. The wood tumbles around and quickly has all the bark knocked off.

The barked wood then goes to the grinder room on a conveyor. It is put into the grinders, four pocket ones, and the wood is ground by forcing it with hydraulic pressure against the face of a revolving grindstone, producing ground wood pulp. It is then pumped to the ground wood wet room.

All is screened by centrifugal screens. Part of the stock is run through deckers of 25 tons capacity for beaters. The balance of the pulp is run over on wet machines and made into laps for storage.

At times of low water the laps are brought back into the mill and shredded up and used for stock for beaters.

The beaters are large mixing vats in which ground wood is mixed with sulfide fiber which is shipped in from the sulfide mill at Cloquet.

This furnishes the long fiber and strength to the sheet. After the stock has been thoroughly mixed in the beaters it is dumped into a large chest and pumped from there through a Jordan refining engine which draws out the fibers.

From the Jordan engine the stock is pumped to the paper machine screens which take out any slivers or other foreign matter. From the screens it runs to the fourdrinier wire. On this wire the water drops through, leaving the fibers meshed on top of the wire in the form of a sheet. At the end of the wire the sheet is carried on wooden felts through three sets of press rolls which take out additional water. From the third and last press the stock goes into the dryer section where it passes over 36 steam heated dryers each four feet in diameter.

At the end of the dryer section the paper is thoroughly dried, but lacks the proper finish. This finish is put on by a calendar stack composed of 12 pressed steel rolls. From there the finished paper is wound on reels and is cut into the desired roll lengths. (Brainerd Daily Dispatch, 18 April 1917, p. 1, c.'s 1 & 2)

DISPATCH IS PRINTED TONIGHT ON PAPER MADE IN BRAINERD

_____

The Dispatch today points with pride to the fact that the Daily Dispatch is printed on paper made in Brainerd by the Northwest Paper Company and that the roll from which this paper comes is among the first turned out by this great local industry.

At present 150 men are employed. The pulp from which the paper was made comes from wood grown in Minnesota. The wheels of the big mill are turned by the Mississippi river, and that great river has its inception in the state of Minnesota. So the Northwest Paper Co. at Brainerd is peculiarly a home institution.

All honor and success to the company which has shown its perseverance and business and constructive ability by the success in which it has surmounted all obstacles in the way of building the plant. (Brainerd Daily Dispatch, 20 April 1917, p. 1, c. 4)

May

PAPERMAKERS HAVE BEEN ORGANIZED HERE

_____

Local Starts off with Twenty, Being

General Men Who have Trans-

ferred from Other Locals

_____

Pulp, Sulfide and Paper Mill Workers Or-

ganized with Sixty Members and

Elect Their Officers

Papermakers of the city have formed a union and pulp, sulfide and paper mill workers have also organized.

George J. Schneider, of Minneapolis, organized the papermakers and a local of twenty members, mostly men transferring from former locals, has been formed in Brainerd. These include men from International Falls, Cloquet, Sauk Rapids and from Park Falls and Rhinelander, Wis.

Apprentices start at $2.30 and the highest wages paid papermakers attain $4.88. The men work eight hour shifts.

At the meeting Friday morning the men were addressed by John M. Taylor of Brainerd, vice president of the sixth district of the State Federation of Labor, who told of the benefits gained by organized labor and their experience in the past.

Temporary officers have been named which include president, W. Vilas; financial secretary, William Rasch; corresponding secretary, Clarence Miller.

Pulp, sulfide and paper mill workers were organized by organizer Sample of Appleton, Ia. The local starts off with 60 members. James Thomas is president and Armour Thayer treasurer. (Brainerd Daily Dispatch, 25 May 1917, p. 1, c. 7)

1918

January

PAPER MILL MAY BE ENLARGED

_____

Rumors Current to the Effect That

Another Unit Contemplated by

Northwest Paper Co.

_____

IMPETUS TO N. E. BRAINERD

_____

Wilson Mill Activities on Site of Old

Mill Will Also Give Boost to

That Town Section

A report in Brainerd is to the effect that the Northwest Paper Co. may enlarge its paper and pulp plant in Brainerd to twice its capacity. The present plant is so built that additional units can easily be added.

Inquiry at the offices of the company elicited no information, statements there being they had no knowledge of any plans of the company.

The mill gives employment to many men and has virtually assisted to put Northeast Brainerd, a thriving section of Brainerd, on a solid foundation.

Early in the spring a big sawmill is to be established near the paper mill and electric power will be used. Alfred Wilson of Motley is the moving spirit in this enterprise and it is asserted that he has closed a deal with Minneapolis parties to saw 25,000,000 feet of lumber during the next five years. The Wilson mill is expected to saw 25,000 feet every ten hours. (Brainerd Daily Dispatch, 09 January 1918, p. 5, c. 2)

April

There was no truth to the report that the Northwest Paper Co. pulp mill had to shut down today on account of low water. Inquiry at the office elicited the fact that the mill was running as usual. (Brainerd Daily Dispatch, 15 April 1918, p. 2, c. 3)

May

BANNER DAY AT THE PAPER CO.

_____

Northwest Paper Co. Turns Out 90,

000 Pounds of Print Paper on

Monday, May 20

_____

THE MILL RUNNING FULL CREW

_____

Stock of Pulp Wood on Hand Suffi-

cient for a Year’s Operation,

Good Stage of Water

Monday, May 20, was the banner day with the Northwest Paper Company so far as output is concerned, since it began grinding pulp and manufacturing print paper on April 16, 1917.

The big mill out on the old Mississippi turned out 90,000 lbs. of print paper Monday from approximately 93,000 lbs. of pulp and this product of Brainerd skill and efficiency will go to different sections of the country to be used in the publication of newspapers and general print stock work.

Full Crew Employed.

The mill is running a full crew, one hundred and sixty-eight skilled employees and is recognized as one of the best and most modernly equipped plants in the country of its size. It has one of the highest speed paper machines made with a capacity of 750 feet of print paper to the minute, the completed product coming off the finishing rollers in a continuous sheet and is then carried to the big spools where it is wound for easy handling.

Good Supply of Stock.

The mill has a stock of pulp wood on hand sufficient for a year’s operation and the stockpile of pulp from what is known as the overflow, is steadily growing. Forty-two cords of spruce wood are used daily in the manufacture of the regular output and the company has laid in a large supply from the north. A good stage of water is now afforded and the mill is running in perfect system and up to the ideals of an efficient management. (Brainerd Daily Dispatch, 21 May 1918, p. 5, c. 3)

1919

July

PULP, SULFIDE, PAPER MILL WORKERS

_____

Secure an Increase of Wages from

5 to 10c an Hour Following

Conference Held

_____

INT. PRES. JNO. P. BURKE THERE

_____

Met with Messrs. McNair of the

Northwest Paper Co. and Mem-

bers of Local No. 79

Pulp, sulfide and paper mill workers of Brainerd have received an increase of wages from 5 to 10c per hour.

John P. Burke, International President-Secretary of the Pulp, Sulfide and Paper Mill Workers was at Brainerd in conference with the managers of the Northwest Paper Co. and a committee of Local No. 79 and an amicable agreement was quickly arrived at.

At the meeting there were remarks by President Burke and Manager McNair. President Burke spoke about the agreements. Mr. McNair made a nice talk. The local gave a rising vote of thanks to Pres. Burke and the committee for such a substantial agreement and also a rising vote of thanks to the management of the Northwest Paper Co. for the good spirit they had showed their employees. (Brainerd Daily Dispatch, 28 July 1919, p. 5, c. 1)

PAPERMAKERS ON A NEW SCHEDULE

_____

Local in Brainerd Has Conference

With the Northwest Paper Co.

and Scale Adopted

_____

15 PER CENT INCREASE GIVEN

_____

Back Pay from May 11, 1919—Pres.

Carey of Papermakers and

Messrs. McNair at Meeting

At a meeting of the Northwest Paper Co. and the Papermakers Local No. 164 held at the company’s office at the mill, the men were granted a 15 per cent increase in their 1919 wage schedule with back pay from May 11, 1919.

J. T. Carey of Albany, N. Y., President of the International Brotherhood of Papermakers and Wm. and C. I. McNair, manager of the Northwest Paper Co. of Cloquet were in attendance at the meeting.

Those on the committee representing the local papermakers were M. A. Pickering chairman, C. W. Bukowski, L. Schwendeman, M. Ward, C. W. Jackson, Charles Dykeman and O. Simonson. The agreement extends to May 1, 1920. (Brainerd Daily Dispatch, 28 July 1919, p. 5, c. 1)

1921

March

02 March 1921. Those members of the Chamber of Commerce who failed to get into the procession Wednesday missed more than they imagine. The procession was formed to move out to the Northwest Paper Co. mill to watch the mysterious means by which paper is made. (This Was Brainerd, Brainerd Dispatch, 02 March 2001)

April

03 April 1921. For April, at least, the Northwest Paper Company has a schedule which means full time for April. Many orders have been received, thus guaranteeing uninterrupted working of the mills here for the balance of this month. (This Was Brainerd, Brainerd Dispatch, 03 April 2001)

June

STRIKE STILL ON AT PAPER COMPANY

_____

The strike is still on at the Northwest Paper company plant in Brainerd. They were not, said a committee of employees, a party of the group of manufacturers who submitted the wage question to arbitration and who will resume operations next week.

This group of paper manufacturers represents about 40,000 men who have been out since May 1 and May 11.

International Falls and Fort Frances signed up with the 1920 agreement and wages until the wage question is settled. (Brainerd Daily Dispatch, 30 June 1921, p. 7, c. 2)

October

02 October 1921. The large Northwest Paper Company plant started off full blast this Monday morning at 7 o'clock with three crews and 125 men at work. All Northeast Brainerd and Brainerd generally is happy at the resumption of work in the plant. (This Was Brainerd, Brainerd Dispatch, 02 October 2001)

1923

July

15 July 1923. Northwest Paper Co. Plant and Product described. Local plant manufactures newsprint paper exclusively. The Brainerd Dispatch buys all its paper from this institution. About 50 percent of logs used and manufacture of paper by the local mill is cut on the banks of the Mississippi River. (This Was Brainerd, Brainerd Dispatch, 15 July 2003)

1925

September

15 September 1925. The Northwest Paper Company has begun additions and improvements to its Brainerd mill which when completed will amount to about $200,000, it is believed. (This Was Brainerd, Brainerd Dispatch, 15 September 2005)

1929

December

Northwest Paper Company Mill on the east side of the Mississippi River, ca. 1918. Source: Postcard

04 December 1929. The Water and Light Department will provide 300 to 500 kilowatts of power to the Northwest Paper Co. Mill from midnight to 4 p.m. each day. With that assist it is believed the mill's own water power can power the machinery the balance of the day. (This Was Brainerd, Brainerd Dispatch, 04 December 2009)

1931

January

01 January 1931. John McKenna, superintendent of the Northwest Paper Co., today announced a signed contract by which the Brainerd mill will furnish newsprint needed by the eight newspapers controlled by the owners of the Brainerd Dispatch, totaling 1 million pounds. (This Was Brainerd, Brainerd Dispatch, 01 January 2012)

May

26 May 1931. Business establishments in Brainerd were at a standstill for nearly four hours today after lightning struck the switchrack at the Riverton electric station. The NP railway shops and the Northwest Paper Mill continued to operate using their own power plants. (This Was Brainerd, Brainerd Dispatch, 26 May 2011)

July

20 July 1931. The paper machine at the Northwest Paper Co. mill was shut down to permit repairs today. The down time was taken now while demand for newsprint is less over the vacation season. The men should be back to work in three days. (This Was Brainerd, Brainerd Dispatch, 20 July 2011)

1932

December

03 December 1932. Contracts for newsprint and other products manufactured at the Brainerd mill of the Northwest paper Co. mean the mill will run at or near full capacity in 1933. This should ensure employment of the full force of 115 men. This is welcome news for the city. (This Was Brainerd, Brainerd Dispatch, 03 December 2012)

1935

March

27 March 1935. With the better tone in business operations and a more optimistic outlook generally, come reports that the Northwest Paper Co. may resume operations in Brainerd. Inquiry at the plant elicited no information but F. LaRue of Little Falls has been appointed new mill manager, effective April 1. (This Was Brainerd, Brainerd Dispatch, 29 March 2015)

April

City and county officials today were asking officials of the Northwest Paper Co. mill in Brainerd to close the gates of the dam to relieve high water levels in the Mississippi. This would allow better conditions for the dragging operation to find the body of John Spencer, believed drowned. (This Was Brainerd, Brainerd Dispatch, 30 April 2015)

1942

February

02 February. —Paper mill employs 150, pays $200,000 in wages. (This Was Brainerd, Brainerd Dispatch, 02 February 2002)

1944

October

27 October 1944. In the immediate Brainerd area, a present labor shortage does not exist. Laborers are still needed at the Northwest Paper Mill and the Northern Pacific Shop, but that is practically all the hiring that is being done. (This Was Brainerd, Brainerd Dispatch, 27 October 2004)

1947

February

23 February 1947. One of the largest industries in this northern and central Minnesota area this winter has been the cutting and movement of pulpwood into the paper mills of the nation. During the past week this commodity has been moving through Brainerd over the Northern Pacific Railroad on an average of 40 carloads daily. (This Was Brainerd, Brainerd Dispatch, 23 February 2007)

1948

October

Northwest Paper Company Mill, ca. 1949. Source: Postcard

05 October 1948. The Brainerd paper mill produces 24,000 tons of paper annually. At the peak of the cutting season about 15,000 cords of pulp wood are racked in the mill yard. The payroll in wages and salaries paid to 187 employees exceeds half a million dollars annually. (This Was Brainerd, Brainerd Dispatch, 05 October 2006)

1951

March

29 March 1951. Two 85-foot gates, each seven feet high, have been installed in the new dam at the Northwest paper mill. The local paper mill site is one of five dams in the nation equipped with such gates, the others all being found in New England. (This Was Brainerd, Brainerd Dispatch, 29 March 2011)

1952

May

17 May 1952. Due to slack demand for paper used in the manufacture of wallpaper, which is the principal product of this mill, the Brainerd mill of the Northwest Paper Co. will shut down. The mill is expected to be shut down for two weeks, starting May 25. (This Was Brainerd, Brainerd Dispatch, 17 May 2012)

October

24 October 1952. Wage increases averaging 4.6 cents per hour have been approved for 167 employees of Northwest Paper Co., with mills at Cloquet and Brainerd. However, the Wage Stabilization Board denied increases of 5.6 cents per hour for another 222 employees. (This Was Brainerd, Brainerd Dispatch, 24 October 2012)

1953

August

13 August 1953. P. W. Budd, executive of the Northwest Paper Co., spoke to the Lions Club and gave assurance that the company’s paper mill in Brainerd will continue operating, and that the company has no plans to dispose of or shut down the mill. (This Was Brainerd, Brainerd Dispatch, 13 August 2013)

1954

June

10 June 1954. The Northwest Paper Co. announced plans for additional construction work at its plant here which will enable the plant’s flexibility in the manufacture of paper. The water treatment plant, recently completed, was the first step in the program. (This Was Brainerd, Brainerd Dispatch, 10 June 2014)

1956

July

Work began today on a $300,000 addition to the Brainerd paper mill of the Northwest Paper Co., officials announced. The addition to the south end of the current building will have 35,000 square feet plus a basement, and will mean employment for 50 additional workers. (This Was Brainerd, Brainerd Dispatch, 04 July 2016)

1957

September

Brainerd’s fastest growing industry, the Northwest Paper Co. mill, has applied for $1.25 million in new building permits for storage, boiler and machine rooms. This is part of a $5 million project that will include a pulp mill on land across Mill Ave. now used for the county fair. (This Was Brainerd, Brainerd Dispatch, 11 September 2017)

November

The Northwest Paper Co. is spending more than $6 million on the expansion project now underway at the plant here. Mace Harris, company VP, says the project will provide a second paper machine and everything should be completed by the middle of 1959. (This Was Brainerd, Brainerd Dispatch, 07 November 2017)

1959

October

08 October 1999. Philip W. Budd, 934 South 8th Street, has been appointed manager of the Northwest Paper Company mill here, succeeding Leo J. Gayou who has resigned. Budd's most recent capacity at the mill was production manager. (This Was Brainerd, Brainerd Dispatch, 08 October 1999)

1960

June

06 June 1960. The Brainerd plant of Northwest Paper Mill will be closed for a week beginning June 13, Philip Budd, manager announced today. It will permit the order situation to build up while giving employees a week of their vacation. (This Was Brainerd, Brainerd Dispatch, 06 June 2000)

1962

April

27 April 1962. The warm spring weather has brought a beehive of activity at the new fairgrounds south of Brainerd on 13th Street. All buildings have been moved into place from the old location on Mill Avenue. That property was purchased from the county by Northwest Paper Company. (This Was Brainerd, Brainerd Dispatch, 27 April 2002)

June

19 June 1962. Earl W. Wolleat has been appointed manager of paper manufacturing at the Northwest Paper Co. Mill here. (This Was Brainerd, Brainerd Dispatch, 20 June 2002)

July

18 July 1962. A two million dollar expansion that will add 30 to 40 new jobs here, was announced today by Northwest Paper Co. Phil Budd, manager of the Brainerd Mill, said that a new addition approximately 70x300 feet, will be constructed. (This Was Brainerd, Brainerd Dispatch, 18 July 2002)

October

20 October 1962. Groundbreaking for the $3,000,000 project at the Paper Mill in Brainerd was set for this week. Growth of employment in the paper industry here in the last five years has been spectacular. (This Was Brainerd, Brainerd Dispatch, 20 October 2002)

1964

October

18 October 1964. Some 200 Brainerd businessmen and professional men toured the Northwest Paper Company plant and then were treated to a noon lunch at the country club. (This Was Brainerd, Brainerd Dispatch, 18 October 2004)

1969

May

20 May 1969. Northwest Paper Co. announced the following major management changes. Philip W. Budd has been elected vice president of operations. Earl Wolleat has been elected vice president of manufacturing, and Spencer H. Cone has been appointed manager of Brainerd Mill. (This Was Brainerd, Brainerd Dispatch, 20 May 1999)

21 May 1969. The Northwest Paper Co. announced that Phil Budd has been elected to the new position of vice president-operations, Earl Wolleat will leave his position as Brainerd mill manager and move to Cloquet, and Spencer Cone will be the new Brainerd mill manager. (This Was Brainerd, Brainerd Dispatch, 21 May 2009)

1971

November

10 November 1971. Plans have been formulated for the construction of an estimated $1.4 million primary waste treatment plant for the Brainerd mill of the Northwest Paper Company were announced today by Richard C. Nordholm, vice president and general manager of Northwest. (This Was Brainerd, Brainerd Dispatch, 10 November 2001)

17 November 1971. Northwest Paper Company has been fighting a battle against low demand for its production in recent weeks, according to Spence Cone, mill manager. The lack of heavy demand has meant some layoffs at the mill here and also the cutting back of the work week. (This Was Brainerd, Brainerd Dispatch, 17 November 2001)

1972

February

10 February 1972. A stubborn gate in the paper mill dam on the Mississippi River threatened to create dangerous conditions on Rice Lake. The gate, which is used to regulate water levels, stuck open for awhile, dropping the water by five inches before being fixed. (This Was Brainerd, Brainerd Dispatch, 10 February 2012)

March

06 March 1972. Officials of the Northwest Paper told the Brainerd City Council that the company would go it alone in constructing a secondary water treatment plant. (This Was Brainerd, Brainerd Dispatch, 06 March 2002)

07 March 1972. Spence Cone, mill manager at Northwest Paper Co. here, told the city council the company would build its own secondary water treatment plant. Building a joint plant with the city would cost the mill an extra $500,000. Brainerd will have to build its own plant. (This Was Brainerd, Brainerd Dispatch, 07 March 2012)

1973

October

31 October 1973. An industry-wide slump that had the Northwest Paper Mill running at less than full capacity for a year has turned into a boom, with the mill operating at full, 7-day a week capacity. Spencer Cone, mill manager, says this is typical of the cyclical industry. (This Was Brainerd, Brainerd Dispatch, 31 October 2013)

1977

May

03 May 1977. The Potlatch Corporation announced yesterday that it is going to spend $70.6 million over three years to modernize its paper mills in Cloquet and Brainerd. (This Was Brainerd, Brainerd Dispatch, 03 May 2007)

1978

March

14 March 2008. A mute swan has become the unofficial mascot of many of the workers at Northwest Paper Mill since being discovered on the far side of the Mississippi from the dam. (This Was Brainerd, Brainerd Dispatch, 14 March 2008)

1984

June

27 June 1984. A $7.5 million improvement project upgrading paper coating mixing and handling operations began Tuesday at Potlatch Corporation's Brainerd paper mill. (This Was Brainerd, Brainerd Dispatch, 27 June 2004)

1985

January

25 January 1985. Brainerd's Potlatch paper mill is in the middle of a $7.6 million expansion and remodeling of its color kitchen, a coating preparation area for the high quality paper produced at the plant. (This Was Brainerd, Brainerd Dispatch, 25 January 2005)

1988

December

11 December 1988. Potlatch Corp. announced a $12 million capital investment in the Brainerd paper mill. The project is expected to be a first step in long-range plans to modernize the Brainerd facility. (This Was Brainerd, Brainerd Dispatch, 11 December 2008)

1998

A Century of Papermaking

It is quite an accomplishment.

Front cover of the Potlatch Centennial publication in Brainerd, 06 August 1998. Source: Potlatch, Brainerd, Minnesota

The Brainerd mill of the Minnesota Pulp and Paper Division of Potlatch Corporation has changed from a power plant, to a pulp mill on the west bank of the Mississippi, to a newsprint mill on the east bank of the Mississippi, to a fine grade paper mill. We have seen mergers, a washed away dam, shutdowns, state of the art machinery, name changes, product changes, and computerization.

Let’s stroll back in time to when Charles A. Weyerhaeuser, Rudolph M. Weyerhaeuser, C. I. McNair, and R. D. Musser joined forces to build the first unit of the Northwest Paper Company at Cloquet, Minnesota in 1898 on the banks of the St. Louis River. It housed four grinders and one small paper machine. The next year another paper machine was added. In 1903 the Northwest Paper Company expanded its operations to Brainerd, Minnesota when it acquired the Northern Water Power Company on the Mississippi River. The company soon realized the potential of the power company and constructed a three grinder pulp mill on the west side of the Mississippi River. Over the next eight years the majority of the 12 tons per day of groundwood pulp was sent to the Cloquet mill. The Brainerd mill quickly outgrew its facilities and was shutdown in 1911 and dismantled in 1914.

A much larger operation was constructed on the east side of the Mississippi River. The Frederick Paper Mill, named after Mr. Weyerhaeuser Sr., started construction in 1915 and took 2 years to complete but when it was completed the mill boasted one paper machine (#5), eight pulp mill grinders, a new hydroelectric system and rebuilt dam. The new #5 paper machine started operating on April 20, 1917 at a production of 40 tons per day. The new mill produced both pulp and newsprint.

In July of 1934 during the Great Depression, the Brainerd mill was forced to shutdown because of a poor economy and strong competition in the newsprint market. However, nine months later, on May 17, 1935 the mill opened back up, this time producing wallpaper. The mill was averaging 65 tons of production per day.

Mother Nature forced the company to make changes in 1950 when the original wood, rock, and steel dam over the Mississippi River couldn’t hold back the force of spring flood waters. The dam was destroyed. A concrete dam, as we currently know it today, was constructed.

The wallpaper market saw a steady decline during the early 1950’s. Consumers started to use “do it yourself” paint in their homes. The Northwest Paper Company was forced to look at alternative products. The decision was made to switch to fine paper grades. The #5 paper machine was rebuilt. The groundwood pulp mill was shut down and bleached chemical pulp was shipped from Cloquet. In April of 1956, the manufacturing of fine grade papers began in Brainerd. The mill also expanded its fine finishing, packaging, and shipping departments to accommodate the nearly 80 tons per day of paper production.

The #6 paper machine was added in 1959 boosting the capacity of the mill by more than 300 percent and nearly doubling the workforce. In 1964, the #7 coater was added and the Brainerd mill began producing coated paper.

A major milestone in the company’s first 100 years took place in 1964 when Potlatch Forests, Inc. merged with the Northwest Paper Company. Northwest Paper, originally a subsidiary of Potlatch Forests, Inc. became a division of Potlatch when the company was rechristened Potlatch Corporation in 1973.

By 1978, the division’s coated printing papers were earning a reputation as the finest in the industry. The Brainerd mill underwent additional improvements that year as precision sheeters were added to improve the sheering process and reduce losses. Production at the Brainerd mill had increased to 292 tons per day, 198 tons less than the 490 tons of fine coated printing papers that are presently produced in Brainerd today. Another change took place in 1996 when the Northwest Paper Division was renamed the Minnesota Pulp and Paper Division to better recognize the company’s plan to sell open market pulp beginning in the year 2000.

The plan to expand the division’s pulp production is part of a $528 million pulp mill modernization and expansion in Cloquet. The new pulp mill, when complete in 2000, will more than double pulp capacity and make the division self-sufficient in pulp production—eliminating the need to purchase pulp from the open market. The mill will be a show case for pollution prevention and will help guide the division into the next century of paper making.

The Minnesota Pulp and Paper Division has been producing fine products from the forest for a century and we look forward to the next 100 years. We look to the future with great hopes, dreams, and expectations for the Minnesota Pulp and Paper Division. We hope you enjoy this memorabilia book of the Brainerd mill as much as the 100 year celebration team has enjoyed gathering the history and pictures to assemble it. (A Century of Papermaking 1898-1998, 06 August 1998, Potlatch, Brainerd, Minnesota, pp. 1 & 2)

2000

February

Haney Brings Energy to Potlatch Post

If energy was a requirement Potlatch executives were looking for when they elected someone new to lead the company's Brainerd mill they certainly got it, and with a lot to spare.

Anna M. Haney has been named by the Potlatch board of directors as the vice president for manufacturing in Brainerd. She takes over for Barbara Reher, who moved to the Cloquet division to lead manufacturing operations.

Haney brings not only sixteen years of experience working for Potlatch, but also an excitement and enthusiasm to her job.

Haney, a native of Mississippi, has been with Potlatch since 1984 and has served in a variety of engineering, planning and senior production positions.

She graduated from the University of Mississippi in 1984 with a degree in chemical engineering. She said she started out working towards a degree in chemistry but soon found she didn't want to be spending her time working in labs. Her grandfather, a civil engineer, sat her down and told her she might like to give engineering a try.

She graduated with a degree in chemical engineering, but looking for work at Potlatch might have been the last thing Haney would've thought. When she graduated in 1984 her fellow engineering students were being hired in the oil industry, especially since the University of Mississippi was so close to the Gulf of Mexico oil companies.

The bottom of the oil industry fell soon after, meaning there would be no job for Haney in that industry. A family friend that worked for Potlatch mentioned Haney for a position at that company. She interviewed for a job in process engineering, and on Feb. 4, 1984, she said she accepted the job.

"I walked in that day blind," Haney said. "I knew nothing about the paper industry."

Being new to the paper industry didn't phase Haney. She started as a process engineer and worked the same position in Potlatch plants in Arkansas and Idaho. She said working for Potlatch has given her opportunities she might not have gotten working at another company, such getting to travel internationally.

The chances of anyone being named to lead a division of a nationally known company with yearly net sales over a billion dollars is rare. Being a woman has, historically, meant there was even less of a chance, but Haney doesn't look at it that way. In fact, she said, being a woman doesn't even factor into her job.

"You learn to be one of those handful of women in college," Haney said.

"By this time, I am used to it. It's no big deal."

Haney said she is thankful for the opportunities Potlatch has given her, including the realization that titles don't matter.

"I went from being right out of college thinking I would would be president one day to being more experienced, more wise," Haney said. "What makes you feel good at the end of the day, those are the rewards."

This isn't Haney's first move to Minnesota. In 1993 she moved to Duluth to work in the Research and Development department of the Cloquet plant. It was a year Haney will never forget as records were set for both temperature lows and snowfall.

"I thought I had moved to the North Pole," she said.

Most recently she had been working as a production manager at Potlatch's Idaho Pulp and Paperboard mill in Lewiston, Idaho. The move to Minnesota was a welcome one for Haney, who said this area reminds her more of her forested hometown of Pontotoc, Miss, than the sparsely-wooded, open basin of where she lived in Idaho. "I'm glad to be back in the woods," she said.

Haney has set two goals for Potlatch's Brainerd mill this year. The first goal is to improve upon the mill's safety performance. She said the company isn't experiencing any safety problems currently, but there is always room for improvement when dealing with such an important issue. She said she hopes the mill will be at a zero injury average in five years.

The second goal is a division wide mission statement meant to help Potlatch compete with larger companies. Haney said Potlatch is asking its employees to help the company to become more agile and quicker in adapting to change.

"This is how we change.," Haney said. "It's not what you do, it's how you do what you do."

Haney said she is always looking for new opportunities, but she has moved to work in a different Potlatch division every three to four years for 16 years, and she would really like to stay in Brainerd for a while.

The Potlatch mill in Brainerd creates premium coated printing paper. It used for brochures, catalogs, tabletop books, magazines, art reprints and annual reports. (Brainerd Dispatch, 12 February 2000)

October

More Job Cuts at Potlatch Expected

Additional work force reductions are expected at Potlatch, but current negotiations continue between labor unions and management. Firm numbers are somewhere in the future.

"We're in the process right now negotiating with unions for Brainerd and Cloquet mills," said Mike Birkeland, Potlatch spokesman. "We do know there will be additional work force reductions on the hourly side. Now it's a question of how we proceed."

Throughout the company 300 salaried jobs were eliminated in May with 16 of those jobs at the Potlatch plant in northeast Brainerd. Potlatch's board of directors approved a work force reduction plan May 19 in an effort aimed at reducing costs and improving efficiency.

Before the job cuts, the diversified forest products company employed 6,700 workers with 1,700 of those on salary. In Minnesota, Potlatch employed 2,600 workers before the job cuts with nearly 800 of those in salary positions.

Whether job cuts can be accomplished with retirements and other efforts could depend on current negotiations. Birkeland said the company has been meeting with union representatives since August and more meetings are scheduled.

"Until we finalize the agreements and negotiations we won't have anything specific," Birkeland said. "We hope to proceed in a fashion that is fair and equitable for all involved. ... Discussions of this nature are certainly not easy."

Potlatch's printing papers segment reported a loss of $13.8 million in 1999, compared with an income of $14.2 million in 1998. The company's 1999 annual report stated the printing papers segment's operating income in 1998 was substantially below 1997's earnings of $33.4 million.

Potlatch reported net sales for the first half of 2000 were $867.4 million, compared with $829.5 million for 1999's first half.

In its quarterly filing for the Securities and Exchange Commission, Potlatch recorded a $26 million pre-tax charge in June to cover costs associated with the company-wide work force reduction and reorganization in its salaried positions. Potlatch anticipated an annual pre-tax savings of $21 million as a result of those job cuts.

The premium-coated printing papers, produced at operations in Brainerd and Cloquet, are used in annual reports, art reproductions and high-quality advertising. Potlatch is listed seventh among the nation's producers of premium-coated papers.

Birkeland said massive changes in the paper industry are part of the company's goal to become as lean and efficient as possible.

Potlatch is not alone.

In September, the Duluth News Tribune reported an undetermined number of salaried and hourly workers at Lake Superior Paper Industries and Lake Superior Recycled Fiber Industries of Duluth were losing their jobs.

Stora Enso North America offered a voluntary early retirement for union employees at its central Wisconsin plants. Stora Enso, a worldwide forest products company with headquarters in Helsinki, Finland, is in the process of a $100 million cost-reduction effort begun in January 1999. Consolidated Papers Inc. merged with Stora Enso in August.

Potlatch points to increasingly competitive markets, increasing costs and consolidations as companies are bought out by others in the industry. Tuesday, Birkeland said the work force reduction is a result of all those industry pressures.

"The reason we are doing that is to remain competitive in a changing environment and ever increasing market competition. ... That is the reality that we are faced with.

"You have to change and adapt if you want to survive."

What those changes will mean in the lives of plant workers in Brainerd and their families is uncertain until a decision may be reached at the negotiation table. (Brainerd Dispatch, 12 October 2000)

Wood Industry Feels Effects of Global Competition

Reduced Timber Access Also Takes Toll on Wood, Paper Products Industry

DULUTH (AP)—The 2-by-6s that workers sorted at Hedstrom Lumber Co. earlier this month were going to a buyer who paid $270 per thousand board feet. It cost the company $350 per thousand board feet to make them.

Last month, International Paper's Sartell mill paid a record $60.80 per cord for 825 cords of aspen on state land near Onamia, outbidding Potlatch and a Weyerhaeuser plant in Deerwood.

"When I started here in 1989, you could buy all the aspen you wanted for $7 to $10 a cord," said Wayne Brandt, executive vice president of Minnesota Forest Industries and the Minnesota Timber Producers Association, industry groups based in Duluth.

A lot has changed since then.

Leaders in Minnesota's wood and paper products industry say they are struggling to remain solvent while facing increased global competition and reduced access to timber on some public land. The industry's discomfort has grown acute this year.

• In June, Potlatch Corp. laid off 126 salaried workers at its Minnesota paper and wood mills and is negotiating the layoffs of an unspecified number of hourly workers in Cloquet and Brainerd.

• That same month, the world's largest forest-products company, International Paper, acquired the Champion International paper mill at Sartell.

• In August, Finland-based Stora Enso bought out Consolidated Papers, which owned the former Lake Superior Paper Industries and Superior Recycled Fiber Industries, both in Duluth. Stora Enso is finishing what Consolidated started: eliminating 700 jobs in Wisconsin and Minnesota.

• Last month, Hedstrom Lumber started laying off 40 workers at its Two Harbors mill and closed it at least temporarily, the first large-scale layoff for the family-owned company since it opened its main mill in Grand Marais in 1914. At the same time, Finland's UPM-Kymmene, which acquired Blandin Paper Co. in Grand Rapids in 1997, notified about 30 executives and managers in Grand Rapids that their positions could be moved next year to Chicago.

Experts say Minnesota's lumber mills and papermakers are both contributors to and victims of worldwide overcapacity.

Minnesota's paper companies invested more than $2 billion in improvements and doubled production since the early 1980s, when demand for paper exceeded supply and profits were high.

But companies around the world did the same, leading to a product glut, stagnant or falling prices and many years of substandard profits.

Bigger players have bought smaller players—shutting down acquisitions sometimes to reduce capacity.

"It's been the worst decade for paper operations since the Great Depression," said Mike Birkeland, regional communications manager for Potlatch, which had net earnings of $41 million last year, compared with $137 million in 1989. "Supply has been greater than demand, and some other countries, such as Brazil, where wood is cheaper, have been flooding our markets. Companies are cutting costs."

Worldwide overproduction, relaxed trade policies, a strong U.S. dollar and a slowing U.S. economy have combined to invite imports and send softwood lumber prices plummeting.

Howard Hedstrom, president of Hedstrom Lumber, estimated that U.S. lumber production is exceeding demand by about 2 billion board feet a year—the annual production of at least 10 large mills. Shutdowns are needed to make prices recover, he said.

Hedstrom's company was losing $100,000 a month by last spring, and it closed the Two Harbors mill. "It's no fun to tell 40 people they don't have a job," he said.

At the same time the need for trees has increased, the industry's access to trees on public land in Minnesota has decreased. Between 1990 and 1999, Minnesota's national forests—the Superior and Chippewa—reduced timber sold by almost 50 percent.

The state also had reductions during the late 1990s, even though state and federal management plans said significantly more timber could be cut.

Why haven't the state and federal governments kept up with demand?

Experts say the answer is a mix of growing environmentalism, bureaucratic delays and court battles that have bogged down federal sales, and budget constraints that have meant less time for state employees to spend on timber sales.

"The public is a lot more involved than they were five years ago," said Jim Sanders, supervisor of the Superior National Forest.

Brandt said timber-sale reductions in the Superior played a role in the shutdown last year of a sawmill in Marcel and have forced other northern Minnesota mills to truck logs in from Canada, Wisconsin and Michigan at a much higher cost. Timber buyers also have turned more to private landowners.

Meanwhile, environmentalists say even less public timber should be cut. Ray Fenner, who has filed several timber-sale appeals on behalf of the Superior Wilderness Action Network, said the industry's troubles have everything to do with over expansion and hardly anything to do with environmentalism.

"Nothing you do seems to stop the juggernaut," Fenner said. "We're not winning this battle; we're losing. We can't compete with the timber industry's lobbying dollars." (Brainerd Dispatch, 28 October 2000)

November

Potlatch to be Inactive for Two Holiday Weeks

Potlatch will shut down mill production two weeks this year during the Thanksgiving and Christmas holidays.

That was the diversified forest product company's announcement today.

The company pointed to "high inventory levels, seasonally weak markets and increased import pressures" in a written statement announcing the shutdown. Mill production in Brainerd will be temporarily shut down during the weeks of Nov. 20 and Dec. 18.

Phil Baker, vice president of Potlatch's Minnesota Pulp and Paper Division, said the holiday shutdowns will not affect service to customers.

"We've been operating at full capacity despite soft market conditions for coated printing papers," Baker stated in the news release. "... We're hopeful this action will lead to a year-end inventory correction."

Reached at the union office at Potlatch today, Bob Harting, president of Local 79 of the Paper Allied Chemical and Energy International Workers Union, said the union did not expect to have an official response to the announcement.

Harting said the shutdown was related to the market changes and not to recent negotiations between labor and management. Potlatch Corp. is in the process of a workforce reduction and was recently in negotiations in regard to an early retirement package that the union membership later rejected.

The Brainerd mill's 662 employees will be able to use vacation time during the holiday shutdown and the company said employees can use 2001 vacation time if vacation benefits have already been fully used this year.

The Cloquet pulp and paper mill is expected to remain in operation during the holidays. The Cloquet mill is directly tied to the pulp mill and pulp markets are solid right now, the company reported. In order to shut down paper machines in Cloquet, Potlatch reported it would need to shut down the Cloquet pulp mill as well. (Brainerd Dispatch, 10 November 2000)

December

Potlatch Expects to Lay Off 60

About 30 Workers in Brainerd to Lose Jobs

Potlatch officials announced they expect to lay off up to 60 hourly employees in January between the Brainerd and Cloquet mills.

About 30 hourly workers are expected to be laid off in Brainerd.

The announcement came late Monday afternoon from Potlatch Corp.'s Minnesota Pulp and Paper Division, which makes coated printing papers for high-quality advertising and corporate publications such as catalogs, brochures and annual reports.

In addition, Potlatch announced it will not replace nearly 80 additional hourly employees who "have elected to retire in 2000."

An announcement about layoff numbers has been expected. In May, Potlatch's board of directors approved a plan to cut the company's work force. Throughout the company 300 salaried jobs were eliminated in May with 16 of those jobs at the Potlatch plant in northeast Brainerd. The cuts were part of the Spokane, Wash.-based company's previously announced plan to reduce costs and improve efficiency.

"The reality is that we must minimize costs, which includes reducing the size of our work force where possible, to remain competitive," said Phil Baker, Potlatch's Pulp and Paper Division vice president, in a news release.

Potlatch points to increased competition from coated paper import sales that increased 25 percent in each of the last two years. Potlatch's annual company report shows net earnings from 1989 were $136 million. Net earnings in 1999 were $40 million, which was an increase from earnings reported in 1998 and 1997. The last time the company reported a loss was 1993.

Potlatch spokesman Mike Birkeland said that the 1999 net earning figures come despite a $450 million increase in net sales since 1989. Birkeland said while earnings went up, prices for product were stagnant in the 1990s and costs increased.

"Combine all those factors and you come up with a scenario that you have to reduce costs to be competitive," Birkeland said.

Potlatch's contract with union locals representing the Paper Allied Chemical and Energy Workers International Union and the Energy Workers International Union and the National Council of Fireman and Oilers, Service Employees International Union allows for employees Union membership for Local 79 and Local 164 voted against an agreement negotiated between management and labor representatives. Union officials stated the vote was on a retirement package offered by Potlatch and not on the number of hourly jobs to be eliminated and was overwhelmingly rejected by membership in Brainerd and Cloquet because of contractual strings.

Union officials at the Brainerd plant could not be reached for comment late Monday or early today.

"We were unable to reach an agreement on an early retirement package," Birkeland said. "If we could have achieved an early retirement package it could have potentially reduced or eliminated any layoffs. ... And without reaching an agreement this is the result."

Job layoffs are expected across the board with the most recent hires going first.

"We've seen the wave of consolidation," Birkeland said of diversified forest product industry trends. "We are not alone in the efforts to reduce cost in the industry. We are analyzing every facet of our business. The work force reduction is part of that process."

Birkeland said cost reduction efforts between the Brainerd and Cloquet mills achieved a bottom line savings of $12 million in major fixed cost areas from raw material to travel expenses. Birkeland said the job cuts, both hourly and salary, are expected to put Potlatch in a better competitive position. Further changes, if any, in the work force in Brainerd are expected to be on a much smaller scale and preferably handled through attrition, Birkeland said. (Brainerd Dispatch, 06 December 2000)

Union Responds to Potlatch Layoff Announcement

Potlatch local union representatives today issued a response to the Tuesday announcement of layoffs at the Brainerd and Cloquet mills.

Union concerns stretched from competition from foreign nations and an impression that layoffs could have been reduced through a negotiated agreement between labor and management.

"While the unions are concerned with the recent developments in regard to layoffs at Potlatch in Cloquet and Brainerd, we are far more worried about the overall health of our industry," stated Bob Harting, president of Paper, Allied-Industrial, Chemical and Energy Workers International Union Local 79 in Brainerd.

In the news release, Harting pointed to international trade agreements such as the General Agreement on Tariffs and Trade and North American Free Trade Agreement and the fact that "all too many of our customers are seeking products from overseas. While the unions understand our customer's concerns, the United States and its future survival of its industries depend on being united, as well as working together to solve our problems."

In the statement, Harting said when tariffs are placed on Potlatch products going overseas and not on other products coming to the U.S., it creates an unfair impact.

"The unions feel there needs to be more parity for our industries to remain competitive in today's global economy," Harting said.

In response to a Potlatch management statement Tuesday, the unions did not agree that more layoffs could have been avoided with an acceptance of the negotiated agreement between labor and management that union members rejected earlier this month.

Potlatch spokesman Mike Birkeland said Tuesday that if an agreement on an early retirement package could have been reached it could have potentially reduced or eliminated any layoffs.

"The reason it was voted down was that the contractual strings attached to this package would have caused larger reductions of people now and in the future," Harting said, adding he did not believe the number of layoffs in Brainerd was as large as the reported 30 positions because of retirements and people quitting their jobs. Potlatch announced 60 layoffs of hourly workers divided evenly between Brainerd and Cloquet in addition to about 80 hourly employees who elected to retire in 2000.

"It is our goal to keep as many of the younger people working as possible and work together with Potlatch to make this company successful," Harting said. "I firmly believe with the years of good union/management relations we can accomplish this." (Brainerd Dispatch, 06 December 2000)

POTLATCH LAYOFFS

Overseas Competition Forces Layoffs at Potlatch Plants

A major employer in Brainerd trimmed positions and planned for layoffs in a process that ran from May through December.

On May 19, Potlatch, a diversified forest products company with a paper and pulp mill in northeast Brainerd, approved a work force reduction plan. Both labor and management raised concerns about overseas competition in the paper industry.

The Spokane, Wash.-based company conducted a company-wide analysis aimed at reducing costs and improving efficiency from travel costs to job cuts. The Brainerd mill employs about 662 workers.

The company announced first-quarter 2000 earnings would be significantly below consensus estimates of 27 cents per share. The company's printed papers segment reported a loss of $13.8 million in 1999.

Other companies throughout the industry reported similar concerns, layoffs and plans to cut costs. Potlatch dropped 300 salaried jobs in May. Sixteen of those positions were in Brainerd.

In early December, company officials announced a layoff affecting up to 60 hourly employees in January—30 in Brainerd and 30 in Cloquet. The plant also scheduled a production shutdown for two weeks this year during the Thanksgiving and Christmas holidays.

Mike Birkeland, Potlatch spokesman, said cost reduction efforts between Brainerd and Cloquet achieved a bottom-line savings of $12 million in major fixed costs.

Birkeland said if labor and management had agreed to an early retirement package in early December, that could have potentially reduced or eliminated layoffs. Union representatives of Local 79 and Local 164 did not agree that more layoffs could have been avoided with an acceptance of a negotiated agreement. Union members rejected the agreement. Union leadership cited contractual strings attached to the package that would have caused larger reductions in employees now and in the future.

"While the unions are concerned with the recent developments in regard to layoffs at Potlatch in Cloquet and Brainerd, we are far more worried about the overall health of our industry," stated Bob Harting, president of Paper, Allied-Industrial, Chemical and Energy Workers International Union Local 79 in Brainerd. Harting said when tariffs are placed on Potlatch products going overseas and not on other products coming into the United States, it creates an unfair impact.

Birkeland said further changes, if any, in the work force in Brainerd were expected to be on a much smaller scale and preferably handled through attrition. (Brainerd Dispatch, 28 December 2000)

2001

March

Equipment Malfunction Causes Temporary Potlatch Shutdown

An equipment malfunction Thursday caused Potlatch to temporarily shut down operations.

Brainerd Fire Department crews arrived after an 8:37 a.m. emergency call from the Mill Avenue plant in northeast Brainerd. No one was hurt at the plant.

A malfunction in a turbine driven air compressor, used with some of the mill's paper processing equipment, caused the incident. By Thursday afternoon, the equipment was replaced.

Mike Birkeland, Potlatch spokesman, said steam from the air compressor actually extinguished the flame before the fire department arrived and before flames could spread. Birkeland said damage was minimal. (Brainerd Dispatch, 09 March 2001)

Energy Costs Cut Potlatch Earnings

Potlatch recently announced that it expects first quarter 2001 earnings to be "significantly below" analysts' estimates.

High cost of natural gas and electricity, particularly at facilities in the northwestern U.S., was listed as a major factor. Potlatch, which is based in Spokane, Wash., pointed specifically to the northwest and increases in electricity prices primarily resulting from power shortages in California.

L. Pendleton Siegel, Potlatch chairman and chief executive officer, stated in a news release that the company started and will continue to mitigate high energy costs by conservation through internal systems changes and increasing internal generation of electricity. Siegel said the high energy costs could persist through much of 2001.

Siegel stated that the other major factor affecting the company's financial performance is poor markets for most of its products for the first two months of 2001.

Tissue was the only area that was reported with modest price improvements. Potlatch reported. Other pricing, for lumber and panel products, printing papers, pulp and paperboard were reported to be "down dramatically" compared to a year ago and down compared to the fourth quarter of 2000.

Siegel stated Potlatch's modernized and expanded oriented strand board in Cook has been operating well since January. And the new pulp mill in Cloquet, home of the company's regional headquarters, is reported to be increasing production and reducing costs. (Brainerd Dispatch, 31 March 2001)

April

First Quarter Loss Reported by Potlatch

Continuing High Energy Costs and Poor Market Conditions Take Toll

Potlatch Corporation, based in Spokane, Wash. reported a loss for the first quarter of 2001 in a news release this week.

The diversified wood products company with a paper mill in Brainerd reported that continuing high energy costs and poor market conditions for most of its products are reasons behind the first quarter results.

Results for the quarter include an after-tax charge of $2.6 million, or $.09 per diluted common share, related to the workforce reduction plan at its pulp, paperboard and consumer products operations in Idaho.

For the first quarter of 2001 the company reported incurring a net loss of $28.8 million, or $1.02 per diluted common share, before the workforce reduction charge. Including the charge, the loss was $31.4 million or $1.11 per diluted common share.

Net earnings for the first quarter of 2000 were $2.4 million or $.08 per diluted common share. Net sales for the first quarter of 2001 were $444.0 million, compared to $474.6 million recorded a year ago.

Potlatch reported that markets for the company's printing papers remain soft.

The pulp and paper segment reported an operating loss for 2001's first quarter of $15.1 million, compared to earnings of $3.3 million in 2000's first quarter. "High energy costs, particularly in the northwest, severely affected the segment's financial performance," L. Pendleton Siegel, Potlatch chairman and chief executive officer, stated in a news release. "The company is actively working to mitigate these costs through conservation initiatives and enhancement of its internal electrical generation capabilities." Results were also adversely affected by lower net sales realizations for paperboard and pulp and a decline in pulp shipments. Consumer tissue product shipments and net sales realizations showed modest increases for the quarter compared to the first quarter of 2000.

The resource segment reported earnings of $7.9 million for the first quarter, compared to the $12.8 million earned in the first quarter of 2000. Potlatch reported the "unfavorable comparison to the prior year was primarily due to lower log production in Idaho and Arkansas combined with lower net sales realizations for log sales in Idaho."

Potlatch's wood products segment reported an operating loss of $20.7 million for the first quarter of 2001, vs. earnings of $15.7 million recorded in 2000's first quarter.

"Net sales realizations for all of the company's wood products were considerably lower than first quarter 2000 levels, especially oriented strand board, which were down over 40 percent," Siegel stated. "Oriented strand board shipments declined during the current quarter, largely due to the temporary shutdown of the Cook, Minn., plant to complete a modernization and expansion project; while lower plywood shipments reflect the permanent closure of the Jaype, Idaho, plant last fall."

Markets for lumber and panel products continue to reflect the effects of foreign imports, Potlatch reported.

The printing papers segment reported a first quarter 2001 operating loss of $2.2 million, compared to the $4.1 million loss in the first quarter of 2000.

"Increased production at the pulp mill in Cloquet, Minnesota, helped to reduce costs and led to significantly increased pulp shipments compared to the first quarter of 2000," Siegel stated. "Those benefits were partially offset by lower net sales realizations for printing papers and pulp and higher energy costs." (Brainerd Dispatch, 22 April 2001)

October

Potlatch Planning Temporary Shutdowns in November, December

Potlatch is temporarily shutting down the Brainerd mill for several days in November and December in what the company says is a response to a weak demand and extremely poor market conditions.

The Brainerd paper mill will close Nov. 17-25 and Dec. 15 to Jan. 1.

Archie Chelseth, regional public affairs director, said competitors have made the same decisions in regard to temporary shutdowns.

"We find ourselves in a situation where we have to do the same," Chelseth said.

The announcement about the shut-downs was made to employees on Oct. 3. Chelseth said depending on market conditions, the shutdown is subject to change and is something they are watching week to week. (Brainerd Dispatch, 20 October 2001)

Potlatch Reports Third-Quarter Loss

Potlatch reported last week that poor market conditions for most of its products and substantially higher interest expense resulted in a loss for the third quarter of 2001.

The company reported a net loss of $6.6 million, or 23 cents per diluted common share, compared to a loss of $10.5 million for the same period in 2000.

The 2000 results included an after-tax charge totaling $11.3 million for costs related to the closure of a plywood mill in Idaho. Potlatch reported net sales for the third quarter of 2001 were $456.6 million, slightly higher than the $452 million recorded for the same period a year ago.

"For the first nine months of 2001 the company incurred a net loss totaling $47.7 million, or $1.69 per diluted common share," Potlatch reported. The net loss for the first nine months of 2000 was $17.5 million, which included charges for a salaried workforce reduction and the plywood mill closure. Before those charges, Potlatch reported the net earnings for the first nine months of 2000 were $9.6 million.

Net sales for the first nine months of 2001 were $1.36 billion, compared with $1.39 billion for 2000's first nine months.

The resource segment reported an operating income of $17.9 million for the third quarter of 2001, down from the $23.5 million earned in the third quarter of 2000. Potlatch reported the results reflect lower net sales for log sales to external customers in Idaho and internal customers in Arkansas combined with higher costs in both those states.

Operating income for the wood products segment was slightly above break-even for the third quarter of 2001, compared to a loss of $29 million a year ago.

The printing papers segment recorded a third quarter operating loss of $7 million. A year ago the printing papers segment recorded an income of $2.3 million.

"Lower net sales realizations for printing papers and pulp adversely affected results for the segment," L. Pendleton Siegel, Potlatch chairman and chief executive officer, said in a news release. "Unfavorable economic conditions and foreign imports have had a negative effect on both price and product mix for printing papers."

The company reported net sales for printing papers were down 12 percent and pulp was down 44 percent compared to a year ago. Potlatch stated shipments for printing papers and pulp increased to partially offset the negative effects of lower net sales.

The pulp and paper segment reported operating income for the third quarter of $10 million compared to $6.9 million a year ago.

"Higher interest expense during the current quarter was due largely to the greater amount of debt the company currently has outstanding compared to last year and to a reduction in the amount of interest capitalized for major construction projects," Potlatch reported. (Brainerd Dispatch, 28 October 2001)

2002

February

Potlatch Reports a Net Loss for Fourth Quarter

Potlatch reported a net loss for the fourth quarter of 2001 indicating continued poor market conditions for most of its products and market-related shutdowns at several facilities including the Brainerd mill.

Potlatch reported that results for the quarter were "adversely affected by extended shutdowns at the company's two printing paper mills in Minnesota."

In addition, the company reported "market-related production curtailments at its pulp and paperboard mills" in Idaho and two of the company's lumber mills.

The company also reported fourth quarter results were also "negatively affected by an unusual $7.6 million charge to bad debt expense, due to a pulp broker's insolvency, as well as an $11.1 million charge for costs of removing defective equipment from service and deferred litigation costs, recently determined to be uncollectible, from the company's lawsuit against Beloit Corp."

For the fourth quarter of 2001, the company reported a net loss of $31.7 million, or $1.12 per diluted common share. This was compared to a $15.7 million loss, or 55 cents per diluted common share in 2000.

Net sales for the fourth quarter of 2001 were $394.9 million, which was $24.8 million lower than fourth quarter 2000.

Potlatch reported a net loss for the full year of 2001 of $79.4 million, or $2.81 per diluted common share. The net loss for 2000 was $33.2 million.

Net sales for 2001 were $1.75 billion compared to net sales of $1.81 billion the year before.

Of more interest in the Brainerd area may be the individual accounting of the printing papers and the pulp and paper segments.

The printing papers segment recorded a fourth quarter operating loss of $18.3 million versus the $3 million income reported in 2000. L. Pendleton Siegel, Potlatch chairman and chief executive officer, stated in a news release net sales for printing papers declined more than 15 percent while "pulp pricing pressures resulted in a 40 percent decline in pulp realizations."

Siegel pointed to depressed market conditions as the reason for extended mill shutdowns.

The pulp and paper segment reported an operating loss of $14.1 million for the fourth quarter compared to a loss of $3.9 million for the fourth quarter of 2000. Siegel stated fourth quarter 2001 results were slightly better than a year ago and were about break-even if some things were excluded such as the segment's $11.1 million charge related to the Beloit lawsuit and its share of the pulp broker bad debt charge.

Potlatch Corp. directors declared the regular quarterly dividend on the company's common stock. The dividend of 15 cents per share is payable March 4 to stockholders of record on Feb. 8. (Brainerd Dispatch, 03 February 2002)

Promoting Potlatch With Future of Forest Products Industry in Doubt,

Company Feels It's Time to Start Getting the Word Out About Just How

Important Its Products Are to Public

Potlatch Corp. is taking a more aggressive approach to get the word out about the company's future.

Recently, the company gained visibility through commercials that emphasize how much its products are a part of daily life. An overhead view of a family's kitchen makes the point. From household paper products to a kitchen floor—wood products are part of it all.

The ad campaign is called the Good Life.

"At the end of the day people use our products in everything they do," said Frank Carroll, public affairs director for Potlatch's eastern region.

But no one denies the forest products industry is troubled. Annual and quarterly financial reports are using red ink. Industry heavy hitters are consolidating. Markets are poor enough to curtail production. And in Brainerd the rumor mill produces a steady diet of plant closing stories.

Carroll knows the drill. He even heard a report that his company was closing when he went to pick up his order in a fast-food restaurant. Carroll, based in Cloquet, replaced the retiring Archie Chelseth in December. Carroll is responsible for community relations and communications for Potlatch pulp, paper and wood products operations in Minnesota. He also serves as the company's governmental relations counsel in northern Minnesota and St. Paul.

Carroll said Potlatch had a long period of company silence in the region as the Cloquet office lost long-time communication managers Mike Birkeland and then Chelseth.

"The time you need to communicate the most are when things are the toughest," Carroll said. "... People are afraid and they don't like change and none of us like what's happened to the market the last couple of years."

When times are tough, Carroll said people can revert to a worst-case scenario. Carroll said silence denotes withdrawal and that denotes problems and fuels rumors.

"I think that's a function of silence," he said. "I think some of that will calm down. The whole world revolves around public perception of a company. ... We are here. We're communicating. We are ready to talk. We aren't going anywhere."

For Potlatch, the goal is to be one of the companies standing when the recession fades.

Carroll said just a few years ago Potlatch had about a $40 million profit. Last year Potlatch lost about $40 million. Carroll said, in most businesses, a down cycle spurs rumors.

On the other hand, Carroll said Potlatch mills broke production records left and right and production has been "highly efficient." He said any responsible business wants to run a company someone else wants to buy.

"The thing that we don't control is the greater market," Carroll said. "My own view is that there are more positive signs than negative signs."

He pointed to economists recent predictions for a shorter recession than expected. And, Carroll said, Potlatch, unlike a dot .com business, makes real wealth in manufacturing and building things people need. Carroll said he is not aware of any thing constituting consolidation plans for Potlatch.

"The point to me is everybody is struggling," Carroll said, adding no one is doing specifically well. "But there are parts of the business doing very well."

Consumer products—such as bathroom tissue and paper towels—were among areas showing hopeful signs, as well as Potlatch's Resource Management Division. Carroll said the oriented strand board market price rose 15 percent two weeks ago. Diversity is also considered a company strength as one market may be down at any time while another is up.

"The past few years markets for wood products have been really tough," Carroll said. "I feel confident there will be a rebound in the markets. I feel very confident abut our workforce and our company's ability to stay standing and stay strong. We are taking some pretty heavy fire, but we are not alone by any means."

Either way the public company with 6,000 employees in half a dozen states, including 2,390 in Minnesota and 590 in Brainerd, cannot do anything swiftly. Carroll said moving a company Potlatch's size, which owns 1.5 million acres of land, is more like turning a battleship than a patrol boat. Publicly traded companies also have to record changes with the Securities and Exchange Commission, meaning a great deal of information is readily public versus the reporting requirements for privately held businesses. Management changes, sales, purchases, profits and losses are all posted.

Carroll was the company's communications manager for the western region with headquarters in Lewiston, Idaho. His voice has a western lilt and his images can be homespun. Before coming to Minnesota he queried a friend to inquire how different the climate might be—politically and temperately.

"It's the same buffalo viewed from a different fence," he concluded. Although he is still waiting to try out the snowblower he purchased. An early trial run confirmed it could toss rocks a considerable distance.

Before joining Potlatch, Carroll was employed in public affairs positions with the U.S. Forest Service in the West. Carroll, from Arizona, has a bachelor's degree from the University of New Mexico and a master's degree in public administration from Boise State University. (Brainerd Dispatch, 09 February 2002)

March

Potlatch Closing

Sale to Leave 660 Employees of Paper Mill Without Jobs in 60 Days

Employees were described as shocked and sad after today's announcement that Potlatch's Brainerd mill, with 660 employees, will close in 60 days.

Potlatch announced a sale agreement of its coated fine paper business to a South African corporation for $480 million in cash. The sale to Sappi Limited, a coated fine paper business based in Johannesburg, is expected to finalized in mid- to late May but still has to undergo reviews, such as regulatory approval.

The agreement calls for the sale of Potlatch's Cloquet pulp and printing papers facilities and associated assets to a Sappi Limited subsidiary. Potlatch stated it will leave the coated printing papers business.

"We will be seeking a buyer for the plant," Mike Sullivan, Potlatch director of corporate communications in Spokane, Wash., said today. "We are going to make an honest and good faith effort to find a buyer."

But Sullivan added Potlatch agreed to a non-compete clause and cannot sell the plant to a competitor who would produce coated paper. Sullivan said it was inappropriate to speculate on the chances of locating a buyer for the Brainerd mill.

"We are engaged in a feasibility study to find out what the options are," he said.

Sullivan said Potlatch intends to shut the mill down in 60 days but that could change depending on what Sappi wants. Rumors have circulated months about Potlatch's future, potential sales and closing of the Brainerd mill. Rumors were fueled by the company's quarterly reports of financial losses.

In 2001, Potlatch's printing papers segment reported a loss of $36.7 million on revenues of $464 million.

Frank Carroll, public affairs director for Potlatch's eastern region, spoke quietly this morning from the Brainerd mill. Carroll recently moved to Cloquet from Idaho. He said employees were shocked and sad as they heard the news.

"They are all asking the question, 'What about me?'" Carroll said.

"We are going to do everything we can to help people transition into new jobs."

Carroll said some people suspected this eventuality, others did not want to contemplate the closing and remained hopeful. But Carroll said all employees were aware of how much investors had struggled.

"They have been papermakers for a long time and they knew that things were tough," he said.

Carroll said the employees did everything they could humanly do to keep the operation going.

"These are the best papermakers that have ever lived and they did the best they could do," Carroll said. "Everybody here did a brilliant job. It's very sad. It's been an almost continuous operation for 90 years. They made everything here from newspaper to wallpaper to the finest paper every made—literally the finest paper made by anybody."

Potlatch retains its timberland and wood products operations. The sale is specific to the Spokane-based company's printed papers division. Some of the coating equipment at Brainerd will also be going to Sappi.

Sappi reported the transfer of the business from Brainerd to its other mills in North America and Europe will create a stronger position and profitability for its operations.

Sullivan said the sale was precipitated by the foreign competition and industry consolidation in the last few years.

"Potlatch has become a relatively smaller player," he said. "That makes it more challenging for us to compete."

Sale of the coated printing papers is part of Potlatch's strategic plan to increase shareholder value by focusing on businesses with the greatest growth potential, Potlatch Chairman and Chief Executive Officer L. Pendleton Siegel stated in a new release.

Information on potential severance packages was not released. Potlatch human resources staffers were at the Brainerd mill this morning informing employees at 6:45 a.m. The deal for the sale was signed and completed in the early-morning hours.

Potlatch contacted the Displaced Workers Program in St. Paul today. Paul Moe, director of the Minnesota Displaced Workers Program for the Department of Trade and Economic Development, said today he notified the program's rapid response team. Moe said large dislocations of workers in smaller communities is often more troubling because it is harder to absorb the employees.

The rapid response team has five members who typically set up informational meetings for displaced employees. The team works with the company and union leadership to establish training needs with a goal of moving people back into the work force as quickly as possible.

"When these layoffs happen in communities such as Brainerd, or in LTV for example in Hoyt Lakes, it is just so devastating," Moe said.

From Northwest to Fingerhut to Kmart, Moe said the state has been facing massive layoffs at record-breaking numbers. He said there is a legislative proposal to transfer $16 million to the Dislocated Workers Program budget.

"The good news then for Potlatch employees who are about to face dislocation of layoff would mean we'd have those funds to work with," Moe said.

Carroll said the 60-day notice is a positive as it helps people and state agencies plan.

"It's very hard," Carroll said. "But it's not like Enron. People are not sitting outside with their lives in a box and wondering what is happening to them.

"We are going to do things like help people with resume and job services and employee assistance and we have employee assistance on site right now to handle counseling. Right now we are very concerned and we are going to do everything we can to help everybody—remind them that the sun is going to rise tomorrow morning." (Brainerd Dispatch, 18 March 2002)

Wallin: Shutdown 'Devastating'

Brainerd Mayor James Wallin said today the shutdown of Brainerd's Potlatch operation here was devastating to the community.

"When you figure that's over 600 people who work there and they're all what I consider high-paying jobs," Wallin said. "They've been our major employer for years. To me it's just devastating."

Wallin, who's worked in the printing business for 40 years, said there has been concern the plant might close for some time. Wallin works part time for Range Printing and is co-owner of Lakes Area Mailing. He has two sons who work at the mill.

Minnesota Senate President Don Samuelson, DFL-Brainerd, said today the plant closing would have a huge economic impact on the community.

"It's a blow to our entire state economy," he said.

He would like to see state officials contact the new owners and see if there are other uses for the plant, consider extending unemployment benefits for fired workers and offer employment training for employees.

Samuelson said Gov. Jesse Ventura was in Germany but Rep. Dale Walz, R-Brainerd, said efforts must be made to keep the Potlatch work force in the community if there's any chance that new buyers are interested in the plant. He said the Legislature would consider the extension of unemployment benefits to accomplish that.

"That's a huge hit," Walz said. "It's a devastating hit for central Minnesota."

Brainerd City Council member Gary Scheeler said one topic that might come up at tonight's city council meeting is the possibility of the city acquiring the paper plant's electric power generating facilities and its waste treatment plant.

Lisa Paxton, Brainerd Lakes Area Chambers of Commerce executive director, talked with Potlatch officials and several community leaders this morning in a conference call. She said Potlatch is already aggressively working to market the Brainerd plant.

Paxton said it was too early to tell what affect the closure might have on the area economy. Paxton said the 60-day period before the plant's closing gives the community time to react to the setback.

Brainerd City Administrator Dan Vogt, who was meeting with Paxton this morning, said Potlatch will take the lead in trying to find a new owner and will continue to make paper in the next 60 days.

"We have an extremely diverse economy," Paxton said. "A lot of these manufacturers are either new or expanding. We're in a much better positive situation than we were even six months ago." (Brainerd Dispatch, 18 March 2002)

For Workers, a Time for Tears and Concern About Future

When the news hit this morning that Potlatch's Brainerd mill would be closing tears filled some employees' faces as to what the future has in store for them.

There will be 660 employees out of a job in 60 days.

Dawn Zelinske has worked at Potlatch for 27 years.

"A lot of good people will go down the tube," she said. "I saw it coming. You can't run a business that is hangin' by a thread.

"This is the worst thing that could have happened."

Her family will be hit twice as hard. Her husband, Lonn Zelinske, also works at the mill and they have three children. He has been there for 22 years.

Zelinske said it is scary to think that both incomes will be gone. However, she said her family will do what they have to survive. Zelinske said there are many couples who work at Potlatch.

"Not anybody is too happy," said Jeff Seymour. Seymour works in the finishing room and has been there for 10 years. "I have no clue on what to do once the shock is over with. We'll have to move on."

"It's a shock," said Nita Eibner, who has been employed with Potlatch for 24 years. "I'll start looking now (for a new job). I have to make a house payment like everyone else does."

Eibner has an accounting degree so she hopes she can find something in that field.

John Doshan works at Potlatch as the department safety coordinator and has been there for 33 years. He said he is not surprised by the news, but said he in confused about what the future holds for him.

"I'm not sure what I'll do," he said. "I'm concerned with the employees and the citizens of Brainerd."

However, even though many do not believe it, Doshan said, "There will be life after Potlatch. Many people have left here and have made it."

"Potlatch has been here forever," said Chris Nylund. "It's hard to believe that it's closing ... I have no clue what I'll do."

Nylund works as a maintenance planner and has been with the mill for 29 years. He also was the former mayor of Baxter.

"It'll be a big lifestyle change," he said. "I worry about the young people."

Jed Jackson has been with Potlatch for two years as a mechanic and was shocked about the news. However, Jackson said he is young so he is not worried about finding a new job.

Jackson went on vacation to Florida last week and said he now wishes he would have stayed home so he could have saved the money.

Not all employees were surprised on the news.

"It was not a big surprise," said Tim Fitch. Fitch has been with Potlatch for 25 years and is a supervisor in the finishing and shipping area. He said last week the paper's stock price went up.

"There are only a few mills left and you can't compete at the cost per ton and Brainerd is not a pulp mill," he said. "Brainerd is a dinosaur.

"It'll hurt Brainerd a lot."

Fitch is 51 and said after four years he would have been offered retirement.

Fitch also is concerned for his two children, who also work at Potlatch. His son, Shawn, also saw the closing of the mill coming. He said he can fall back on construction for another job.

Bob Harting, president of Paper, Allied-Industrial, Chemical and Energy Workers International Union Local 79, said negotiations for severance packages would be done next week.

Heinz Lintner also has skills that will help him find a new job. Lintner works in the electrical shop at Potlach and has been there for 10 years. Lintner said he may have to seek a position out of Brainerd because he would not be able to find a position in the field that would pay enough here. (Brainerd Dispatch, 18 March 2002)

Paper Mill Has Been a Brainerd Landmark

For nearly a century, the pulp paper industry has been a significant part of Brainerd's rich heritage.

It began when Northwest Paper Co. was created in 1899 with the combined efforts of Charles A. Weyerhaeuser, Rudolph Weyerhaeuser, C. I. McNair and R. D. Musser. The men were involved in building the Northwest Paper Co. along the banks of the St. Louis River in Cloquet. Potlatch centennial editions report the Cloquet mill produced its first newsprint on April 8, 1899.

But the company, which merged with Potlatch Forests, Inc. in 1964, truly began to grow after it expanded in Brainerd in 1903 by purchasing Northern Water Power Co. on the Mississippi River and the C. F. Kindred Dam. The pulp paper company expanded to a ground wood pulp mill along the west shore of the Mississippi River in Brainerd, and produced 12 tons of ground wood pulp per day.

Brainerd, it may have seemed to these innovative industrialists, was a perfect spot to build a paper mill. The community had woods and water—the mighty Mississippi River could provide power for a mill, and there was an abundance of forests. They also had transportation. In the 1870s, the Northern Pacific Railway brought its railway system to "The Crossing," which is now known as Brainerd. Additional railroad spurs ensured that the pulp or paper could be easily transported.

The Brainerd mill outgrew its location in 1911 and was shut down, then dismantled in 1914 and reestablished at a better location on the river's east side. Construction of the Frederick Paper Mill, named after Frederick Weyerhaeuser Sr., took two years. Operations at the new mill began April 20, 1917. The new plant produced 40 tons of pulp and newsprint daily.

The company's land holdings soared from 2,000 acres in 1920 to 156,000 acres in Minnesota by 1929. The Depression years were hard ones for papermakers in Brainerd, but the plant managed to stay open, even if it operated in the red.

In 1934 the Brainerd mill closed for nine months. When it reopened it began producing wallpaper instead of newsprint to the average amount of 65 tons per day.

The demand for paper grew sharply during the war years, which brought increased financial health to the mill.

When wallpaper markets declined in the 1950s, the company reinvented itself once again, shutting down the ground wood pulp mill and beginning production of fine grade paper in April 1956, producing about 80 tons of paper production each day. In 1959, photographs of the area along Rice Lake show the Crow Wing County Fairgrounds in the backdrop of the Potlatch Mill. In 1950, spring flood water washed out the wood, rock and steel dam. A concrete version was constructed as its replacement.

In 1964, the same year the company merged with Potlatch Forests, Inc., the production of coated paper began in Brainerd.

Ken Zelinske, Brainerd, retired last year from Potlatch after working there for 40 years. He started at the paper mill in 1961, back when women would hand fan the paper and check for defects. He worked in the coating department and has served as union president.

He has four sons and a daughter-in-law who are employed at the Brainerd mill.

"I don't think people realize how much this is going to affect the community," said Zelinske, of the Potlatch closing. "The resorts and tourists are nice, but they're not going to keep the grocery stores open here in the winter. It's going to be pretty tough. I wish they would have made this announcement before the school bond referendum issue." (Brainerd Dispatch, 19 March 2002)

City Offers its Support

The city of Brainerd Monday pledged its support to the employees of Potlatch.

In a statement read by Brainerd Mayor James Wallin to the city council, Wallin said the city will work with Potlatch to serve the needs of its employees, 616 of whom will be affected by the paper mill's closing.

"Our No. 1 concern at this time is the employees and their families," read Wallin from the statement. "We are a community that cares about our residents."

It was announced Monday that Potlatch was sold to Sappi Limited, a South African corporation, for $480 million in cash. The paper mill, in operation for more than 100 years, will be closed in less than 60 days.

"The city will do everything it can," said Council President Lucy Nesheim.

Both City Administrator Dan Vogt and Community Development Coordinator/City Planner Mike Brethorst have been in contact with several local and state agencies on behalf of Potlatch employees.

"We're putting considerable time and effort into assisting Potlatch in helping their employees," said Brethorst.

The city council, based on a recommendation from the Safety and Public Works Committee, directed staff to work closely with Potlatch officials, and to look at acquiring the paper mill's sewer plant and electrical facilities, including the Mississippi River dam.

Council member Gary Scheeler said Potlatch's infrastructure would not only be a benefit to the city but also to a potential buyer because it would, "relieve a huge debt load." Scheeler said that acquiring the infrastructure would also protect Brainerd from another entity that would use the services against the city.

Nesheim said such direction may be premature.

Council member Jim Dehen responded that it was only directing staff to research the feasibility of acquiring the water, sewer and electrical services at Potlatch. (Brainerd Dispatch, 19 March 2002)

Wellstone: Price No Consideration in Bid to Find Buyer for Paper Mill

Senator Sees Development as Glimmer of Good News in Bad Situation

Sen. Paul Wellstone, D-Minn., said today Potlatch officials told him price will not be a consideration in the bid to find a buyer for the Brainerd wood products plant.

He said, after speaking with Potlatch CEO L. Pendleton Siegel today, that he was assured by Siegel that the company would be willing to accept very little or no money for the Brainerd facility.

"I'm not pleased with Potlatch's decision but he (Siegel) did say to me that they are totally committed to finding a buyer and price is not the issue," Wellstone said. "I'm angry about the (U.S.) trade policy and angry about their (Potlatch's) decision. ... I do find it significant that they are very committed to finding a use for the facility."

He termed the latest development a little bit of good news in a bad situation.

"I do think it's important that they definitely are going to make a commitment to look for a buyer for us," he said. "Price will not be a consideration."

In the wake of Brainerd's largest employee layoff in years state politicians expressed concern for Brainerd's Potlatch workers and explained what programs were available to help them.

All three District 12 lawmakers, Senate President Don Samuelson, DFL-Brainerd; Rep. Dale Walz, R-Brainerd; and Rep. Greg Blaine, R-Little Falls, said they would work with Potlatch to try and find a buyer for the Brainerd plant in the next 60 days.

Walz and Blaine said workers would be eligible for state unemployment insurance, the Dislocated Worker Program and other programs available through the Minnesota WorkForce Center in Brainerd. Applications for unemployment benefits are available online at www.mnwfc.org or by telephone at 1-877-898-9090. Information on the Dislocated Workers Program may be obtained by visiting www.dted.state.mn.us or calling the Minnesota WorkForce Center at 1-888-GETJOBS.

"I'm saddened to see the Potlatch plant close and so many jobs lost as a result but I wanted to make sure, that those who have been laid off, are aware of what programs the state has in place to help in this time of need," Walz said in a news release.

Blaine noted the unemployment payments don't provide as much income as the jobs would have but said they would hopefully take care of people's basic needs.

House DFL leader Tom Pugh said, in a news release Monday, Democrats will seek to add Potlatch employees to a bill that extends unemployment benefits for laid-off airline employees. House DFLers also will try to add funds to the Displaced Workers Program.

"This is yet another body-blow to the economy of Minnesota and we can't simply say 'too bad, there's no help' to these hard-working Minnesotans," Pugh, DFL-South St. Paul, said. "This layoff will severely hurt the Brainerd area economy. Even though the region is growing, many of these new jobs pay far less than what Potlatch paid."

Pugh's release said some 23,000 jobs have disappeared from the Minnesota economy since January 2001. Rebecca Yanisch, commissioner of the Minnesota Department of Trade and Economic Development, estimated the job loss count at a higher number, maintaining in a Star Tribune article that 37,000 jobs have been lost since Sept. 11.

Gov. Jesse Ventura, also quoted in the Star Tribune, expressed his concern for the workers and pledged to work to help them when he returns. He is in Berlin promoting Minnesota tourism.

U.S. Senate candidate Norm Coleman, former mayor of St. Paul, said he was sorry to hear of the Brainerd layoffs, particularly followed on the heels of a winter tourist season that offered little snow for area snowmobilers.

"Our heart goes out to those who lost their jobs," he said Monday night.

Coleman, who's scheduled to campaign in Little Falls this afternoon, said government over-regulation, high taxes, Clinton administration logging bans and lack of enforcement of trade laws all played a role in the layoffs.

"We make it difficult on ourselves," he said. "At times we have to say no to the Sierra Club."

It's too easy to just blame the layoffs on the economy, Coleman said, even though it obviously plays a role. The country needs to take action to help businesses compete with foreign firms, he said.

Coleman said he hasn't given up on the wood products industry, an important part of Minnesota's economy. He favors a balanced approach of protecting the environment without unnecessarily burdening industry.

Craig Nathan, regional operation manager for Rural Minnesota Concentrated Employee Program, said his private, nonprofit organization would apply for a state grant for readjustment and retraining services. MnCEP is a private, nonprofit organization that's housed at the WorkForce Center in Brainerd along with Job Service and Rehabilitation Services. (Brainerd Dispatch, 19 March 2002)

Plant Closing is a Blow to the City but Brainerd Can Survive

Dispatch Editorial

The news hit Brainerd area residents like a hard punch to the stomach—Potlatch's Brainerd mill is closing its doors.

Even though the rumors, the temporary shutdowns and the competitive foreign market were clear signs the plant might someday close, the actual announcement stunned many people.

The busy paper mill with its billowing smokestacks is synonymous with Brainerd and is the first business that greets motorists who enter the city from the northeast. Like Brainerd's other landmarks, the railroad yards and the Paul Bunyan statue, the Potlatch plant's strong presence spoke of a community that valued hard work, craftsmanship and the dignity of labor.

This week, as Brainerd area residents drive past the Mill Avenue plant, they'll think of the 616 Potlatch workers with rent or house payments and an uncertain future. Even though the warning signs of a plant closing were there it's hard to break the long-held Brainerd mindset that equated a job at the mill with good wages and security.

Old-timers think back to other economic setbacks this region has faced. The layoffs of Burlington Northern railroad workers in the early 1980s, the closing of the Cuyuna Range mines, the collapse of the Scorpion snowmobile manufacturing plant in Crosby.

Civic officials and politicians are already working to see if some sort of manufacturing interest can be attracted to the Brainerd plant so the bulk of the talented work force can be kept in the community's labor pool. It's too early to tell if the Brainerd area will be successful in establishing a manufacturing business to step into the void that's been created by the loss of Potlatch. We're part of an international economy and many aspects of that economy are out of our control.

The plant's closing is a serious blow to this region's economic health but the Brainerd area is not the first Minnesota community to be dealt a severe economic jolt. Duluth, Minneapolis, St. Cloud have all faced economic setbacks and they're still standing. Other communities in other states have also reconfigured their economic mix after plant closings. It will take time, hard work and some creative brainstorming but Brainerd can survive this reversal. (Brainerd Dispatch, 19 March 2002)

Shock Waves Ripple

Paper Mill Workers Left to Worry About Their Financial Future

Ripple effects continue a day after Potlatch announced it is closing the Brainerd mill.

A Potlatch spokesman revised the number of affected employees later Monday saying about 616 employees will lose their jobs when the mill closes in 60 days, 530 hourly and 86 salary. Initial reports had as many as 660 employees affected.

Late Monday morning employees stopped Bob Harting, president of Paper, Allied-Industrial, Chemical and Energy Workers International Union Local 79, as he stood near the guard shack in the Potlatch parking lot. One question was common—what happens to pensions?

Harting found out about the mill closing when he received a call at 5 a.m. Monday. The sale did not include union contracts.

CORRECTION / CLARIFICATION

Due to incorrect information supplied to The Dispatch for the Monday Page 1A story on Potlatch closing the Brainerd mill, the number of Potlatch employees affected by the plant's closing should have been 616 hourly and salary workers.

The Dispatch regrets the error.

"We all kept thinking things would turn around," Harting said of the paper industry. "Everyone is in shock, of course."

Harting said Potlatch agreed to sit down with the union and negotiate pensions and severance pay for salary and hourly workers as soon as next week.

Monday Potlatch announced a sale agreement of its coated fine paper business to Sappi Limited, a South African corporation, for $480 million in cash. In the sales agreement, Sappi—originally known as South African Pulp and Paper Industries Limited—purchased Potlatch's coated printing papers division with its Cloquet plant and related assets. Some coated printing paper equipment will be removed from the Brainerd mill.

Sappi stated it will reopen negotiations with PACE looking for a more flexible union contract. PACE represents union workers in Cloquet and Brainerd. The Cloquet mill has 1,100 jobs. Sappi told workers in Cloquet they had to reapply for their jobs after the sale was completed, leaving uncertainty as to how many jobs may exist. Job numbers are more uncertain in Brainerd, depending on whether a buyer is located.

Information was not available this morning on the Potlatch payroll in Brainerd or on the average or starting hourly wage. Hourly wages at the Cloquet mill start at $14.50 and more experienced workers can earn as much as about $25 per hour.

Potlatch is divesting itself of its coated printing paper capabilities, which include production of glossy paper used for magazines and annual reports. Potlatch officials stated they will seek a buyer for the Brainerd mill but cannot sell the plant to a coated paper competitor of Sappi. The sale to Sappi is expected to be finalized in mid-to-late-May.

Frank Carroll, Potlatch director of public affairs based in Cloquet, said efforts to find a buyer for the Brainerd mill will continue. Carroll said late Monday that he had already heard from the Brainerd Lakes Area Chambers of Commerce and economic development sources, as well as Minnesota Attorney General Mike Hatch.

Carroll said a potential buyer for the plant may not be another paper maker. Carroll described the Brainerd mill as having well appointed offices with established infrastructure for power and water.

"And it comes with a work force—highly skilled welders and pipe fitters," Carroll said. "It's an opportunity for some kind of manufacturer. It could be anything. ... We'll be surprised, I think, as we go forward in the kind of interest we will have.

"I hope and I pray that that's the case. ... The bottom line is short of something like that happening we are moving toward closing that mill."

Gary Sorensen, regional manager for Job Service covering the Brainerd area, said today there has been good response from the community in an early coordinated effort to seek a buyer for the plant. Sorensen said the WorkForce Center offers assistance in job searches and self assessments. But Sorensen said if additional dislocated worker dollars, currently being discussed in the Legislature, are made available there could be additional staff dedicated to assist Potlatch workers.

At Potlatch Monday, Harting said the Brainerd mill could be used for paper production for uncoated paper.

"I sure hope for the community that someone buys us, but I'm not real hopeful of that," Harting said, adding the entire paper industry is struggling.

As rumors circulated for months about a possible sale, Harting said people were not as hopeful the Brainerd mill could survive without a pulp mill associated with it as is the case in Cloquet. A sign that something was happening came when corporate people were in Cloquet for meetings last week.

"It certainly isn't a labor/management relationship," Harting said of the reason behind closing the mill. "It's the industry. We've always had a good union/management relationship. ... I think Potlatch will treat their people OK."

Harting said there has been a labor contract with Potlatch since 1937. Harting is encouraging employees with questions to call the union office at 828-6556.

He said: "We are going to provide all the help we can and we are still going to make paper up to the last day."

This story includes information from the Duluth News Tribune. (Brainerd Dispatch, 20 March 2002)

Plant Closing Stirs Referendum Worries

Last week, residents in the Brainerd School District passed a $59.9 million building referendum that will increase property taxes.

Not even a week later, the same residents heard that Potlatch's Brainerd paper mill will close and leave 616 people without jobs.

Some people, including Potlatch employees, wish they would have known about the closing of the mill before they voted for the bond. Potlatch employees are now faced with deciding on a new career and determining how to meet their financial obligations.

They also will have to worry about how to come up with additional funds to pay their property school taxes.

Potlatch - A closer look

Potlatch was founded in 1903 in Potlatch, Idaho. The Spokane, Wash.-based company is an integrated forest products company with 1.5 million acres of timberland in Idaho, Minnesota and Arkansas.

Potlatch is a major supplier of bleached paperboard in Pacific Rim markets, especially Japan.

Manufacturing operations: Idaho, Nevada, Minnesota, Arkansas and Michigan produce lumber and panel products, bleached pulp and coated printing papers, consumer tissue and bleached paperboard.

2001 revenues: $1,751,996 with a net earnings loss of $79,445.

Employees: 6,300.

Minnesota Pulp and Paper Division: Headquartered in Cloquet. Minnesota employees number 2,250. In 2001, Potlatch's printing papers segment reported a loss of $36.7 million on revenues of $464 million.

Timberland in Minnesota's Resource Management Division covers 350,000 acres.

In 1999, Potlatch reported the completion of the $525 million pulp mill in Cloquet. The modernization project began in 1992.

Cloquet has a bleached kraft pulp mill with a 425,000 ton capacity and a paper mill with two paper machines and coating equipment with a 230,000 ton capacity.

Brainerd has two paper machines and coating equipment with a capacity for 155,000 tons.

The property in northeast Brainerd is largely covered by buildings and support operations such as parking lots, a railroad spur and the adjacent dam on the Mississippi River.

Timberland in Crow Wing County, listed as Potlatch or the former name of Northwest Paper Co., amounts to 21,000 acres. Potlatch stated it will retain timberland, although more Potlatch land has been available for sale in the area.

Market value of the land and buildings at the Brainerd mill is $8,353,400. The market value is used to generate tax money. Value for taxes payable in 2002 comes from the appraised market value in 2001. Crow Wing County Auditor Roy Luukkonen said value remains with the land and buildings whether the plant is operating or not.

Source: Potlatch Corp., Securities and Exchange Commission, Crow Wing County.

Brainerd Superintendent Jerry Walseth said the school district will follow Potlatch activities. The district will study the impact of the closing of the paper mill and how it will affect the district's enrollment. The district will look at how the paper mill is marketed for a potential buyer.

Walseth said it is too soon to tell what will happen to the plant.

"We need time to understand the impact," said Walseth.

Brainerd City Council member Gary Scheeler, at Monday's city council meeting, made a motion for the city council to send a letter to the school board suggesting the school district hold off the bond issue for at least a year in order to determine the financial fallout of Potlatch's closing. Council member Bob Olson agreed with Scheeler.

However, Scheeler's motion, by a 5-2 vote, was tabled until the next council meeting. Council member Jim Dehen, who made the motion to table, said the decision to send a letter didn't have to be made tonight. (Brainerd Dispatch, 20 March 2002)

Federal Aid May be on Way

Potlatch employees can expect to receive good news in the mail in the days ahead because foreign imports contributed to the impending loss of their jobs.

Workers may be eligible for job training, job search and relocation allowances, income support and other services through the Trade Adjustment Assistance program established under the Trade Act of 1974.

The TAA offers benefits and re-employment services to assist unemployed workers. Workers may receive up to 104 weeks of approved training for another job or career. Income support, in weekly cash payments, may be available for 52 weeks after a worker's unemployment compensation benefits are exhausted and during a time when a worker is participating in an approved full-time training program. Income support is a combination of unemployment benefits and the weekly cash payments through the program for a maximum of 78 weeks.

The program is administered by the Department of Labor's Employment and Training Administration. The state serves as an agent in administering the program.

Lovella Rempel, trade coordinator with the Minnesota Department of Economic Security, confirmed the eligibility of Potlatch workers for the federal assistance.

Rempel said letters will be going out to Potlatch workers to let them know they can apply for assistance. And Gov. Jesse Ventura's administration is setting up group informational meetings with Potlatch employees. Rempel said those meetings will offer help to start the application process and will be scheduled closer to the time employees are laid off.

The Department of Labor concluded Potlatch employees are eligible to apply for worker adjustment assistance after conducting an investigation last spring. And the eligibility extends to workers who were laid off on or after May 1, 2000.

The labor department investigation began after a petition was received May 14. The petition was filed on behalf of workers at the Brainerd mill. To be eligible to apply for assistance Potlatch had to have laid-off workers, sales or production declines and increased imports contribute to worker layoffs. Research conducted by the department found the Brainerd mill met each requirement.

Department of Labor investigation findings revealed the plant experienced declines in production and employment levels within a relevant time period to qualify. The investigation also found Potlatch's major customers had significantly increased imports of high line coated printing paper.

The United States imports of coated printing paper increased 15 percent during 2000 compared with 1999, according to the Department of Labor.

The labor department's investigator concluded increases of imports in direct competition with Potlatch products from the Brainerd mill "contributed importantly to the decline in sales or production and to the total or partial separation of workers. ..."

Monday 616 Potlatch employees were informed the Brainerd mill is expected to close in about 60 days after sale of the company's coated fine paper business to a South African corporation for $480 million in cash.

The sale to Sappi Limited, a coated fine paper business based in Johannesburg, South Africa, is expected to be finalized in mid- to late-May but still has to undergo reviews, such as regulatory approval. Potlatch stated it will leave the coated printing papers business.

There have been rumors this week that employees have received layoff notices already. Frank Carroll, Potlatch spokesman, said no one has been laid off at the plant and they will continue to produce paper. Other concerns have come from Potlatch retirees. Carroll said retirees are not affected by the plant's closing and will receive their benefits as previously agreed upon.

Retirement benefits and severance packages for current Potlatch employees have not been determined yet, Carroll said. Bob Harting, union president at the Brainerd mill, said earlier this week union leaders expected to negotiate with management about severance and benefits.

A bill passed by the Senate Finance Committee Wednesday to extend unemployment benefits for extra weeks moved forward at the Capitol. In the bill, Potlatch workers would be eligible for 26 weeks of extended benefits. (Brainerd Dispatch, 22 March 2002)

For Zelinskes, Potlatch is a Family Affair

Potlatch, for Ken Zelinske, Was More Than Just a Place to Work.

The paper mill was a way of life for him and his family.

The Oak Lawn Township man spent 40 years working in the coating department before he retired last year. He was president—among many other duties—of Local 164 for nearly 20 years. He encouraged his six children to apply for jobs there, which they did.

Zelinske's four sons, Lonn, 40, Steve, 38, Kyle, 35, and Wade, 31, all currently work at the paper mill. So does Lonn's wife, Dawn, whose father, Al Hendricks, worked at the paper mill for more than 30 years. Zelinske's daughter, Kim Brown, also worked at the mill as a summer replacement worker while in college.

Between the six Zelinskes, they've invested nearly 103 years of their lives at Potlatch, longer than the paper mill has been open in Brainerd. While Monday's announcement of the paper mill's closing wasn't a complete surprise, the Zelinske clan is left wondering what's going to become of their once secure future.

"It really bothers me," said Ken, of Potlatch's closing. "My wife cried that morning."

This family is not alone. There is no way to know how many families like the Zelinskes are profoundly affected by Potlatch's closing. But many employed at the mill have another relative—a sibling, cousin, in-law or even spouse or ex-spouse—working there. Steve said it would be easier to figure out who wasn't related out of Potlatch's 616 employees, rather than figure out how everyone is related to one another.

"There's never a time when one of us isn't at work," said Steve, who has worked at the mill for 10 years.

The best way to get into Potlatch for many years was to have a parent, brother or uncle who worked there, said Ken.

For Wade Zelinske, Potlatch's announcement on Monday may mean this is his last week at work. He's worked for two years in the labor pool at the mill, working when other employees were on vacation. No one is taking vacations now. He suspected that this may be his last week of work. If so, he'll head to St. Cloud next week to stay with friends and search for another job. He and his wife would sell their home in Brainerd and move their four children if he finds a job there.

"I just don't see anything in Brainerd," said Wade. "I have no idea what I'm going to do. I have to decide what I want to be when I grow up."

"Everyone is still in shock, wandering around with somber looks," said Steve, of his co-workers at Potlatch. Like his father before him, Steve is active in the union, but not the same union. He serves as union steward of Local 79, one of the two unions at the paper mill, and has spent a good part of his week in union meetings.

"It was a good-paying job in our hometown," said Steve, on why he and his wife returned to Brainerd after working as a millwright at a paper plant in Florida. They have three children and recently built a new house in Oak Lawn Township. "We were raised on a Potlatch income. I wish it was still there, but look at what it's given us. I'm grateful for what they've given us."

Kyle has worked at the paper mill for almost three years in the coating department, the same department as his father. He was on vacation this week when he heard the plant was closing and promptly returned to work. He said he may go back to college once the paper mill closes. He and his wife have three children.

Lonn and Dawn met at Potlatch and got married almost 10 years ago. She's worked at the mill for about 27 years. He's been there 21 years. Together they have three children.

Their 11-year-old daughter Katelyn told her parents that a few of her friends at Garfield Elementary have said that their parents are talking about moving from Brainerd now that they lost their jobs at Potlatch. Her teachers have been supportive this week, giving her hugs.

"I think we're going to be poor," said Katelyn. "I’m kind of worried we will have to move, too."

"We're going to be OK," Dawn assured her daughter. She said for the past two years she and Lonn have been paying off credit cards and car loans, and have been saving money because of the rumors that the mill would close.

"I'm sad," said their son, Scott, also 11. "Because everyone lost their job."

Some people around town have been cruel, cracking jokes about Potlatch's demise. Kyle figures for some people, it's their way of dealing with the situation.

"Some make jokes about how Menards is hiring," he said. "When I started (at Potlatch), I thought, 'Now there's a job where I can develop a pension.' And that's gone."

"It's going to change the entire area," said Steve. "But I hope people will realize it's not the end of the world. You just gotta keep trucking." (Brainerd Dispatch, 22 March 2002)

Potlatch Officials Say They're Committed

to Looking for a Buyer for Brainerd Plant

Potlatch officials reiterated Friday that price is not an issue in finding a buyer for the Brainerd plant.

At a meeting between U.S. Sens. Paul Wellstone and Mark Dayton and Potlatch management, company officials said they are committed to marketing the plant and looking for a buyer with enough capital to operate it.

Before they attended the meeting at city hall, the two senators met with Potlatch's management team for lunch. Wellstone asked whether Potlatch was willing to consider making use of the plant knowing the good feeling employees had for the company.

"Quite frankly, no there isn't," said Rich Paulson, Potlatch Corp. president.

Paulson acknowledged part of the company's feasibility study is looking into the potential for making tissue at the Brainerd mill. But Paulson said freight adds to cost and there is not a big market nearby.

Paulson said he did not want to encourage employees in any way with a suggestion that Potlatch will operate the plant for another product line. He said the decision to sell the printing papers division was made to ensure Potlatch itself had a long-term future.

Rebecca Yanisch, state Department of Trade and Economic Development commissioner, said more details on plant assets was needed to market the plant. Potlatch's transition team is in the process of putting together information on demographics, plant output and infrastructure.

Dayton asked whether there was one contact person or office for employees with questions. Yanisch suggested the WorkForce Center on South Sixth Street in Brainerd as a contact point. (Brainerd Dispatch, 23 March 2002)

Community Leaders, U.S. Senators Consider Options for Potlatch Plant

Identifying potential suitors for the Potlatch plant before the mill closes is one key goal, but officials suggested the community should also be prepared for difficulties ahead.

Community leaders gathered Friday afternoon at Brainerd City Hall to look at response options in the wake of Potlatch's announced mill closure in nearly 60 days ending 616 jobs.

"I think you'll find this community came together very quickly," said Lisa Paxton, Brainerd Lakes Area Chambers of Commerce chief executive officer. Paxton facilitated the city hall meeting with U.S. Sens. Mark Dayton and Paul Wellstone.

Dayton said Potlatch employees outlined a list a possible products and now the questions are what companies operate those businesses, who are other industry players and who in Minnesota has the expertise to assist Brainerd. Dayton suggested getting a consultant, tapping into Potlatch resources and generating a list of contacts. Then, he said, figure out who will call the contact list.

Commissioner Rebecca Yanisch of the state Department of Trade and Economic Development said her office can help sort out potential targets. Bob Harting, Potlatch union president, said the union can also help with industry names.

Crow Wing County Commissioner Terry Sluss said the process of identifying short- and long-term goals reminded him of the June 13 tornado aftermath. He said thought also needs to go into preparing the community for what could be a year or two of significant difficulties following the plant's closing, as well as continuing to see whether the business can be saved.

Dayton asked those present whether they had thought out what needs to be done and who is prepared to spearhead the effort. Representatives at the meeting included Brainerd city officials and staff, Brainerd School District, Central Lakes College, WorkForce Center in Brainerd, Rural Minnesota Concentrated Employment Program, Job Service, Business and Industry Center at CLC, Brainerd Lakes Area Development Corp. and Minnesota staffers for Wellstone and Dayton.

Dan Vogt, Brainerd city administrator, talked to his St. Cloud counterpart last week to see whether that city's Fingerhut experience could benefit the Potlatch situation.

"It's all so new to us," Vogt said of current efforts. "It's something we've never done before."

Yanisch is working with Potlatch to produce an inventory. She said the company should be motivated to find a buyer in part because of its quarter million dollar property tax bill. Yanisch also sought clarification from a Sappi executive as to whether the non-compete clause covered all coated paper. Sappi Limited is buying Potlatch's Cloquet plant and Brainerd plant coating equipment. The deal is expected to be finalized in May.

Earlier last week, Frank Carroll, Potlatch spokesman, said the company's attorneys were looking at the sale agreement language to clarify that point. Harting said the plant cannot make any coated paper but could produce other kinds of paper. According to sales agreement language, production of products will be considered on a case-by-case basis. The non-compete clause is in effect for 10 years.

Brainerd Mayor James Wallin, who has been in the printing business for 40 years, said looking at the plant objectively, it makes an excellent paper mill but refurbishing it into other manufacturing would involve severe retooling costs.

Paxton asked how strong a lead the community should take in relation to Potlatch's marketing efforts.

Dayton said if Potlatch had identified a buyer they would be consummating a deal by now.

"You need someone whose mission is to find a buyer," Dayton said. He said the best prospect is in the next 60 days. The likelihood of a buyer falls off as time goes on, especially if the plant sits empty through the winter, Dayton said. He suggested grant dollars may be available to help hire a coordinator whose job is to pull information together and then contact the greater community group as needed.

Other concerns include asbestos removal costs if interior demolition is needed to refit the plant and whether Potlatch is willing to remove and disassemble equipment if needed for a new buyer.

After the meeting, Wellstone said: "It's all easier said than done. I think we work on as many fronts as possible." (Brainerd Dispatch, 23 March 2002)

U. S. Senators Offer Support

Wellstone, Dayton Pledge Their Help to Potlatch Employees

Bordered by stacks of Potlatch paper, Potlatch employees on Friday told two U.S. senators from Minnesota they were not ready to give up yet.

In an emotionally charged meeting, employees were moved to tears as co-workers spoke of a Potlatch work tradition that extended through generations and of the family atmosphere inside the plant.

Monday, 616 employees learned Potlatch sold its coating printing paper division to a South African-based company and plans to close the Brainerd mill in 60 days.

Sens. Paul Wellstone, D-Minn., and Mark Dayton, R-Minn., flew to Brainerd by 10:30 a.m. Friday from Washington, D. C. Rebecca Yanisch, state Department of Trade and Economic Development commissioner, joined them at the mill in northeast Brainerd. About 250 Potlatch workers awaited them, seated in metal folding chairs or standing nearby along the paper stacks in the shipping room.

"We hope in your short time here you'll feel a sense of the feeling we have," said Don Andersen, acting mill manager. "We are looking forward to some help—any kind that you can give to us."

Both senators said they did not want false hopes or expectations regarding the potential for other uses of the plant, but pledged their support and said Friday's visit was not a sign of temporary interest. Both spoke against a foreign trade policy through the Clinton and now the Bush administrations and the effect on workers in central and northern Minnesota.

"I can feel the determination of everyone," Wellstone said following worker presentations. Wellstone said one effort was to make sure workers had extended unemployment benefits. "We are determined to help in every way we know how to."

Wellstone and Dayton said they were willing to make calls or fly to meetings to assist efforts with a potential buyer for the Brainerd plant.

  Potlatch employee Brad Herron listened to Sen. Paul Wellstone at a meeting of employees Friday at the Brainerd mill.

"It is very emotional to hear your stories and understand the depth of your tradition here," Dayton said. "... We won't stop until we've exhausted every possibility."

At the same time the senators spoke with workers, the Displaced Worker Program's rapid response team was meeting the management down the hall from Potlatch's shipping room. Yanisch said speaking with workers was helpful in terms of knowing more about the plant's capabilities.

  Potlatch employee Deanna Nelson reacted with sadness as employees talked about a sense of loss and determination to survive at a meeting of workers Friday with Sens. Paul Wellstone and Mark Dayton at the Brainerd mill.

During an employee Power Point presentation Friday, workers outlined equipment assets in the 400,000 square feet of manufacturing space located on the 128-acre Potlatch site. Workers spoke of employee abilities and previous training in team concepts, communication skills and leadership aspects.

"We've got a very talented and highly motivated work force here," said Bob Harting, union president. "We've just got a proven history of overcoming obstacles."

Employees outlined possible plant uses in specialty niche grade papers, such as parchment, greeting card, packaging, water mark, translucent and food grade paper. Six months ago the Brainerd mill developed an uncoated line of paper in shades of white or color. In the sale agreement between Potlatch and Sappi Limited there is a no-compete clause for production of coated paper.

There were occasional light moments of humor, but emotions rose in throats and filled eyes with tears as three employees spoke for the work force.

"First of all I love you guys," third-generation millwright Ron Ebinger said to employees. Ebinger started at the plant 36 years ago and worked through the transition from Northwest Paper Co. to Potlatch. He said Potlatch was good to the employees and he said the question was not what Potlatch has done for workers, but may be what the company will do for workers yet. Potlatch management previously said it was willing to work to actively seek a buyer for the plant.

"I can't tell you what a pleasure it is to work here with you," he said to co-workers. " ... Do not—do not give up. We are not going to leave this country. We're going to make it."

Worker Sandy Tautges said without opportunities the company provided her family would not have had college education or travel experience.

But it was the third speaker who appeared most to affect listeners who quietly leaned forward in their seats. Many wiped away tears.

"This is really hard," Denny Wickham said. "... A lot of us here had grandfathers help build the dam and make this place the best place to work and I don't want to see it quit and I don't think anybody here does. ... Now we need the people that are here to help us."

Wickham said his 30 years at Potlatch combined with his grandfather, father and son for more than 100 years of service.

"If somebody wants to come here and buy us we'll take you," he said. "You give us a chance, we'll make her run.”

Both senators said they did not want false hopes or expectations regarding the potential for other uses of the plant, but pledged their support and said Friday's visit was not a sign of temporary interest. Both spoke against a foreign trade policy through the Clinton and now the Bush administrations and the effect on workers in central and northern Minnesota.

"I can feel the determination of everyone," Wellstone said following worker presentations. Wellstone said one effort was to make sure workers had extended unemployment benefits. "We are determined to help in every way we know how to."

Wellstone and Dayton said they were willing to make calls or fly to meetings to assist efforts with a potential buyer for the Brainerd plant.

"It is very emotional to hear your stories and understand the depth of your tradition here," Dayton said. "... We won't stop until we've exhausted every possibility." (Brainerd Dispatch, 24 March 2002)

Signs of Potlatch Trouble Didn't Lessen Impact

Allen Kretzmann, 58, began working at Potlatch in 1966. Thirty-six members of his family worked at the Brainerd mill over the years.

And even knowing the business was struggling did not prepare him for the shock of the closing announcement last week. Kretzmann said the shock was second only to losing his wife to cancer when she was 32.

"This place stood behind me every foot of the way," Kretzmann said of Potlatch and those dark days after his wife died.

Kretzmann worked in the finishing department and in maintenance. He said you never think a plant closing is going to happen to you.

"I wanted to retire out of here," Kretzmann said. "This isn't the way I want to go out. ... People ask me how I feel. It's something I can't even put into words."

Wayne Brandt, executive vice president of Minnesota Forest Industries, Duluth, and member of the governor-appointed Minnesota Forest Resources Council, said a number of Minnesota paper mills have witnessed a trend in ownership changes, including Blandin in Grand Rapids and Trus Joist, a Weyerhaeuser business in Deerwood. International buyers are part of the regular mix.

"It's a shock when it happens. Certainly many observers knew the position the Brainerd facility was in terms of being vulnerable," Brandt said. But he noted most of the rumors of the last few years included the Brainerd plant in a sale. In terms of the forest products industry, Brandt said: "We haven't had any plant closings of this magnitude in Minnesota."

But in Brainerd, he said it's the first time in Minnesota where the closing of the mill came as part of the acquisition. Brandt said he feels terrible for the employees and the community.

"We've seen a number of transactions of this type in the industry and not just in our state," Brandt said. "... The prospect for Cloquet under Sappi ownership is pretty bright."

He said industry transactions have typically been good for facilities as bigger long-term players committed to the forest products industry come in and have enough muscle to stay. There are additional industry concerns of timber supplies and availability, particularly on public land, as well as the regulatory and business climate in both the state and nation.

Brandt said some industry observers miss the aspect older facilities or those with less economic capacity play.

Grand Rapids has been straightforward in acknowledging that "three old machines there are not going to be running real long into the future," Brandt said. "The question becomes are the factors in place here in our state that will lead UPM (Kymmene) to a decision to replace that capacity here, elsewhere or not at all.

"I do not see any more paper mill closings at all," he said. "Each that exist in the state had recent investments and competitive capacity."

Brandt said he could not speculate on future use of the Brainerd mill, but added it has advantages of being a good facility with power, water, transportation and a productive workforce.

But Brandt said he understands the current turmoil for workers in the Brainerd area. He remembered his Seafarers International Union activity 20 years ago when worker reductions were taking place and employees sat in his Duluth office.

"It's something you never forget," he said. "It's a helpless feeling." (Brainerd Dispatch, 26 March 2002)

April

Potlatch Workers Can Apply at Cloquet Plant

Potlatch employees with specific skills in Brainerd may apply for jobs at the Cloquet plant.

Stephanie Hall, communications manager for Sappi Fine Paper North America, confirmed the corporation began taking applications Tuesday and will have job interviews in Brainerd during the weeks of April 15 and April 22. The deadline for job applications is April 19.

Hall said Sappi is targeting existing Potlatch employees for the job applications.

Brainerd plant workers are targeted further to those with experience or skills in four areas—power and recovery, paper making—including off-machine coating, calendar operations and maintenance.

Sappi managers were on-site at the Cloquet plant today and Wednesday to disclose new terms and conditions for employment with workers there. Hall said the system is the same for both Cloquet and Brainerd employees in terms of applications and interviews.

Sappi's plan is to maintain or exceed current pay levels, Hall said. Pay typically covered a range from $14.50 to $25 per hour. But Hall said there will be a reduction in how many levels of pay are offered.

Pay levels were based on a combination of longevity and skill levels. Another change will come in benefits as employees will now contribute 20 percent to dental and medical premiums. Previously there was no employee contribution.

Just after the sale agreement was announced between Potlatch and Sappi Limited, Sappi stated it planned to reopen negotiations and was looking for a more flexible union contract.

In the agreement, Sappi purchased the Cloquet plant and its assets. The Brainerd plant is expected to close in less than 60 days. The sale is expected to be finalized in mid- to late-May.

Paper, Allied-Industrial, Chemical and Energy Workers International Union represents union workers in Cloquet and Brainerd. The Cloquet mill had 1,100 jobs. After the sale was announced, Sappi told workers in Cloquet they had to reapply for their jobs.

Hall said Sappi's intention is to gain employees from the existing work force. Sappi anticipates there will be a reduction in jobs at the Cloquet plant, Hall said.

Cloquet, with a population of 11,201, is located about 86 miles northeast of Brainerd. A typical drive from Brainerd to Cloquet can take two hours.

Cloquet's population grew by 2.9 percent in the last census while Brainerd grew by 6.7 percent. (Brainerd Dispatch, 04 April 2002)

Potlatch—More Than Paper

The other morning I heard a story about how a very uninformed person was saying things like "Potlatch employees are finally getting what they deserve, and now they know what it is like for the rest of us. "... Fortunately and appropriately, the Potlatch employee that was present confronted this individual directly. As you might guess, this individual's source of information was revealed to be the seldom accurate "what I hear up town".

The closure of the Brainerd mill and the resulting loss of jobs is a small fraction of what this community will lose as a result of this closure. The logo hanging on the side of the building "Potlatch People Make it Better" is not limited to the production of paper. We are not only paper mill workers, we are Sunday school teachers, baseball coaches, firefighters & firefighter instructors, first responders and EMT's, PTA members, motorcycle safety instructors, United Way volunteers, township supervisors, softball coaches, basketball referees, swimming coordinators, Boy Scout and Girl Scout leaders, 4H leaders, Salvation Army bell-ringers, American Cancer Society volunteers, and those involved in the numerous local organizations. Who will donate gifts to the 350 children through the Sharing Tree program? I am sure this is just a short list of all the charitable organizations Potlatch employees participate. In addition, the pay scale at Potlatch provides the opportunity for our family members to volunteer in similar organizations.

For those people who choose to paint Potlatch Employees in a negative light, ask them if they are ready to be the next Boy Scout leader, or Sunday school teacher, or put on fire-fighting gear and run into burning buildings. The famous country singer George Jones may have said it best in his song "who is gonna fill their shoes?"

Potlatch employees have many reasons to take pride in this mill and this community. I dare you to find a higher quality of life anywhere else. Many of us will likely be able to remain in this community and continue to enjoy what we have helped to build. Those of us that find opportunity elsewhere will become involved in making our new communities as vibrant as the Brainerd Lakes area. (Brainerd Dispatch, 09 April 2002)

FOR SALE: PAPER MILL

Potlatch, Community Leaders Upbeat About Finding a Buyer

Potlatch managers and community leaders are guardedly optimistic about reaching a suitor for the Brainerd mill.

Potlatch hired the firm of Jaakko Poyry, a well-known forest products industry consulting firm based in White Plains, N.Y., to help find a buyer for the Brainerd mill. Jaakko Poyry representatives visited the Brainerd mill earlier this month. They reported being impressed with the mill's clean environment, well-maintained equipment and the workforce. Tom Brotski, Potlatch plant transition manager, said Jaakko Poyry's addition is exciting.

"They will help us with the marketing and sale of the mill," Brotski said, noting Jaakko Poyry, which has its worldwide headquarters in Helsinki, Finland, is respected as an information resource in the industry. Brotski said the consulting firm will be looking at opportunities to make other types of paper at the mill that will not interfere with the non-compete clause with Sappi Limited.

Brotski said the consultants looked at the equipment and will help with an analysis, which typically takes several weeks. But Jaakko Poyry agreed to feed Potlatch information as soon as it became available.

"That was very encouraging," Brotski said.

Potlatch Strategy Team

The community strategy team includes the Brainerd Lakes Area Chambers of Commerce; Brainerd Lakes Area Development Corp.; cities of Brainerd and Baxter; Brainerd WorkForce Center; Central Lakes College; Crow Wing County; Brainerd School District; Initiative Foundation; Paper, Allied-Industrial, Chemical and Energy Workers International Union Local 79 & Local 164; and Potlatch management.

Several other organizations and elected officials have also been involved, including U. S. Sens. Mark Dayton and Paul Wellstone, U. S. Rep. James Oberstar, state Sen. Don Samuelson, Minnesota Department of Trade and Economic Development, Region 5 Development Commission and Minnesota Power.

Representatives of the cities, chamber and BLADC have presented a community response outline to Potlatch leaders for their review. The strategy team will be meeting shortly to finalize a coordinated action plan for a variety of response areas including marketing/economic development, employee assistance, communication and community issues.

Source: Brainerd Lakes Area Chambers of Commerce.

Since the first hours after the closing announcement, Potlatch stated it was working on two fronts. One was to provide as much information and assistance possible to mill employees. The other focus was finding a buyer. Brotski said one of the key aspects comes with the existing workforce.

"That's the key asset here," he said. "We have people who can really generate great new ideas."

Potlatch put together a booklet of mill information complete with color photographs to help market the mill. The booklet details the 128 acres and about 400,000 square feet of main building space. It also has megawatt and gallon information on the hydroplant's power capacity, which averages 19 million kilowatt hours per year and the 3 million gallon capacity wastewater treatment plant. Other information included involves the overhead cranes, boiler capacity, two switch engines, two paper machines, two rail and eight truck docks, a steam power plant, and workforce demographics.

Brotski said the goal is to maintain some or all of the jobs at the Brainerd mill.

Lisa Paxton, Brainerd Lakes Area Chambers of Commerce chief executive officer, said the community has been working behind the scenes for the same goal. Those efforts began the morning the plant closing was announced on March 18. Specific roles were outlined for an organized effort.

Before the end of the month, at least one community meeting is being planned to present information about the status of the Potlatch Brainerd mill closure, marketing efforts to find a suitable buyer, employee assistance programs and community response plans.

Brotski said the community response and its relationship with the plant will be important in marketing the plant as interested buyers come looking. Potlatch's availability has generated interest in the plant. Liberty Paper Inc., a state-of-the-art paper mill located in Becker and a division of Liberty Diversified Industries, a large privately held company in the Midwest, toured the Brainerd mill earlier. The Department of Economic Trade and Development reported receiving other interested contacts.

Rebecca Yanisch, DTED commissioner, said the attorney general's and DTED's first priority is to get clarification regarding what types of paper product can be made in the Brainerd mill. Yanisch said a meeting was set with Sappi representatives for that purpose. Yanisch said there is a strong sense of urgency in moving forward and a view that the Brainerd community should not bear the brunt of business inflexibility.

Early on Yanisch said both sides were committed to saying they wanted to do the right thing and now she said it is important to sit down and get to the bottom of details. One consideration remains the selling price.

Frank Carroll, Potlatch spokesman, said the company is committed to selling the plant for as little as a dollar to another paper company that could employ the existing workforce. If another kind of manufacturer was interested the sale price becomes negotiable, Carroll said. Yanisch said there have been conflicting stories on the sale price from Potlatch and Sappi.

Yanisch said the state is committed to work for the Brainerd community in finding a buyer for the mill.

Area leaders with similar objectives met with Potlatch managers three days after the closing announcement to try to understand what the community's role might be. The result was a coordinated effort with several approaches running simultaneously.

The community strategy group wanted to make sure services were available for employees. They wanted to pursue state and federal government assistance in terms of economic development. And they wanted to market the plant.

The mining experience at LTV in Hoyt Lakes helped. Northspan Group Inc., a non-profit solutions provider for business and community development, shared its experience in northern Minnesota. Randy Lasky, Northspan Group president, talked to the Brainerd area group about grant opportunities and how to put together a coordinated community response.

The chamber reported regional directors for Minnesota's two Democratic senators Paul Wellstone and Mark Dayton attended the meetings with Lasky.

Lasky told the group he was impressed with the community coordination and commitment to looking for a solution. He also said the Brainerd area group had made significant progress in three weeks to develop a collective strategy. (Brainerd Dispatch, 14 April 2002)

Write-Off for Paper-Segment Sale Overwhelms Potlatch Report

SPOKANE, Wash. (AP)—Potlatch Corp. wrote down the costs of its decision to get out of the printing paper business—including the planned closure of its paper mill in Brainerd—to create a $167.4 million first-quarter net loss.

The Spokane-based company said the $149.8 million charge pushed its per-share loss for the January-March quarter to $5.90.

Potlatch took the write-off to cover the cost of the pending $480 million sale of a majority of its coated printing paper segment assets to Sappi Limited including its mill in Cloquet, closure of the Brainerd mill and its exit from the business.

But excluding those one-time costs, Potlatch's loss on continuing operations was less than Wall Street expected and just half the red ink reported a year earlier.

Potlatch has hired a forest products industry consulting firm to help in the search for a buyer for the Brainerd mill, which employed 616 workers and is set to be shut down in about two months. The firm will look at opportunities to make other types of paper at the mill that will not interfere with a noncompete clause in Sappi's agreement to buy Potlatch's coated fine paper business and the mill in Cloquet. (Brainerd Dispatch, 18 April 2002)

After Potlatch Goes, What Next?

As the closing of the Potlatch mill nears, community leaders are grappling with unknowns. Wednesday a strategy group met to form specific action plans.

About 50 people, including members from Potlatch's transition team and the community strategy group, met for three hours Wednesday morning at Cragun's Resort near Brainerd. The goal was to identify strategies in three major areas, establish small group leadership and set up future meetings if needed. After break-out sessions on employee opportunities, economic development and the impact on the community, Potlatch strategy meeting participants came up with several plans and areas of continuing effort.

Plans that worked in St. Cloud for Fingerhut's closing and in Hoyt Lakes in response to LTV's closing also were suggested. Group participants agreed an opportunity fair or resources fair should be established. A $2 million retraining grant proposal was submitted to the state Friday that could include assistance for two-year college degrees.

Tom Brotski, Potlatch plant transition manager, said the collaboration of effort has been important to people at the mill. Employees signed a severance package Tuesday. Potlatch determined 170 of its employees are within five years of retirement and 98 are eligible for benefits now.

A community meeting to discuss information gathered in response to the impending closure of Potlatch's Brainerd mill is set from 7 to 9 p.m. May 7 at Tornstrom Auditorium, Washington Middle School, Brainerd.

Brotski said the mill's closing date, anticipated in May, is a moving target. He said the lack of a final work day is frustrating for employees, but depends on decisions between coated printing papers division buyer Sappi Limited and Potlatch.

"As soon as we can nail it down we will do that," Brotski said.

Beyond that Brotski said all efforts are being focused on finding a buyer for the mill.

After group sessions met, people returned to the general session to summarize action plans. Lisa Paxton, Brainerd Lakes Area Chambers of Commerce chief executive officer and group facilitator, said the groups came up with a lot of great ideas.

The economic development group suggested looking into state economic development grants to hire help to put all the strategy team's information together and pursue items.

Ideas included getting risk capital to attract technology companies, detailed skills assessments for Potlatch employees, grants to help existing businesses expand so they can hire more workers and the review results from Potlatch's consultant, Jaakko Poyry. The Initiative Foundation offered to fast-track a healthy communities study to assist Brainerd in planning. Another plan is to analyze other paper mills that have closed in the past year or so.

The employee opportunity small group came up with several action plans, including the need to have a dedicated place for employees to meet and get information from multiple agencies and sources after the mill closes. The union is expected to play a significant role there. And a Web site is being put together to allow employees to keep in touch in the future.

A career exploration day is set at the mill with college representatives, Minnesota Department of Trade and Economic Development officials and Business and Industry Center members. A job fair was another plan that may be in place by June. Help also is being set up for the expected 10 percent or 60 workers who decide to open their own businesses.

Other areas of interest included Potlatch's acreage, roughly 75 acres, across the river from the mill near Riverside Drive. And there was a ripple question regarding how area vendors will be affected by the mill closing.

For many of the questions, the answers remain elusive. Among the unknowns are what the mill's closing will mean for the community in the next year. Major questions revolve around the complex human response to 616 job losses. How many families may leave the community? How will resources get to those who need help but may not ask for it? How are efforts best combined to attract a mill buyer?

Some Potlatch managers are expected to leave the community, workers with particular skills from pipefitters to electricians are expected to have job offers, others may hunker down for several months before making final plans.

"That is the unknown," Warren Williams said in a small group session.

In the short term, prospects are for reduced spending as Potlatch employees look at bills from a $50,000 a year lifestyle that may be replaced by a reduced earning potential closer to $30,000 per year. Ripple effects are expected. The housing market could change to a buyer's advantage if sales prices fall as more houses enter the sale listings. Lending institutions, particularly ones with a high percentage of Potlatch employee loans or mortgages, may see initial fallout if any bankruptcies come to pass.

Weekly meetings were set between the strategy team and Potlatch's transition team since the mill closing was announced March 18. Information has been gathered regarding plans to find a buyer for the mill, employee assistance options and the overall effect on the community. Wednesday representatives from Brainerd, Baxter and Crow Wing County attended the session.

"The community has really stepped up," Brotski said. He noted contributions, including Brainerd Police Chief John Bolduc who helped with crisis intervention information.

Karl Samp, community impact group facilitator, said studies have shown whether people stay or leave a community depends more on whether they feel connected to the people instead of wages. (Brainerd Dispatch, 26 April 2002)

May

Potlatch Employees Updated on Community Efforts

Potlatch employees were given an update Wednesday on community efforts in the wake of the mill closing announcement.

"I appreciate everything everyone is doing, because I need my job back," said Steve Metzler, Potlatch worker.

Community leaders from Brainerd, Baxter and Crow Wing County met with employees in four hour-long sessions throughout the day. Employees watched a Power Point computer presentation by Larry Kruse, Baxter city administrator, about the mill's assets. The presentation was updated to include recommendations that came from the recent community strategy team meeting at Cragun's resort.

"The community cares," said Heidi Funk, Crow Wing County United Way executive director. Funk said the community is aware of the contributions Potlatch workers have made. Funk reminded employees of the coming opportunity fair, one of the outcomes from the strategy meeting, and a job fair in the planning stages.

Lisa Paxton, Brainerd Lakes Area Chambers of Commerce chief executive officer, outlined community efforts in the hours and days after the closing announcement. And she said learning from the LTV closing in Hoyt Lakes has put the Brainerd area far ahead in terms of response.

"We want to let you know that we are moving and moving quickly," Paxton said, noting goals are to get people back to work and find a viable use for the mill. "We don't have all the answers. We are finding them as you are."

One coming action is a trip to present the strategy team's efforts to the Department of Trade and Economic Development. Another is the community meeting set from 7-9 p.m. May 7 at Tornstrom Auditorium in Brainerd.

Employees, sporting safety glasses and with ear plugs hanging from threads around their necks, listened to ideas for possible mill uses and to updates on companies that have expressed interest. Beyond a paper mill, one possible use has been for the manufacture of modular housing.

"We want you to be aware there are a lot of people working," Kruse said. "... We need to keep you here and keep you active in our communities. ... We can talk all we want but we have to come up with an action plan."

And Kruse said efforts are moving in that direction.

Sheila Haverkamp, Brainerd Lakes Area Development Corp. executive director, also spoke of addition of jobs with Lexington Manufacturing's growth and the addition of TEAM Industries to Baxter, along with Lindar Corp. and Liberty Tool. She said BLADC services will be available to any business interested in the Potlatch mill.

Potlatch feasibility team members and community leaders all said they are waiting for the Jaakko Poyry consulting group's results in regard to marketing the mill. And there was the impression that time is running short.

Jeff Carlson, Potlatch feasibility team member, said a 15-16 minute videotape was also created with a professional voice over. Carlson said team members wanted to get the video while the mill was in operation. The video will be available to employees for viewing. Potlatch also has been running trials, working with colors, to see what other products could be made.

"We are surprising ourselves in all the flexibility we have in this operation," he said. (Brainerd Dispatch, 02 May 2002)

Yanisch Says Language in Pact May be Snag in Mill Marketing

Clarification of non-compete status in the sales agreement may be a sticking point in efforts to market the Potlatch mill quickly.

Rebecca Yanisch, Department of Trade and Economic Development commissioner, said Thursday afternoon her department and the state attorney general's office have been working with Potlatch and Sappi Limited to get clarification on the noncompete language in the sales agreement.

"We made it clear, and the attorney general made it clear, that language is a problem," Yanisch said.

Yanisch said at this point the state agencies have not gotten the answer they would like. She said the noncompete language is really what the state is still trying to work through. Yanisch met with Sappi representatives earlier in an effort to clarify the language. At stake is how the plant can be marketed and where to focus attention if certain products the mill is capable of creating remain off limits.

"My goal is to get clarification in the next two to three weeks," Yanisch said. "I feel a real sense of urgency here."

Since the March closing announcement, Yanisch said the state has learned just how difficult the paper market is.

"Anything we can do to increase options for reuse of the plant is crucial right now," she said.

Yanisch will meet with Sheila Haverkamp, Brainerd Lakes Area Development Corp. executive director, and others Monday afternoon to look at the community strategy team's efforts and potential reuses for the mill.

The state also is encouraging Potlatch to share the results of the Jaakko Poyry consultant analysis. Potlatch officials say some of the consultant's findings may not be put in writing in order to protect confidentiality from Jaakko Poyry's research sources in the paper industry.

Minnesota Attorney General Mike Hatch could not be reached for comment. His press secretary, although familiar with the Potlatch sale agreement language issues, said Thursday that because Hatch was busy he may not be able to return calls to respond to the contract language issue between late Thursday afternoon and this morning. Today Hatch's press secretary said all questions were being referred to Yanisch.

Potlatch has not announced the mill's closing day. Speculation is the closing announcement will be down to the wire, leaving little advance notice.

At employee meetings with community leaders Wednesday, employees had questions about communication efforts after the mill closes. Options listed include a mailing list of employees and continuing newsletters, as well as a Web site.

Steve Metzler, Potlatch employee, said rumors are continuing that if the mill is not sold by fall, the equipment will not be in shape to restart later.

"A lot of people up on the floor are nervous," Metzler said.

Maintenance staff reported they are doing everything they can to preserve equipment to last up to 16 months after the closure and create minimum cost to restart.

Metzler also asked whether Potlatch employees will have "first crack" at jobs if a buyer is found. Officials said that will depend on the buyer.

Lisa Paxton, Brainerd Lakes Area Chambers of Commerce chief executive officer, said Potlatch employees are the ones who know the mill best and have the skills to be an asset to a potential buyer.

While many efforts are combining between the community and Potlatch to market the mill, employees were recently advised not to go home with their severance packages and fish until fall.

"You can't bank on something happening," Jeff Carlson, Potlatch feasibility team member, told employees at a meeting Wednesday. "It may be a year. It may be two years. You have to make decisions based on your own situation."

However, Carlson said the community strategy members and Potlatch's team are optimistic.

A Potlatch mill picnic is set from noon to 4 p.m. May 18 in Loren Thompson Park in Baxter. Don Andersen, Potlatch acting plant manager in Brainerd, said the picnic will help provide needed closure for some employees. (Brainerd Dispatch, 04 May 2002)

Sen. Samuelson Describes His Efforts to Lessen Impact

Sen. Don Samuelson said he asked if there could be a more gentle phase-out at Potlatch versus a quick mill closing once a sales agreement is signed.

Samuelson, DFL-Brainerd, drove up from St. Paul to attend a community meeting Tuesday regarding the Potlatch closure. It was the first time the senator was able to speak at a community gathering since the mill's closing announcement.

Samuelson met with Potlatch and Sappi Limited representatives several times since the announcement to discuss what the mill can make and what the non-compete clause means. Samuelson met with L. Pendleton Siegel, Potlatch chairman, in St. Paul Tuesday morning.

Siegel reassured Samuelson Potlatch is willing to market the mill for a reasonable sale price.

Samuelson compared the Potlatch efforts to the Hennepin Paper Co. closing in Little Falls where the mill owners walked away leaving unpaid debts in the community and left the plant to decay. Now Samuelson said there is a $5 million price tag on a cleanup effort to keep the mill from falling into the river, creating a bigger environmental disaster.

The senator said Potlatch has been a good corporate citizen and paid good wages.

"I believe they are helping through the process," he said, noting Potlatch thinks there are two or three products that may be allowable within the confines of the non-compete clause. And Samuelson said he is continuing to meet with the attorney general once or twice a week regarding the sales agreement, the non-compete clause and making sure federal and state laws are met. He reported the Minnesota Pollution Control Agency confirmed existing permits will be automatically turned over to a new company should a buyer be found.

Keeping the mill as a paper plant is what Samuelson hopes is a first priority. He said models evaluating such job losses use a multiplier of at least three for each employee when translating the effect on the community, which means the numbers could be equaled in the thousands.

From employees, Samuelson said the questions he fielded have often revolved around severance packages, 401(k) accounts and unemployment benefits.

"Employees are understandably nervous about those things," he said.

In response to concerns about insurance benefits, Samuelson said at this point the Legislature is not willing to waive the four-month waiting time for Minnesota Care.

Samuelson met with state agencies and the attorney general after learning the mill was going to shut down. He said the first effort was trying to make sure state resources were ready to cover needs. Samuelson received calls noting Burlington Northern Railroad employees did not get the help Potlatch workers are receiving. He said the difference is such programs did not exist in those days and the current effort is an improvement.

Samuelson told meeting participants he is willing to help in any way.

After hearing reports from other communities about other plant closures, Samuelson said the news hit home with Potlatch's announcement in March.

"All of a sudden we are hit with it." (Brainerd Dispatch, 08 May 2002)

POTLATCH POWWOW

Crowd of 30 at Meeting Told End May Come by Monday

The Brainerd Potlatch Mill could close as early as Monday if the sales contract with Sappi Limited is signed, but officials cannot confirm that date yet.

That update was one of the new pieces of information coming from the community meeting regarding Potlatch at Tornstrom Auditorium Tuesday night. A small contingent of employees will remain at the mill for two to three months after the official closing and then those numbers will again decrease.

About 30 people attended, including presenters. Outside posters, created by area students with colorful Potlatch images, decorated the halls. Many written messages wished employees good luck in finding new jobs they can love.

Tom Brotski, Potlatch transition team, said the children's art illustrated the link between the mill and the community.

"I want to thank the community for immediately stepping up the way it did," Brotski said.

Brotski said efforts are continuing to put together a marketing plan that stresses what is unique about the Brainerd mill, the community and the state that will interest a buyer. Two interested companies have visited the mill. Contacts were made to five to seven others who asked their names remain confidential. Another meeting is expected Friday. One option for a product line is the paper that comes on the back of roof shingles or labels.

"We really hope we are successful," Brotski said of marketing efforts. Looking at other mill closings in the last year among Potlatch competitors, Brotski said the competition to attract a buyer is fierce. "The task is monumental in finding a buyer. I'm excited about trying to do that. Everyone at the mill is excited about trying to do that."

The mill is currently running trials, creating different types of paper on machines to test abilities. A palette was displayed outside the meeting with a mix of pastel colored paper produced in the trials.

Questions from attendees included why Potlatch is not interested in pursuing the Brainerd mill for a different product line such as the colored paper or the company's new hot commodity consumer tissue products.

Brotski said Potlatch's direction is now with forest products and tissue. With the sale of the printed papers division to Sappi, Potlatch is leaving that market. Difficulty in competing with giant companies, such as division buyer Sappi Limited, was listed as one pressure.

Frank Carroll, Potlatch public affairs director based in Cloquet, said the company is looking to expand in the consumer products tissue market and will undoubtedly need a tissue mill. But Carroll said the mill will need to be closer to markets than the Midwest, largely because of freight costs.

Siegel and Potlatch looked at ways to stay competitive for a long time, Carroll said. Millions were invested in the pulp mill at Cloquet. With the company's debt load, Carroll said money was not readily available to do a similar upgrade at Brainerd's location.

He pointed to the Brainerd mill's smaller paper machines and an inability to compete with the production of larger machines at other plants. Five years ago Carroll said the company was a believer it could be successful in the fine papers division and felt like a substantial company in the world. But, Carroll said the market went south. The economy and the industry, strong U.S. dollar and global market—with papermakers in China and Indonesia—combined to make that corporation feel small. The company began losing millions each year.

Potlatch put $26 million into updating the Brainerd mill's No. 6 paper machine a few years ago, but a new machine would cost about $750 million. Carroll said the Brainerd mill is a wonderful facility with the finest paper artists and two small state-of-the art 1964 machines making fewer tons of product—less than 600 tons per day—than other mills. Carroll said a big tissue machine makes about 800 tons per day.

Cost also was an issue. Carroll said making paper at the Brainerd mill cost $200 per ton more than Cloquet—$140 was in labor costs and $60 of that was in pulp costs. Pulp is dried and baled and shipped to Brainerd before it is put back into the mixers to make paper. For Sappi, it may make sense to expand paper mill capabilities near its other facilities in Cloquet.

"Sappi can do what we couldn't do," Carroll said.

Carroll said Potlatch, once a company making $100 million in profit per year, was faced with red ink from its biggest divisions, was faced with the choice of fixing the mill, selling it or shutting it down. Sappi Limited provided the deep pockets for the purchase of Cloquet, which makes 800 more tons of pulp per day than needed. Carroll said Potlatch is also a 100-year-old company with a long history of being in communities. And when people call it big business, he said the business is really the people sitting in the auditorium.

"Potlatch is not a company that has a reputation for cutting and running," Carroll said. "And we are not going to do that now."

L. Pendleton Siegel, Potlatch chairman, also attended the Monday meetings in St. Paul. Potlatch officials met with the state's attorney general and Rebecca Yanisch, Department of Trade and Economic Development commissioner, and discussed the non-compete clause.

About 480 Potlatch employees have registered for the Dislocated Worker Program. No date has been set for the employee job fair. Workshops also are being planned to provide information on starting a business. And a well-received education session conducted at Potlatch that covered college opportunities may be repeated. (Brainerd Dispatch, 09 May 2002)

Paper Mill to Close Monday

The Brainerd Potlatch Mill will close Monday.

Potlatch Corp. confirmed it will close the paper mill and leave the coated printed papers business on that day. The 616 employees were informed Wednesday afternoon.

Operations will continue through May 17 in parts of the Brainerd mill to finish processing inventories.

Today employees at the Brainerd mill said having a final date was better than being kept in suspense. Some workers have lined up other jobs and were waiting for the closing date to make new arrangements.

"It helps bring closure to everybody," said Tom Brotski, Potlatch feasibility team.

Don Andersen, acting Brainerd mill manager, said many pieces of equipment will be shutting down this weekend. The No. 6 paper machine will continue to operate through Monday morning. Crews will be involved in mill clean-up efforts into next week and will leave the mill at different times.

Andersen said workers at the mill are in mixed stages of emotions. He said some people are looking for the closing confirmation.

"Until you see some of that on paper it isn't really real," Andersen said of the closing announcement. "For many it's real. For some it's 'I'm glad it's finally here. I just want it to be over.'"

Andersen said workers in the mill are dedicated to operating the mill well through the last hours.

"People in the Brainerd mill really want to go out of here with their heads held high," he said.

Andersen said plans are to load inventory by Friday. Maintenance staff and a "wind-down" crew will to work in the mill. Arrangements for final paychecks are still being made.

Potlatch announced the sale of its printed papers division and the Cloquet pulp and paper mill on March 18. South African-based Sappi Limited purchased the Cloquet mill and related assets for $480 million. When the sale agreement was announced, the anticipated mill closing date was May 16.

Potlatch's sale to Sappi included coating equipment in the Brainerd mill and a non-compete clause in regard to Sappi's operation. Potlatch retains ownership of the Brainerd mill and has pledged to continue to market the mill and search for a buyer. (Brainerd Dispatch, 10 May 2002)

Sappi to cut 200 Positions As it Takes Over Cloquet Paper Mill

CLOQUET (AP)—About 200 hourly positions will be eliminated when Sappi Fine Paper North America takes over the mill in Cloquet from Potlatch Corp.

Sappi signed an agreement with Potlatch on March 18 to buy the mill and expects the deal to close as early as next week.

As the $480 million sale is structured, Potlatch will terminate all of its hourly employees in Cloquet when the deal closes, and Sappi will then hire 580 people to operate the mill. The "vast majority" of them will be current Potlatch workers, Sappi spokeswoman Stephanie Hill said.

After the deal closes, Hill said, Sappi expects to negotiate a new contract with the Paper, Allied-Industrial, Chemical and Energy Workers International Union. The existing contract will not transfer.

The salaried work force is expected to remain largely unchanged, Sappi said. The mill currently employs about 1,000 hourly and salaried workers combined.

Potlatch is getting out of the coated fine paper business. It's closing its paper mill in Brainerd on Monday, though parts of it will keep operating through next Friday to finish processing inventories. The Brainerd mill had 616 employees.

Sappi Fine Paper North America is headquartered in Boston. (Brainerd Dispatch, 11 May 2002)

Paper Mill Machines Begin Shutdown

Before sunrise this morning, the last paper ran through the No. 6 paper machine at Potlatch. Then workers began shutting it down.

One of No. 6's last duties before the 5:05 a.m. shutdown was creating paper trials. Those trial runs, including the previous creation pastel-colored paper products, have been used to show the versatility of the machine and the people who operate it.

At the mill there is still hope the equipment shutdown will be a temporary one—until a buyer is found.

A meeting last week in Minneapolis between Potlatch's team working to market the plant and an interested party was called encouraging. Feasibility team members presented information and are waiting to see if the undisclosed company's interest is enough to generate a site visit.

Today workers reported for regular schedules. Piece by piece they will move through the mill, preparing equipment to sit idle for an indefinite time. Paper made in the last days of production will be shipped out.

"If we did find a buyer, we'd be ready," said acting mill manager Don Andersen.

Most employees will leave the mill Friday.

Tom Brotski, Potlatch feasibility team, spent much of the weekend at the mill. He said today efforts are focused on getting through the equipment shutdown.

"It's sad," Brotski said of the mood in the mill. "It's been sad for a lot of people. It's the last time they are going to see people in this work environment."

Brotski said relationships with co-workers, people who have worked together 10 and 20 years, are behind the greatest sense of sadness. But with all the turmoil and uncertainty since the March 18 announcement that the mill would close, Potlatch workers still met production goals.

Brainerd mill management and employees are also reaching out—with newfound job loss expertise—to assist 200 Potlatch's Cloquet employees whose jobs were cut in Sappi Limited's restructuring.

A farewell picnic for Potlatch Brainerd mill workers is set for Saturday. A plan is to gather as many workers as possible for a group photo.

"I think that is going to be another emotional time," Brotski said. "I think it's important people meet with their friends. ... It's no longer about Potlatch, it's about the relationships they've had." (Brainerd Dispatch, 14 May 2002)

Help Arranged for Potlatch Workers

As the mill shuts down, former employees will be able to turn to the union office at Brainerd City Hall and the WorkForce Center on South Sixth Street to get information on services and support.

May 24 will be the last payday. Hourly workers who do not have direct deposit will be able to pick up paychecks at the mill. Severance checks will be mailed or sent out via direct deposit.

Human resources personnel will be at the Brainerd mill in June, July and August to assist workers with questions they might have in the coming months.

A Potlatch team was sent Monday from the Brainerd mill to start group presentations to employees at Cloquet in group and one-on-one sessions.

As many as 50 Brainerd mill workers have been offered jobs from Sappi Limited, new owners of the Cloquet pulp and paper mill.

"Some people are deciding not to take jobs," said Tom Brotski, transition team manager, noting individual family considerations.

Workers who remain at the mill this week are preparing equipment for long-term storage. Employees will stay on to monitor the hydro plant. Others will stay a week-and-a-half to shut down the waste treatment facility.

Maintenance workers will be in the mill for another three to four weeks in the shutdown process. And the Potlatch phone will be answered until June. Conditions are complicated by the shared Audix voice mail system shared between the Brainerd mill and Cloquet. There will be no voice mail in Brainerd until provision is made for an alternate system.

"That technology won't be there for us until we think of a way to replace it," Brotski said. (Brainerd Dispatch, 14 May 2002)

THE GREAT FENCE OF POTLATCH

It's a Sign That Paper Mill's Days Coming to an End

A long fence being erected along the north and east sides of the Potlatch property serves notice that the paper mill's days are coming to an end.

The fence is being put up to keep people out of the plant after it's vacated. On Monday, which was the last work day for some Potlatch workers, a crew from Deerwood was working to get the 8-foot high chain-linked barrier in place.

Potlatch's Brainerd mill is closing down.

Most of the work force will be gone by the end of this week. The workers are spending their last days shutting down and taking apart the equipment they've run for years.

Vernon Shields, who has been working at Potlatch for 36 years, spent Monday shutting down the paper machine he had been running the past 15 years.

Shields said the mood was down at the paper mill Monday, but there was also a sense of relief and finality.

"People are glad to see an end because it's been pending so long," said Shields. "We all want to move on."

Fellow employee Hans Anderson compared the rumors of the closing and the actual announcement to the longest funeral ever. And while the mood was sullen after the initial closing announcement, Monday it was amplified, Anderson said.

"Usually people are out here joking, relieving stress," said Anderson, enjoying a cigarette at the sheltered smoking area outside the employee entrance at the paper mill. "There's a lot less of that today."

Tom Brotski, Potlatch plant transition manager, said this week has been pressing all the details and plans begun March 18 into a final few days.

"It's all coming to a head right now," he said from a seat in the lobby. Stress was visible on faces inside the mill Monday afternoon.

"After Friday, it's all done," Brotski said.

Brotski sighed and said March 18 seems so long ago.

"This morning is so long ago," he said and sighed.

Frank Carroll, Potlatch director of public affairs, was at the Brainerd mill Monday afternoon. News camera crews were among the visitors who signed in at the guard shack.

Sitting for a moment after one interview ended and as another began, Carroll said he still has the checklist of people he called before 8 a.m. March 18, letting them know the mill was closing.

That was nearly 60 days ago. Monday the reality of the mill closing was setting in. As one shift ended about 2 p.m., one man brought a plain cardboard box out to a car in the parking lot.

Top: A mill worker monitored the papermaking process. Bottom: A fellow worker operated the winder on No. 5 paper machine, ca. 1930’s. Source: Brainerd Dispatch

Some employees working on 12-hour shifts had their last day at work during the weekend when No. 5 paper machine was shut down or Monday as No. 6 paper machine took it's last gasp for Potlatch.

Brotski walked in the mill over the weekend as some equipment began to be shut down. In a mill that employs the number of people who fill a small town, the interior can be daunting for the uninitiated.

Single-file walking paths marked in yellow paint glide between and around massive equipment. But for first-timers, it's a tough path to keep track of without a guide. Brotski said the weekend walk through was an emotional time.

Even if a buyer is found, expectations are not for an employment level that matches the 616 workers who are jobless following the mill closure.

Transition team and feasibility team members, who have been working to market the mill and help workers through the change, have not been paying as much attention to their own life boats.

"They've been selfless," Brotski said. "I don't want them to be burning out on this."

Brotski said the effort to find a buyer is going to be a long haul.

While he plans to retire, Shields said he feels bad for his fellow employees who'll have to "scrounge for a living."

But several employees, like Anderson, said they plan to stay in Brainerd and look for work. (Brainerd Dispatch, 15 May 2002)

Resource Office for Potlatch Workers Opens Next to City Hall

Potlatch union officials have opened an information and resource office in the former senior center next to Brainerd City Hall.

Bob Harting, president of Paper, Allied-Industrial, Chemical and Energy Workers International Union Local 79, said the office will be staffed sporadically this week until mill shutdown efforts are completed. On Monday regular office hours of 8 a.m. to 4 p.m. will be set.

Harting said the office will coordinate information after meeting with organizations offering services to displaced Potlatch workers. Internet access is available in the office for additional research efforts.

Harting said the mood inside the mill has been more somber this week. While announcements about the resource office's opening were available to many employees, Harting said some workers had already completed their last day at the mill before all details were set.

"We'll be here to help route them to whatever organization can do the best for them," Harting said of employees. (Brainerd Dispatch, 15 May 2002)

From the Ashes, Hope

On Paper Mill's Last Day, Attorney General Hatch

Sues Potlatch and Sappi Limited

Today was expected to be the end of an era in northeast Brainerd, but a state lawsuit was the topic of conversation and rising expectation.

"It looks like Mike Hatch is going to help us," Les Museus said as he drove through the Potlatch rail yard this morning.

Even after the weeks of preparation to shut down the Potlatch mill, the finality of the last day was difficult. Museus said: "It's hard to believe."

Minnesota Attorney General Mike Hatch sued Potlatch and Sappi Limited Thursday, saying a sales agreement between the two paper companies was anti-competitive and violated Minnesota law. Hatch is seeking a temporary restraining order to keep the two companies from enforcing non-compete language in the sale agreement. A 9 a.m. hearing is scheduled Tuesday in Crow Wing County.

Frank Carroll, Potlatch spokesman based in Cloquet, said he had not seen the paperwork from the attorney general.

"Until we see it I can't really say anything about it," he said today. "We need to read it and see what he is really saying."

Potlatch Corp. finalized the sale of its Cloquet pulp and paper mill to South African-based Sappi Limited earlier this week. The $480 million purchase agreement included coated paper equipment at the Brainerd mill, but not the mill itself. Potlatch retains ownership of the mill and is actively seeking a buyer. The non-compete clause prevents a potential buyer from competing with Sappi's coated paper business for seven years.

In a memo from Hatch that accompanied the lawsuit, Hatch stated: "The practical effect of this restraint of trade is that no company is likely to purchase the Brainerd paper mill, because to do so would effectively prevent a company from competing in the paper industry."

Hatch also wants the court to require Potlatch to cooperate with Rebecca Yanisch, Department of Trade and Economic Development commissioner, to sell the Brainerd mill to a third party.

Hatch's memo stated at least one coated paper manufacturer is interested in buying the mill but only if the non-compete clause is not in effect. Deputy Attorney General Lori Swanson stated company officials acknowledge the agreement's purpose was to prevent Brainerd employees from using their skills to make coated paper and to reduce the overall capacity in the coated paper industry.

Sappi is the world's largest coated paper maker and—with the addition of Cloquet—it will have a 30 percent share of the U.S. market for coated fine paper.

Today the number of cars in the Potlatch parking lot were dwindling. The chain-link fence was nearly completed along Mill Avenue.

Thursday afternoon a couple brought two young children for a last look at the mill where Daddy worked. The young children had to look through a window from an office area to see where their father worked. Many hourly workers left at noon Thursday. The floor, where Potlatch workers created high-quality glossy paper for decades, was closed. A sign posted on the main entry stated Pinkerton Security presence would be increased.

Workers returned to the mill today to complete clean-up efforts.

About 12 workers are expected to be at work Monday with staff at the hydro plant and the waste water treatment plant along with a few maintenance employees. About 70 salaried employees will be at the mill through the end of the month.

A recent survey of Potlatch workers conducted by the mill found many wanted some breathing room before making their next job decisions. A joint services and job fair has been set July 23 at Central Lakes College. Some people had jobs or interviews lined up and were waiting for the final day at Potlatch to move on.

"I haven't thought about it," a Potlatch worker said, looking back at the mill as he stood in the parking lot. He said during the last week he was just trying to keep his mind off the topic.

"If you thought about it, you might not be able to handle it," he said. "It's like a divorce." (Brainerd Dispatch, 18 May 2002)

Good to the Last Switch

Engineer Clem DeRosier at the Controls as Potlatch Switch Engine Comes to Final Stop

Potlatch's golden switch engine has a steady hum as it sits unmoving on the track. The cab vibrates as the diesel engine waits to work.

Inside the gray-painted interior, there is a bare bulb for light, small stacks of work gloves and an upholstered orange lounge chair that has seen better days.

The switch operator often sits in the orange chair. The engineer is on a swivel seat with a window off the front of the cab and a doorway behind him. Inside there are no wheels for turning. In the Potlatch industrial switch engine, there is only forward and back.

Engineer Clem DeRosier has been at the controls for five years. He worked at the mill for nearly 38 years.

"I'm the old man," DeRosier said. Closing in on 60 years of age in a few months, DeRosier is sometimes called dad by fellow workers. Other names were deemed not fit for general hearing. The same could be said of the switch engine that bears Potlatch's name in familiar green letters.

  Rails curve toward docks at the mill in Potlatch's rail yard. The General Electric golden switch engine handles the lions share of work moving railcars in and out of the mill in all kinds of weather.

Thirteen switches allow the engine and railcars to move from one set of rails to another. The Potlatch yard has nearly two miles of track.

After jumping to the ground to operate a switch control, John Jansen grabs parallel handle bars and uses the two-step medal ladder to reach the walkway leading to the engine's cab. Beneath a cloudless blue sky, the bright sunshine indicated one of the first warm spring days in May.

Jansen was one of a number of yard crew members who worked with DeRosier. A Potlatch worker for 29 years, Jansen joined the yard crew five years ago and began working on the switch engine two years ago.

Even as the days of running Potlatch paper and materials were numbered to less than a week's time, DeRosier had to correct himself to past tense more than once as he talked about training others in to learn the controls.

"We've had a lot of good times," DeRosier said. "We got a lot of work done but we had a good time doing it."

A passing Burlington Northern Santa Fe engine passes by on an outside rail. A capped BNSF worker waves a hand to the switch engine's crew.

They are a tight-knit group. The yard crew has an annual party in the late fall at St. Mathias park. And as workers reached those significant ages of 55 or 60 birthday parties were called for and Jansen's wife made cakes for the occasion. Jokes and not a little amount of badgering went on in the yards over the years. They also pooled their own money to buy feed for the ducks until they attracted groups of 100 and were asked to stop. Eagles and great blue heron can be seen flying overhead or cruising along the nearby river.

Deer and woodchucks also wander into view.

"We enjoy things out here they never get to see in that building," Jansen said.

  Yard crew members watched from the adjoining track after gathering for a group photo in front of the engine as workers began to mark the last days as the Potlatch crew. Brackett Wagner stopped for a last look as Dale Jensen, Les Museus and Bob Scott went back to work.

Jansen uses baseball to rate DeRosier's expertise handling the cars on a given day. Some days are equal to a three-pitch inning. Others are closer to a nine-pitch inning.

"He's the Sandy Koufax of engineers," Jansen said.

DeRosier cuts the throttle when he moves the engine away from the mill toward the rail line that leads to those other tracks and BNSF trains. The grade creates a glide path as the engine moves toward the intersection of M Street and Fourth Avenue. But the engineer feels the reverse change as the engine requires more throttle to move back up to the mill.

Even memories of bad weather were OK because of the opportunity to work outside. Cold gusts of winter air come down the Mississippi River and up into the open railway. DeRosier once froze parts of his face. Later he used petroleum jelly to protect the exposed skin.

A small metal fan on a shelf above the controls is a reminder of hotter days. When the switch engine was busy on hot summer days, the crew removed side covers so airflow could help cool the hard-working engine.

Engineers learn on the job how to judge changing conditions. Rain and coal dust change stopping distances. So does the weight in the railcars. The railcars can weigh 190,100 pounds or more, depending on loads. A 100-ton crane is used at time to pick up the front end of railcars, setting them on the tracks. Then the switch engine takes over.

Friday was the last day the switch engine was expected to do its work for Potlatch. It will be put in the storage shed that straddles a section of track next to its sister General Electric white engine, which is kept in reserve. The engines are expected to remain there until a decision is made to change course from current attempts to attract a buyer to the mill with the building and machinery intact.

The yard crew will continue its annual late fall get-togethers to stay in touch and see who grows old the quickest. DeRosier and Jansen did not hesitate when asked what they'll miss most about working on the engine. Both said the camaraderie and the guys they spent time with outside in all types of weather as they moved the rail cars to and from the mill.

Jansen expects to have more time to work with his berry-growing interests. Jansen grows all kinds of berries and recently started a "pick yourself" berry patch with his wife.

DeRosier has a computer program at home that acts as a train engineer's simulator. Once operating the controls of Potlatch's switch engine is a thing of the past, DeRosier can move even larger trains from the comfort of his home. He can pick mountainous terrain or Chicago's busy rail yards. After recently derailing a few simulated train cars, DeRosier said he already learned a few new things.

"Going down the mountain too fast with too many cars on isn't the thing to do." (Brainerd Dispatch, 18 May 2002)

Potlatch Says Hatch Lawsuit Won't Help Find Buyer for Brainerd Mill

MINNEAPOLIS (AP)—Potlatch Corp. said Friday that a lawsuit filed by Minnesota's attorney general isn't likely to help efforts to find a buyer for the paper mill it closed in Brainerd last week.

Sappi Ltd. closed last week on a $480 million purchase of Potlatch's paper mill in Cloquet and assets of the Brainerd mill, though not the plant itself.

Attorney General Mike Hatch sued Potlatch and Sappi on Thursday, saying their agreement was anti-competitive and violated state law.

As part of the deal, Potlatch agreed not to sell the Brainerd plant to any company that would use it to make the same product—coated paper—that's made in the Cloquet mill. That prohibition is for seven years.

Hatch said the clause makes it unlikely that anyone would buy the Brainerd mill, which employed 616 people.

Mike Sullivan, a Potlatch spokesman in Spokane, Wash., said Friday that the company wants to find a buyer for the plant and find other kinds of paper it could produce, and has found some interest.

"We certainly have the same objective in mind as the attorney general, and that is to find a buyer for that plant," Sullivan said. "We're ready to do everything we can in finding a buyer, and we're not sure how the lawsuit is going to assist us in that effort."

Sullivan said Potlatch closed the Brainerd mill because its operating costs were too high for it to be competitive. Coated paper is widely used for magazines, advertising inserts, catalogs, packaging and books.

"The opportunities for us to find a buyer interested in producing coated paper there are probably pretty slim," Sullivan said. (Brainerd Dispatch, 19 May 2002)

Hatch Makes Case

Attorney General in City to Argue Potlatch Suit

Arguments as to whether Potlatch Corp.'s sale agreement with Sappi Ltd. violated state law were heard in a Crow Wing County Courtroom this morning.

Minnesota Attorney General Mike Hatch sued Potlatch and Sappi late last week saying their $480 million sale agreement was anti-competitive and violated state law. Today Hatch presented his arguments before the court asking for a temporary restraining order prohibiting Sappi from enforcing a non-compete clause. The clause is part of Sappi's sale agreement in its purchase of Potlatch's printing papers division. The sale agreement was finalized May 13, idling 616 workers. Hatch said the clause is hindering efforts to attract a buyer for the Brainerd mill.

"We've never seen a covenant like this in the state," Hatch told the court. Hatch presented the non-compete language to the court in enlarged print on display boards. "We haven't seen anything that makes this legal."

Sappi argued similar covenants are common in sale agreements.

Hatch said the non-compete clause is not between Potlatch and Sappi but in effect is directed at a yet unnamed third party—any potential buyer. Two prospective buyers were noted as expressing an interest in the Brainerd mill, but companies were not interested in making a financial investment when they could not compete in the industry, Hatch said.

Robert DeMay, attorney representing Sappi, said the Brainerd mill is too inefficient and cannot compete. DeMay said Sappi does not believe there is a need to go to trial. DeMay said there is no ground for a temporary restraining order.

Eric Swanson, attorney representing Potlatch, said the restraining order would put Potlatch in an untenable position between its sale agreement and a court order and would not help market the mill.

After presenting arguments, Hatch asked for an expedited court date within two months time. Sappi and Potlatch lawyers rebutted Hatch's arguments and said depending on the case, two months may be too short. After a nearly 90 minute hearing, Zimmerman said he needed time to review a deluge of paperwork filed by the attorneys before making a ruling. Zimmerman also urged all sides to consider mediation efforts to see if those talks would make more sense rather than spending time in court.

More than 30 people attended the session in Courtroom 4 in the Crow Wing County Service Building. At one point, Zimmerman paused the proceedings to allow people standing in the back to sit in the vacant jury section.

Sen. Don Samuelson, DFL-Brainerd, attended the hearing, sitting at Hatch's table.

Samuelson said it was difficult to sit there and say nothing. After the hearing, Samuelson said if the Brainerd mill is so inefficient he does not understand why the restrictive covenants are needed.

"It doesn't make sense," he said.

Before the hearing started, Hatch said he felt good about the state's position.

Attorneys for Potlatch and Sappi declined to comment on the case after the hearing, referring questions to their respective corporate communications offices.

Bob Harting, president of the Paper, Allied-Industrial, Chemical and Energy workers union Local No. 79 at the Brainerd mill, was one of the people who provided Hatch with an affidavit for the case.

Outside the courtroom, Harting said if the non-compete clause may be eliminated, perhaps an interested buyer for the mill may be found.

He said: "We have nothing to lose at this point." (Brainerd Dispatch, 22 May 2002)

Hatch Stresses Quality of Workers Here

Potlatch employees' coated paper-making skills and reputation are the main points of discussion in the current legal battle.

State Attorney General Mike Hatch said the mill's value is determined not by machinery alone but with the ability of workers—to judge paper content, texture, coating and processing speeds.

Tuesday, Hatch presented his arguments before the court, asking for a temporary restraining order prohibiting Sappi Ltd. from enforcing a non-compete clause. Presiding Crow Wing District Judge Richard Zimmerman heard arguments from both sides in the state vs. Sappi and Potlatch case and said he needed time to consider the issue.

Hatch gave Zimmerman a copy of a Jaakko Poyry letter. Potlatch Corp. hired the firm of Jaakko Poyry, a well-known forest products industry consulting firm based in White Plains, N.Y., to help find a buyer for the Brainerd mill.

Hatch is suing Sappi and Potlatch, saying the non-compete clause in the sale agreement is anti-competitive and violates state law.

"What this does is penalize these people because they are craftsman," Hatch said.

"Maybe they can do that in South Africa. They can't do that here."

Sappi is a fine coated paper business based in Johannesburg, South Africa.

Hatch said the non-compete clause is a unreasonable restraint of trade and he asked how it helped Sappi.

"This is a closed plant," he said. "Every day it's getting older."

Zimmerman asked if the trial date is expedited and scheduled within two months time, why is the temporary restraining order needed. Hatch said an injunction would send a strong signal and help the state in its effort to find a buyer.

Zimmerman asked whether Hatch would still be in the courtroom if Sappi had bought the Brainerd mill and then closed it. Hatch said he did not know, but the difference in this case is the non-compete clause directed at a third party.

Attorney Robert DeMay, representing Sappi, said the law of competition dictates a business become efficient or die. He said the Sappi agreement allows expansion in Cloquet and benefits consumers.

"We realize it has a certain standard of quality," DeMay said of the Brainerd mill's paper. DeMay said the Brainerd employees are talented and highly respected. But he said the mill is too old, too antiquated, too inefficient and too small to compete in the long term. DeMay said a buyer may come into the picture, hire employees, trade on the Brainerd mill's reputation with consumers and then run the company into the ground.

"That is the purpose of that non-compete," DeMay said, later noting restrictive covenants on land is common in dealing with developers and has no effect on competition.

DeMay said the best thing for the state, consumers and paper workers is the consolidated effort at Cloquet's mill. The Brainerd mill could not be saved in a meaningful way, but Cloquet's mill can be saved, DeMay said.

"It gave the best chance for the most papermaking jobs in Minnesota to survive," he said.

DeMay said the state's claims asserted before the court were "frivolous." And he said the state's effort tells others the best way to protect their interest in a similar situation is to buy the plant, dismantle it and shut it down. Under the current agreement, DeMay said Potlatch is seeking an alternative use.

Good will in the sale agreement—if the Brainerd mill is not restricted by the non-compete clause—is at issue, DeMay said. He said it would give uncertainty and impede Sappi's ability to say it is the only successor to Potlatch.

Attorney Eric Swanson, representing Potlatch, said the temporary restraining order Hatch requested would not help efforts to find a buyer. But Swanson said the lawsuit will not affect Potlatch's continued effort to work with the state. Swanson agreed with DeMay's assessment that the Brainerd mill could not compete. He said Potlatch came to that conclusion after a long process. Swanson said the Brainerd mill had production costs that were 30 percent higher than Cloquet's. And, he said, Potlatch came to the conclusion it was going to close the Brainerd mill either way.

Now Swanson said Potlatch's interest is to find the right buyer.

"We aren't going to sell to just anyone," he said.

In response to Zimmerman, Swanson said he could not say whether the non-compete clause was an obstacle in finding a buyer.

"Uncertainty is our enemy," Swanson said.

In regard to a second part of Hatch's request that the court compel Potlatch to assist the state, Zimmerman asked what authority he had to order Potlatch to cooperate.

"It has not been a problem," Zimmerman said. "They have been very cooperative."

Hatch said he had no reason to believe Potlatch officials would not cooperate as they have been doing. Hatch said he wanted Potlatch to be able to follow through.

In terms of other products, Hatch said the Brainerd mill could make gift bags, soup labels or freezer paper. But Hatch said he has affidavits stating Sappi said the Brainerd mill could not produce those items, citing the non-compete clause.

DeMay said he was not aware of Sappi being asked about buyers or specific products. But he said Sappi has responded when asked whether a certain product was consistent with Sappi's use.

Hatch said Sappi has denied the Brainerd mill's opportunity to make products based on the idea Sappi may want to produce the same thing some day. (Brainerd Dispatch, 22 May 2002)

June

Potlatch Suit Mediation Attempt Fails

Mediation efforts to settle a lawsuit between the state and Sappi Limited and Potlatch fell through Thursday morning in St. Paul.

Crow Wing County District Court Judge Richard Zimmerman urged mediation efforts when he listened to court arguments May 21 in Brainerd. Zimmerman suggested the Thursday meeting. Mediation efforts ended without movement on the contested language in the sale agreement between Potlatch and Sappi, the buyer of Potlatch's printing papers division and its Cloquet mill.

Minnesota Attorney General Mike Hatch sued Potlatch and Sappi earlier this month saying their $480 million sale agreement was anti-competitive and violated state law.

At issue is a non-compete clause in the sales agreement, which prevents a Potlatch mill buyer in Brainerd from competing with Sappi in terms of coated paper manufacturing for seven years. Hatch said the clause is hindering Potlatch's ability to attract a buyer for the mill.

"Since March 18 our staff has had several conversations with analysts and participants in the paper industry," Rebecca Yanisch, Department of Trade and Economic Development commissioner, said in a letter confirming the Thursday meeting with all interested parties. "Based on these discussions it is clear that no company will make the capital investment necessary to operate the Brainerd plant if it has to get permission to produce a product from a competitor that is located only 75 miles away."

Senior company officials from Sappi attended the mediation session at the state Capitol. The meeting lasted about three hours with about 10 people attending in the attorney general's offices.

In a written statement from Sappi's Cloquet office, the company stated: " ... Sappi has expressed its willingness to meet with any potential buyer of the Brainerd mill to explain the practical application of the protective covenant to any proposed use of the mill. At today's meeting, we reaffirmed that commitment. We also offered to meet with state officials again next week to continue the dialogue.

"We will continue to take the appropriate steps necessary to protect our investment of $480 million in this business and the mill in Cloquet, including vigorously defending against the attorney general's legal action, which we believe to be without merit.

"The covenant being challenged is necessary to protect our investment in Potlatch's fine paper business and has been key to saving the jobs of the 700 people employed in that business."

Yanisch suggested shortening the length of the non-compete clause to six months. And the state asked for a specific list of products a Brainerd mill buyer could not make and suggested the items relate to products Sappi is currently producing.

The state previously argued it has evidence Sappi used the non-compete clause in saying "no" to potential products the Brainerd mill could make based on the idea Sappi may want to produce them at some point in the future.

In Zimmerman's May 21 court hearing, Sappi's attorney, Robert DeMay, said he was not aware of Sappi being asked about buyers or specific products. But he said Sappi has responded when asked whether a certain product was consistent with Sappi's use.

Potlatch's industry consultant, Jaakko Poyry, created a list of products the Brainerd mill could make. Thursday, Sappi representatives stated they needed more time to compile the list of paper products made in Cloquet.

Yanisch said the non-compete clause acts as a double whammy in a tough paper market. A successful entrepreneur needs to know it can compete and react in a changing market a year from now, she said. It is a tough position when a competitor can say "yes" or "no" to a business plan, Yanisch said.

"You are really putting blinders on the entrepreneur or that potential owner," Yanisch said. "It's really tough for people to start negotiations knowing that language is in place."

Now the decision about a court date is with Zimmerman.

"Time is of the essence here," Yanisch said. She said the state is walking that fine line between making sure there are good paying paper jobs in Minnesota with Sappi's purchase of Cloquet. But she said the effort there cannot be at the expense of Brainerd workers.

On May 21, Hatch asked the court for a temporary restraining order prohibiting Sappi from enforcing a non-compete clause. Zimmerman suggested the state and the companies pursue the mediation effort versus spending time in court.

Yanisch said the fact Sappi flew in chief legal and financial officers was a sign the company was paying attention to the issue.

Hatch also asked Zimmerman for an expedited court date within two months.

Sappi and Potlatch lawyers rebutted Hatch's arguments and said depending on the case, two months may be too short.

Potlatch's sale agreement with Sappi was finalized May 13, idling 616 workers in Brainerd. (Brainerd Dispatch, 01 June 2002)

A Tribute to a Builder Grandfather Remembered as a Great Man

KATHY (JOHNSON) LOVAS

The close of a chapter. The end of an era. I am searching for a way to describe what the closing of the Brainerd paper mill feels like to me.

Thomas G. Johnson, ca. Unknown. Source: Kathy Lovas © Copyright 2015, All Rights Reserved

I live in Dallas, Texas. The year is 2002. I have never lived in Brainerd and have only been there on a handful of occasions. But when I read the news on The Brainerd Dispatch website that Sappi International has purchased the Potlatch operations in Minnesota and will close the Brainerd plant, it hit me like ... well, like a death in the family.

You see, my grandfather built that mill. And he built the original one before it on the other side of the river. I don't know if there is anyone left in Brainerd who remembers him, but he was a great man. And the story of his greatness is tied to his 40-year long career at Northwest Paper Co. in Brainerd.

My grandfather was Thomas Gray Johnson. He was born in 1877 in the logging boomtown of Eau Claire, Wis. Orphaned as a young boy and with little formal education, he first went to work as a laborer in the lumber mills of that city. But not for long. As the turn of the century approached, there was a growing awareness that the pine forests were not limitless. Loggers were looking for ways to use the less desirable types of trees unsuitable for saw logs.

The Northwest Paper Co. was founded at Cloquet to grind these marginal timbers into pulp to make newsprint. A mill and dam were constructed in 1898, and operations began in 1899. The new company caught the eye of my grandfather. The Potlatch Quarter Century Book lists Thomas G. Johnson as one of the employees who began their careers at Northwest Paper Company in Cloquet in 1900.

Apparently, young Tom Johnson progressed rapidly within the company, and in 1903 he was sent to Brainerd to supervise construction of a second plant on the Mississippi River. Family legend says that the Northwest Paper Company liked its employees to be married, and records show that in 1904 Tom married Rose Elizabeth Brady of Carlton. They settled into a company owned house located near the Brainerd mill on the west side of the Mississippi River. It is the house in which my father, Allen Gray Johnson, and his sister, Mercedes, spent their childhood years.

As the company quickly outgrew its early facilities, my grandfather supervised the construction of a larger plant at its present location on the east side of the river. The No. 5 paper machine began operation in 1917 under his watch. Shortly thereafter, he was appointed to the position of General Superintendent.

Family legend describes him as a man who loved his work and had a warm relationship with other company employees. He was a real "people person," as they say. I'm told it was this aspect of his personality that made him an effective company negotiator during the years of employee unionization in the 1930's.

He was also an inventor. In 1934 he obtained American and Canadian patents on his paper drying process, subsequently used in paper mills across the country. A remarkable accomplishment for a man with only a grade-school education. At his retirement in 1940, in remembering his years with the company my grandfather wrote, "I worked my way up from the lowest job in the plant to the highest, and was always considered a loyal employee."

I visited the Brainerd plant in the summer of 1999. I took a guided tour and saw the No. 5 paper machine. I looked for evidence of the original mill and house on the west side of the river, but there isn't much to be found. I drove along Riverside Drive one day, parked my car and walked a short way toward the river, only to be stopped by a chain-link gate and a "no trespassing" sign.

I left with plans to return one day. Maybe I would get a canoe and paddle up the river, pull over across from the present mill and resume my search. Maybe I would persuade someone from the mill to take me across the river to look for who knows what. Some bits of masonry. The remaining outline of a foundation. There must be something there. But now my opportunity may never come.

My father and grandfather are gone. The house is gone. I have moved 1,000 miles away from my Minnesota roots. But I took distant comfort in my knowledge that at least my grandfather's paper mill was still there. I hope a buyer will be found to save it and the jobs of the more than 600 people for whom it has become, as it has for me, a member of the family. (Brainerd Dispatch, 21 June 2002)

Postcards Tell Part of the Story

Northwest Paper Co. legacy remains in collectors hands and heirlooms in area family homes.

There are vintage post cards depicting the paper company on the banks of the Mississippi River. Juanita Hawks found one such item titled simply "pulp mill, Brainerd, Minn." in her grandmother's belongings. The post card, mailed in 1903, shows a little mill with seemingly hand-colored roof, winter snow, logs and a smattering of trees along the higher bank.

Another item that came up after the mill closing was announced in March was a well-kept booklet from 1946 published by the Northwest Paper Co. in a tribute to employees who lost their lives in World War II.

"May their souls rest in eternal peace and may loving memory of them reside in our hearts forever," the foreword, dated May 30, 1946, reads.

Names and photos mark those employees from the Cloquet and Brainerd mills. They include:

• Gerald J. Bell, 19, Brainerd, who was employed as a pulp laborer in October 1940. An amateur boxer, Bell joined the National Guard in 1938 and served with the 194th Tank Battalion. He was killed the day after Christmas in 1941.

• Howard Malloy, 31, who was employed as a yard man at the Brainerd mill in 1941. He was an outdoorsman and joined the Army in the spring of 1944. He served with the infantry during the liberation of France and was killed in action on Nov. 22, 1944.

• Markus A. Pikula, 20, Little Falls, was an ardent fisherman and was employed by the Brainerd mill as a finisher and loader. He joined the Army on June 26, 1943, and served with Company B, 164th Infantry. He was killed in action in Italy in the late spring of 1944.

• Ralph Purdy, 31, Brainerd, was a 1935 Washington High School graduate, active in tennis, football, swimming, the glee club and men's quartet. He was employed at the Brainerd mill in 1936 and joined the Army in the spring of 1942. He became a member of the 51st Armed Infantry Division and was killed in action on March 26, 1945, in the European Theatre of Operations.

Other names include men separated from the service who worked in the Cloquet or Brainerd mills.

Inside words from "Taps" are included. "Day is done, gone the sun, From the lakes, from the sky, All is well, Safely rest, God is nigh." (Brainerd Dispatch, 21 June 2002)

The Day the Plant Closed

36-year millwright: 'I never failed ... the company failed us'

It was a sad day for most Potlatch employees when they walked off the job about a month ago for the last time.

Some had been employed at the Brainerd paper mill for a couple years, while others had been there more than 25 years. But no matter how long the employees worked at the mill, many said they will miss seeing their fellow workers.

Workers continue to weigh plans. Some had lined up work. Others, as of May 17—their last work day—remained searching.

Tim Hegge, a Potlatch janitor for 10 years, said on his last day of work that the closing of the plant was now just starting to bother him. He said when he first heard the news that Potlatch was closing he didn't care.

"I've been looking for work and it is not easy," he said. "I'm not going to flip burgers and I've farmed but there is no money in farming.

"I have 10 years to retire and if I go to school it leaves seven years to work. ... Who'd hire you?"

Hegge said his daughter also worked at Potlatch and is moving to Moorhead to go to school because she was unable to get into school in the area.

Ron Ebinger, who worked as a millwright for 36 years, will not have to worry about finding a new job. Ebinger, who will turn 55 in January, met the company's retirement requirements. However, Ebinger is not ready to retire and plans to work on his own as a handyman.

"I liked my job and enjoyed every minute of it," he said. "I never failed ... The company failed us."

Ebinger said the last weeks have been hard seeing everyone put the tools away and covering the machines.

"They closed down a good mill. ... There are good people here who never gave up," said Ebinger.

Fellow worker Art Kounkel worked as a millwright for 29 years and missed the retirement requirements by four months. He said the plant had to draw the line somewhere and if he was not affected someone else would have been.

Kounkel said he was disappointed with the plant closing and will miss all the good people at Potlatch.

"At first it was the initial shock (of the plant closing)," said Kounkel. "This is the biggest funeral I've seen in my life. The burial was today (the last day of work May 17)."

"I'm glad it is over," said Tom Huntley, who has been in the electrical shop for 13 years. "I don't like that it is closing down but I don't like waiting either."

Pam Winterfeldt worked for Potlatch for 30 months as a janitor. Her father, Don Schmidt, retired from the plant.

"It's sad to see the emptiness in the halls," Winterfeldt said about her last days of work.

"It's really sinking in ... seeing the plastic over everything.

This is the first time you can hear the radios.

"First I'm laughing and then the next minute I'm crying."

Winterfeldt plans to enroll in the nursing program at Central Lakes College.

Diane Litke also plans to do the same. She worked for Potlatch for 17 years in mechanical services.

"At first I was shocked, I never thought it'd close," she said. "I'll survive. ... The money was good, but I'll miss the benefits and insurance.

"There is life after Potlatch."

Dick Rofidal retired from Potlatch 18 months ago as a millwright and said the closing of the plant was unexpected.

"There have been some problems but not a shutdown," Rofidal said. "Sappi is getting the wrong mill shut down and they will realize it by the end of summer."

Rofidal's wife also worked at the mill.

Heinz Lintner, an electrician of 10 years, was glad that the 60-day waiting period was over.

"Now I can look for a new job," he said. "It's closure and now I can move on."

John Schiller has been with Potlatch for 24 years and has lived in Baxter for 43 years. He planned to move to Lewiston, Idaho, to work for Potlatch there. He said it was a hard decision to make.

It also was hard for him when he first heard the news that Brainerd's mill was closing.

"It's tough. All kinds of emotions. ... They are different from when I first found out," he said. "All the people will be gone and I'll never see them again." (Brainerd Dispatch, 21 June 2002)

The Reaction

Employees Offer Their Thoughts on the Potlatch Plant Closing in Brainerd

Potlatch employees gathered for a farewell picnic at Loren Thompson Park in Baxter on May 18. Most employees finished shut-down efforts that week. The mill stopped producing paper officially on May 13. (Brainerd Dispatch, 21 June 2002)

It's All History Now Museum Plans Potlatch Display

One-hundred-year-old mills have their own sense of legacy.

While some who worked inside those doors may not yet be ready to go by the fenced property with the now quiet smokestacks, part of their history will reside safely in Brainerd at the Crow Wing County Historical Society Museum waiting for a day when memories are sought.

Ends of eras seem steeped in sepia. They seem attached to black and white photographs and brittle, yellowed newsprint. This time, the era ended in full color and modern day. Neighborhoods in the sections bordering Potlatch must now adjust to the loss of that mill hum that accompanied an evening stroll. The railroad tracks along Evergreen Cemetery are silent.

But the history remains.

Mary Lou Moudry, Crow Wing County Historical Society executive director, said many families come to the historical society seeking information on relatives who worked their entire lives at the Burlington Northern railroad shops in Brainerd. Little exists for them to go through and reconstruct that fabled history.

Not this time.

Potlatch contacted Moudry about preserving pieces of the mill's history in Brainerd. Boxes of items, photos, memorabilia and archival data are now at the museum along with the framed Mountie prints that were displayed in the mill. The "Please sign in" sign bordered with two flags that greeted people from Potlatch's reception desk is part of the donation.

"All they have to do is look at it and it will bring back some of those memories," Moudry said.

Potlatch's legacy includes its commission of the famed art that depict Canadian Mounties. At some time in the future, the museum plans to house a Potlatch exhibit. Moudry said the Mountie prints are a display in itself.

The Cloquet mill sent its collection of illustrations depicting the Royal Canadian Mounted Police in the Canadian frontier to the Tweed Museum of Art, located on the University of Minnesota-Duluth campus. The artwork hung on walls in the mill for years. Fifteen artists and illustrators contributed to the collection between 1931 and 1970, including Hal Foster, who went on to create the Prince Valiant cartoon strip. Potlatch commissioned the series as a way to promote its fine printing paper. In the end about 400 pieces of art were created.

"It's wonderful they are giving us this opportunity," Moudry said of Potlatch. "Their hope was that the majority will stay in town and so it would be accessible for the people."

Potlatch included reams of paper from the last runs on the mill's paper machines in the museum donation. Duplicated paperwork will be sent to the Minnesota Historical Society. The historical society is working with remaining Potlatch employees to identify people in the donated photographs, making them more valuable as research items.

Moudry said the museum that once may have been more noted for tours and activities is becoming more of a research facility. Moudry estimates between one-third and one-half of users are doing research, particularly genealogy.

"Even within the community people call regularly now to ask about a building, a street, a house," Moudry said. "The community is seeing us more as a resource."

Potlatch and the historical society compared research and archives when the company was celebrating its centennial in 1998. Moudry said the museum donations probably amount to a year's work for the historical society and its documenting paperwork.

At Potlatch's centennial celebration on Aug. 6, 1998, Potlatch Chief Executive Officer John Richards said Minnesota is key to the overall company. Richards joined the company 34 years ago in Idaho. While the paper industry has experienced difficult economic times with competition changed from Wisconsin and Maine to include Indochina and Europe, Richards said the outlook for the next decade is good.

He pointed to the expansion scheduled for the Cloquet pulp mill, which was expected to increase production from about 560 tons to 1,300 tons of printing paper, as a sizable measure of the company's commitment.

"This will put us in great shape for the next two decades," Richards said. "We plan to keep Brainerd a modern mill. ... We're believers that experienced, long-term people do a better job."

"Potlatch without the people is buildings, machinery and trees," Barb Reher said at the centennial celebration. Reher was then vice president of manufacturing at the Brainerd mill. "Whether a current or past employee, they deserve a thank you. We can't believe the response we're getting. People need to know they are appreciated. ... We've got 100 years because of the people and we'll have the next 100 years because of the people." (Brainerd Dispatch, 21 June 2002)

Closing of Potlatch Plant Truly Does Mark the END of an ERA

Roy Miller

Editor

The rumors just wouldn't go away.

For months people had been telling us in hushed, almost conspiratorial voices, that Potlatch was going to close its Brainerd paper mill.

It was difficult to think the unthinkable, to ponder what that could mean for Brainerd.

When rumor became fact late this winter the news hit many like a ton of paper. Potlatch, with one of the biggest work forces in town, was closing its plant. Even bigger cities would feel shock waves when a plant with 600 workers decides to shut the gate.

Almost since this community's earliest days there has been a paper mill on the Brainerd skyline. Generation after generation after generation enjoyed good-paying jobs making fine paper for a variety of brand names under smokestacks next to the Mississippi River.

Times change. And the tailspin in the market for the fine-coated paper made by Brainerd employees of Spokane-based Potlatch Corp. convinced the firm the plant was no longer viable.

Probably only once before in Brainerd's history has there been such an unemployment shock. The Burlington Northern Santa Fe Railroad shop is but a mere shadow of the thousands who worked here during the Northern Pacific Railroad's heyday. But that work force was pared down over many years. That economic blow didn't come within a matter of weeks. And, fortunately, activity continues today at the shops and railyard.

Our neighbors, our fellow club members, our friends were Potlatch employees. And now some of them are looking for work, starting new careers and some are leaving town. Affected in the process of closing the plant have been the employees' spouses, many of them forced to uproot families and to move to where a spouse found a new job.

Also affected have been the Brainerd lakes area businesses that enjoyed the patronage of some of the highest-paid workers in the area. The money, too, will be missed.

Yes, Potlatch will be missed. It is the end of an era.

The Dispatch decided that since the paper mill has been such an integral part of this community we should salute the employees who worked there. This section is for them.

Life goes on. New uses for the Potlatch plant are being explored. This is not a community where people sit back and wring their hands in despair over an idled plant in northeast Brainerd.

There's a Brainerd spirit, a spirit that keeps this one of the most desirable places to live and work and play in the entire Upper Midwest. (Brainerd Dispatch, 21 June 2002)

From Northwest Paper Co. to Sappi Ltd.

A Look at the Brainerd Paper Mill Over the Years

• The paper mill began in Brainerd as the Northwest Paper Co. That name remains on land tracts to this day in the Crow Wing County plat book.

• The Northwest Paper Co. was started with the efforts of Charles A. Weyerhaeuser, Rudolph Weyerhaeuser, C. I. McNair and R. D. Musser. The Weyerhaeuser and Musser estates in Little Falls are remaining testaments to the days of the lumber baron families, along with the Weyerhaeuser mansion, formerly the Potlatch guest house in Cloquet. Sappi Limited owns the house now.

• Before the turn of the century, the lumber barons were involved in building their paper company on the banks of the St. Louis River in Cloquet. The mill made newsprint from ground wood pulp, producing its first newsprint on April 8, 1899. Chemical pulping was added to the facilities in 1915.

• Brainerd came into the mix in the first years of the 20th century when the Northwest Paper Co. purchased the Northern Water Power Co. on the Mississippi River and the C. F. Kindred Dam.

• In 1901, the Northwest Paper Co. purchased its first Minnesota land parcel. Nearly 100 years later, the company now known as Potlatch counts 350,000 acres of forest land.

• In 1903, the second newsprint mill in Brainerd was opened to use additional pulp produced at Cloquet. In Brainerd, the pulp paper company expanded to a ground wood pulp mill on the west side of the Mississippi River. The mill produced 12 tons of ground wood pulp per day.

• In 1911, the plant was shut down. It was dismantled in 1914 and re-established in a larger form on the river's east side. Construction of the Frederick Paper Mill took two years. It was named for Frederick Weyerhaeuser Sr.

• On April 20, 1917, operations began at the new mill in Brainerd. The mill produced 40 tons of pulp and newsprint daily.

• From 1920 to 1929, the paper company's land holdings soared from 2,000 acres to 156,000 acres.

• From 1922 to 1945, stockholders did not see dividends. World War II spurred production across the nation and the post war economy helped. Paper company wages rose from 40 cents an hour in the 1920s to 85 cents an hour in the 1940s for top-level tinsmiths, millwrights and operators.

• In 1934, the Brainerd mill closed for nine months during the Great Depression. When it reopened, the mill began producing wallpaper instead of newsprint to the average amount of 65 tons per day.

• In the 1950s, wallpaper markets declined, the company shut down the ground wood pulp mill and began production of fine grade paper in April 1956, producing about 80 tons of paper each day. The work force nearly doubled from 354 to 600.

• In 1950, spring flood water washed out the wood, rock and steel dam. A concrete version was constructed to replace it.

• In 1964, Potlatch Forests Inc., founded in 1903 in Potlatch, Idaho, acquired Northwest Paper Co. At about the same time, Cloquet and Brainerd began production of high-grade coated stock to meet the growing need for paper suited to offset lithographic printing processes.

• During the 1980s, Potlatch invested in paper manufacturing upgrades.

• In 1992, Potlatch initiated a complete replacement of the Cloquet pulp mill, doubling its capacity in the process. The Brainerd mill employed about 700.

• In 1993, Potlatch closed warehouses in Brainerd and Cloquet and replaced them with one in Chicago. At the time, Karen Kelley, Cloquet communications manager, said customers were no longer satisfied with a 10-day delivery and wanted things "tomorrow."

• In 1994, the Northwest Paper Division earned $16.4 million in the fourth quarter up $8.7 million from the last quarter in 1993.

• In 1995, Potlatch reported demand for coated paper increased dramatically and profits nearly doubled. The Northwest Paper Division made coated free sheet paper. The heavier high-quality paper was used for corporate reports, coffee table books and art prints.

While demand grew for coated free sheet paper so did capacity. Despite flooded market, Potlatch reported Brainerd and Cloquet mills were operating at capacity.

Potlatch reported its first price increase for paper in five years. About 100 construction workers arrived in Brainerd in December for a $27 million modernization project on No. 6 paper machine.

• In 1996, the Northwest Paper Division became the Minnesota Pulp and Paper Division to reflect the company's intent to enter the pulp market production by 2001. Potlatch reported revenues of $1.6 million with $200 million in export sales. Potlatch was listed 728 on the Fortune 1000 list of U. S. companies and 21 on the Fortune 1000 list of forest and paper products companies.

• In 1997, Potlatch relocated its headquarters since the 1960s from San Francisco to Spokane, Wash., in a cost-savings move. The company has 1.5 million acres in three states and a tissue-converting facility in Las Vegas.

• In 1997, Potlatch's Pulp and Paper Division, including mills in Brainerd and Cloquet, shipped 372,000 tons of printing papers. Product sales accounted for $429 million. Payroll and benefits totaled more than $154 million annually. More than 500 independent regional logging businesses depended on the company as a major revenue source with nearly $85 million spent on wood deliveries.

• In 1999, Potlatch reported the completion of the $525 million pulp mill in Cloquet. The modernization project began in 1992.

Cloquet had a bleached kraft pulp mill with a 425,000-ton capacity and a paper mill with two paper machines and coating equipment with a 230,000 ton capacity.

• By 2001, Potlatch was a major supplier of bleached paperboard in Pacific Rim markets, especially Japan. The company had manufacturing operations in Idaho, Nevada, Minnesota, Arkansas and Michigan to produce lumber and panel products, bleached pulp and coated printing papers, consumer tissue and bleached paperboard.

The company determined it could not successfully compete in the fine coated paper business on a long-term basis. Potlatch began exploring the possibility of selling the business.

Potlatch approached a number of buyers for the entire coated paper business and operations in Brainerd and Cloquet. Potlatch reported certain potential buyers expressly stated their lack of interest in the business related to lack of interest in purchasing the Brainerd facility.

Potlatch determined it will ultimately have to close the Brainerd facility. And the company officials decided to approach buyers interested in purchasing the business without the Brainerd mill.

In 2001, revenues were $1,751,996 with a net earnings loss of $79,445. The company employed 6,300. Minnesota employees numbered 2,250. Potlatch's Pulp and Paper Division with headquarters in Cloquet employed 1,800 employees. Timberland in Minnesota's Resource Management Division covered 350,000 acres.

Potlatch's printing papers segment , which accounts for about one-fourth of Potlatch's annual revenue, reported a loss of $36.7 million on revenues of $464 million.

The Brainerd paper mill, operated with two paper machines, No. 5 and No. 6, and coating equipment, had a capacity of 155,000 tons.

Rumors of a sale of the Brainerd mill began to circulate.

• March 18, 2002, Potlatch announced the sale of its printed papers division and the Cloquet pulp and paper mill. Potlatch completed a sales agreement with South African-based Sappi Limited, originally known as South African Pulp and Paper Industries Limited, for the Cloquet mill and related assets for $480 million in cash.

Potlatch retained ownership of the Brainerd mill, which employed 616 workers. The mill would close in 60 days. Market value of the land and buildings at the Brainerd mill was $8,353,400.

In 2002, the Minnesota Pulp and Paper Division produced hardwood bleached kraft pulp, as well as premium coated and uncoated printing papers.

• May 13, 2002, the Brainerd mill ceased operation and planned to work on closing the mill during the next week with employees leaving throughout the week.

• May 17, 2002, most employees have gone. A skeleton crew was expected to remain for a few months to market the mill, complete the shutdown process and offer human resources contacts for mill employees.

• Potlatch retains a presence in Minnesota with more than 700 employees and a timberlands division with manufacturing facilities in the company's Wood Products group in Bemidji, Cook and Grand Rapids. Seven-hundred ten employees, 330,000 acres of land, biggest private land owner in Minnesota and use 28 percent of wood cut in the state goes to Potlatch mills, 22 percent goes to Sappi. Potlatch said to use 50 percent of the wood.

The integrated forest products company with 1.5 million acres of timberland in Idaho, Minnesota and Arkansas has a 17,000-acre hybrid poplar plantation in northeastern Oregon. Manufacturing operations in Idaho, Nevada, Minnesota, Arkansas and Michigan produce lumber and panel products, bleached pulp and coated printing papers, consumer tissue and bleached paperboard. (Brainerd Dispatch, 22 June 2002)

The Art of Making Paper

It's Like Paul Bunyan's Oatmeal Dish

Making paper is an art.

It combines science, skill and technology. But mostly it comes from the knowledge embedded after years of experience that was passed from one generation of Potlatch papermakers to another. They watched the consistency as pulp sloshed in what looked like giant silver mixing bowls that could shower an unsuspecting newcomer with an oatmeal-like substance as if someone had taken papier-mache and put it in a high-speed blender.

"We always tell the kids it's like Paul Bunyan's oatmeal dish," said Potlatch employee Kari Stoxen.

Later that pulp moved through the plant and was transformed into 25,000-pound rolls of smooth paper. Before it left the mill it was cut into smaller portions, polished to a high gloss, shuttled down corridors, wound and rewound, cut into sheets and boxed for shipment across the globe.

Narrow moving tracks like square metal Chiclet gum helped transfer half-ton shiny paper rolls from one department to another. The idea was to take pulp, recycled material or paper, all formerly a tree, strip it down to its most elemental piece and use that to make new paper.

But it began in the pulp dock.

Pulp was segregated into bales by tree type, although the industry was working on ways to use the forest in a blended version. In earlier days the bales were bound by wire. Later a brown paper wrapper protected the white pulp.

  Pulp mixes with a milky liquid in a giant bowl vortex that will have the substance resembling oatmeal in a matter of minutes. Tour guides called it Paul Bunyan's oatmeal bowl. About 20,000 pounds of stock are mixed in the vortex in the oatmeal-like batch nearly every 30 minutes.

Gondola railroad cars, which open on either side, came into the mill with pulp stock. Not in a liquid form, the pulp actually looked like large sheets of thick rough paper that was more like soft flexible white cardboard.

Other bales of pulp with a higher consistency of moisture felt like fabric. Recycled content pulp had about 50 percent moisture content while pulp from Cloquet aspen had less than 5 percent moisture. The dry pulp, packed paper fibers pressed to a certain moisture content, becomes a relatively thin mat. About three gondola cars came in each day, most of them from the Cloquet pulp mill.

Consumer office waste pulp was purchased and added into mix. The product came in separate bales and papermakers tried to maintain 10 percent post consumer office waste, much of it from recycled white copy paper, in each paper made. Pulp bales waited in the cavernous dock area marked with their origins such as "Cloquet maple." Before the Cloquet pulp mill became the major supplier, about 50 to 60 percent of pulp came from outside sources.

The mill had access to three types of water, city water, raw river water and treated water taken from the river then cleaned and filtered through beds of sand and charcoal. Cleaned water was needed for the white paper and boilers. Other river water was used for cooling.

Near the new pulp were stacks of paper marked "broke," which noted paper that was rejected in the process for one reason or another during the many quality checks, perhaps because of an off color or a wrinkle in the paper roll.

Potlatch workers acted as internal customers with high standards before the paper could move from one area to another such as the finishing room to the coating machine. "Broke" paper was then recycled back into the mix to be made into paper again. Odd ends of paper orders were also recycled.

For most of Potlatch's papermakers the word colored paper referred to different shades of white until real colored paper was added to the mix in the mill's last few months.

Workers on hydraulic lifts moved pulp bales to the two giant mixers where it was thrown in the bowl as a milky white water flowed in from the side. Soon the bowl was shaking as the mix was agitated and the pulp was again reduced to a chunky liquid form. About 20,000 pounds of stock mixed in the vortex in the oatmeal-like batch nearly every 30 minutes.

  Cindy Carlson tested paper in the lab as one of the quality checks before Potlatch-made paper could leave the Brainerd mill. An ash oven was used to find out how much fiber and how much filler was used in the paper rolls.

Then the mixture went to a beater—which used a propeller that looked like it was taken from a cruise ship. From there the process flowed to refiners where the mixture was rotated into a finer substance. In the mid-1980's an eucalyptus system was put in for product from southeast Asia and it had its own refiner. Later Potlatch used the machine for extra refining of its pulp.

All effort was now focused on capturing water and fiber from the pulp mixture. At this stage, the pulp had the consistency of chewed paper.

The pulp fibers were cleaned with four stages of centrifugal force to take out any remaining heavy particles or sand. Cleaner screens with long strings of plastic were also used and the fiber content was thinned down to one percent.

Once that was accomplished, the effort focused on getting the moisture out. Paper machines had two ends for papermakers—a wet end and a dry end. Gravity was used as the soon-to-be paper material traveled over a mesh wire that was once made of bronze and later created with a synthetic material. Then a vacuum sucked out more moisture. Finally moisture was used squeezed out of the fiber. Steam heat continued the drying process. By this time, the fibers were micro thin, looked like paper rolls and had a canvas-like texture as they moved as one giant strip through the paper machine.

The paper ran through felts that squeezed out more moisture as it flowed through machinery two-stories high and ran a gauntlet of three presses before it moved to a smoothing press. Hard rubber rolls now moved the paper to put on a smooth surface. A dandy roll could simulate a wire pattern on the top side.

Speed and tension worked to create the paper. If the alignment was off, the paper would wrinkle. Running the machine slower made thicker paper. The paper threaded through rollers. Just counting rollers in the mill would lead to numbers in the hundreds. A paper strip or tab and forced air was used to thread the paper sheet into the rollers.

  Potlatch employees Mike Shepard and Carol Miller checked sheet-cut paper coming down the conveyor. Before it reached them, the paper was taken from rolls, cut into sheets and collected into reams. This was one of the last stops before the Brainerd-made paper was boxed and shipped to customers.

Now the paper was ready for a coating created from clay carbonates and latex pigments for that glossy smooth finish. The paper was measured and weighed before and after so operators knew just how much coating was put on.

Computers monitored the entire process. Workers monitored the computers.

Along the way samples were taken to the lab so they could be tested for quality, fiber content, brightness, color and density. Cindy Carlson spent 21 years at Potlatch in the lab testing the paper. She used the ash oven to find how much fiber and how much filler was used for the paper rolls.

Outside the lab, an inspection table used six car headlights to look through paper samples. Workers checked for light or dark shapes where the fibers were pressed into paper. The goal was to create something that looked like Cream of Wheat in a bowl.

But the margin between the acceptable paper and the unwanted reject was nearly as thin as the paper itself. And the example hanging by the inspection table of good versus bad was hard to distinguish for a visitor, but became second nature to experienced papermakers.

Print checks were also conducted on every third roll off No. 6 paper machine and every other roll of No. 5. The internal check made sure the customers who would turn the paper into books, corporate reports and art paper would be satisfied.

Jim Boileau worked in the printing room for 31 years and spent 37 1/2 years in the mill. He operated a small area with its own tiny printing machine. It was a quiet room. On one visit, Bee Gees music played in the background.

"It's a great job, I've loved it over the years," Boileau said in April. "I hate to lose it. We make sure everything prints OK before it leaves the mill."

About 75 to 80 percent of the paper machine operations were done from a computer. But workers had to be able to be on the machines as well in order to see what was happening in the process.

  Brandon Bollig and Lew Stoneking checked a roll on the 25,000-pound overhead crane in the crane bay. Paper was moved via the cranes from the paper machines to the next stages in the process where rolls were cut into smaller sizes and could be transported to the finishing room and coating machine before a final high gloss was created in the supercalendar and the paper moved to be cut into sheets.

"Paper making isn't all science, there is a little bit of art to it," Jeff Carlson said, adding knowledge and experience came to the front when things did not work perfectly.

The computers helped pinpoint problems that did occur as it monitored the paper using some 5,000 sensors. If a problem such as sheet break occurred, the computer could create an entire graph to detail the issue.

"You can really monitor so much, it's a great tool," Carlson said.

Paper that was acceptable went to big rolls. Rejected paper rolls were put back into slushers, which carried them back into the stock mixture to be reused again. Access to slushers along the production line kept the paper moving and did not require steps to be backtracked to physically take rejects back to the beginning.

The newly created massive paper roll then went to be cut into smaller, more manageable sizes. Paper that was coated on the machine could be cut into 10 smaller rolls at a time. Non-coated paper was cut in half and put in another line-up for the coating machine. A winder took paper off the paper machine rolls and loaded paper on heavy-duty cardboard cores.

At this stage paper was either uncoated and done, coated, or ready for a trip to the coating machine.

Paper that needed to be coated could be unraveled from the cardboard spool, put on a metal spool for the coating machine, after the coating was applied it was dried and rewound again.

The coated paper was smooth but dull looking until it went through a series of rollers called the supercalendar to create its trademark silk finish for a super glossy premiere paper.

From pulp to supercalendar took about 3 1/2 hours.

Now paper rolls were ready to be made into sheets. Each roll was bar-coded to indicate what machine it came from and when. Rolls moved through the crane bay to the finishing room. The cranes lined up paper to go through four precision sheeters. A test was performed to check how square the sheets were. Paper could be cut to customer size orders with some limitations.

The paper sheets flowed along conveyers and were collected into reams, packaged into boxes and sent out the door.

Rose Mankowski was one of the last employees to monitor the paper before it left the building. She worked as a machine operator at Potlatch for 15 years and had two sons working at the mill.

She monitored some of the last paper Potlatch would make in Brainerd, watching as sheets came down the conveyor collecting in orderly stacks. And she echoed what many employees said as they pondered the beginning of the end and what would be lost beyond their papermaking skills.

She said: "I'm going to miss the people." (Brainerd Dispatch, 22 June 2002)

'It Opened Up a Whole New World for Me'

Woman Shows She Could Handle Male-Dominated Jobs at the Mill

Kathleen Kraklau wrote down tips she learned from 18 mentors who were skilled in papermaking.

She kept the book and cannot part with it yet even as Potlatch's legacy is now something for the history books.

"It's like you can't get rid of it yet," she said. "You can't part with that because it's so much a history of your life."

Now Kraklau, 48, said her regrets are that her grandchildren will not be able see what Grandma did. And she realizes there are people she is going to miss. So many good people, she said.

Potlatch no longer makes paper in Minnesota and the northeast Brainerd mill is closed after a century on the banks of the Mississippi River.

"I don't have any regrets with Potlatch," Kraklau said. "It was one of the best experiences I had. They gave me opportunities I would have never had in my life."

Kraklau was involved in the union, worked on leadership committees and was one of those chosen to help teach Potlatch's team concept to other mill sites.

"It opened up a whole new world for me," she said.

Many workers had swing shifts, working seven days, getting four days off, then working seven midnight shifts and getting two days off and working seven 3-11 p.m. shifts with one day off.

Ike Fairbanks, 57, worked at Potlatch since he was in his early 20s. He remembered the first advice to mill workers who may get lost inside the large building, elevators and the dam were used as landmarks. Fairbanks worked in a variety of departments in the papermaking process. He said communication was a key.

"Once you get going, it was like dominoes everybody knew what was going on," he said.

Fairbanks said if it had not been for the quality of the mechanical services, machinists, oilers and millwrights, Potlatch would not have been able to survive as long as it did. He said they had such skills they could be taken to a junk yard and build a car.

"They are a very talented bunch of guys," Fairbanks said, noting they could rebuild parts versus going for expensive new versions.

Kraklau started at Potlatch in 1983. She and her husband both worked outside the home and ran a dairy farm. Her first job was unstacking paper in the finishing room. September would have been her 19th year at Potlatch.

Kraklau was one of the women who moved into working with the paper manufacturing machines at a time when that was not common. When she first went there she was told she would never be working on the machines. For a woman who is willing to accept a challenge but does not respond well to never, it was the wrong thing to say.

Kraklau started on the scales, keeping a log book and weighing each paper roll. She also moved paper. It was physical work.

"It was a male-dominated area so you had to prove yourself," she said.

Once she made it past that hurdle, she said older machine tenders were willing to share whatever they knew to help her complete the work.

"You've got to learn to talk to these machines and they'll work," she said.

She moved up the rungs becoming backtender on No. 5 paper machine. She was the first female to run No. 5 in Brainerd. It was a big moment for her and, she learned, from the older guys who trained her.

They had 30 and 40 years on the job and Kraklau said she did not have the knowledge or the time in they had. She still sees some of them and she said she thanks them for the job she had and the one she was offered and accepted at Sappi in Cloquet.

"We are tying to do the best we can," she said. "We want to build our retirement. You just don't know how much change in your life you are going to get."

In 48 years, Kraklau said she never left Brainerd except for trips. She called her daughter to gain insight into renting, something she never expected.

She was also worried what some of her mentors would say about her Cloquet job, but they surprised her by being glad she was using her skills. Emotions can well up just thinking about the mill and the people.

Kraklau spent her last 60 days at the mill working in the information center helping fellow employees with a multitude of questions.

"I felt it was the last thing I could do for my family," she said. "A lot of people are going to be hurting—a lot of people. ... This is all they have done (since high school) and they don't know what they are going to do. They are bitter, very bitter and I can't blame them. ... But any job you take there is no guarantee."

Kraklau said the decision to take the job working with the market pulp machine in Cloquet was difficult. But she said she also saw a different side of her husband of 31 years. He had to become the supportive and encouraging one. He told her it was an offer and a challenge she could not pass up. Her children also encouraged her. She tried driving but now stays in Cloquet in a friend's house on the days she works. Looming in the future is a decision regarding whether the family will stay in farming.

When she looks back now, Kraklau said she wonders if more could have been done in a partnership with Potlatch. She said union and management always worked together and she thinks there may have been an opportunity to keep producing the high-quality paper workers took such pride in. She said employees were empowered with decision-making abilities on whether paper reached quality standards to move from one department to another. They worked as a team.

Kraklau said the Brainerd mill was given a year reprieve after sale ideas were announced and they had a goal of saving $12 million and getting costs down to $600 a ton. They met the first goal and were closing in on the second, she said. They never had the feeling the mill was in its last hurrah, she said.

"To hear we were going to close totally, there were a lot of people who were shocked," she said. "You never expected to hear those words."

Since then workers have been going through the multiple stages of grief. Kraklau said the people who created relationships will stay in touch. One of her friends already sold her house and moved back to her home state in Iowa.

"The people who really created a bond over the years will stay in touch," she said. "I really do wish people well. I really hope people take advantage of what is being offered to them. ... I just wish the best for everybody." (Brainerd Dispatch, 22 June 2002)

'You Gotta Feel for These Guys'

Potlatch Retirees Know What Mill Was Like

When Frank Ehmke started at the paper mill, he made 52 cents an hour.

He remembers working for hours without air conditioning in the oppressive heat, the dirt and the smell. His wife, Lois, still remembers how bad his clothes would smell when he came home.

Still, it was a steady paycheck from the paper mill for 45 years, which is something that came to an end for 616 workers when the Brainerd Potlatch paper mill closed in May.

More than 50 years later, Frank and Lois Ehmke sat recently over a chicken finger basket at Chaparral Restaurant, discussing the current state of his former employer and other gossip with his peers at the Potlatch Retirees' Club meeting.

"It's just a shame to see that go to waste with all the money they put into it," said Frank Ehmke about Potlatch. "We hope somebody will buy it."

About 35 members strong, the retirees' club for the past 20 years has met once a month during the fall, winter and spring months.

The meetings provide a chance for old friends and co-workers to catch up with each other, talk about the weather, reminisce about the old days and play cards or bingo.

Lately, the meetings also have been a forum for discussing the shutdown of their mill.

"You gotta feel for these guys," said Gene Hornby, who worked in Potlatch's stockroom for 26 years. "There were a lot of young people with families."

Hornby can relate to the current Potlatch employees who lost their jobs. In 1941, right out of high school, he started working in the rail car shops at Northern Pacific Railroad. He was laid off in 1954 and again in 1957.

"The railroad was very good to us. Every Christmas, they gave us a Christmas present —they laid us off right before the holiday," joked Hornby.

In 1958, Hornby went to work for Northwest Paper Co. He retired in 1986.

The situation still hits close to home for the Ehmkes and the Hornbys. Both had family members working at the paper mill when it closed.

Frank and Lois Ehmke's daughter will be looking for another job. Gene and Rita Hornby's daughter-in-law will be going back to school.

"The thing is, they're in their 50s now," said Lois Ehmke. "It's hard."

The opinions of the retirees about the Potlatch closing is strong, and not too favorable for the company. Gene Hornby thinks Potlatch took a rotten deal from Sappi, the South African paper company that purchased the Cloquet paper mill.

"Something's rotten in Denmark," said Gene Hornby about the Potlatch sale. "That non-compete clause, that's the way all big business is. I know if I was young, I'd be bitter. The way it was brought about, it was sneaky, uncouth."

Hornby also pointed to an agreement Northwest Paper Co. made with the Crow Wing County Board in the 1950s, that involved land from the county in exchange for jobs created at the paper mill. As far as Hornby is concerned, Potlatch didn't live up to its end of the agreement.

Club president Goldie Hazuka said the retirees' club is one of two in the Brainerd area.

The other is a breakfast club.

Hazuka said while the paper mill has closed, the Potlatch Retirees' Club will go on, and she has been inviting any former workers to join the group. (Brainerd Dispatch, 22 June 2002)

Machinery Currently in Process of Removal from Paper Mill is Part of Original Sale Deal with Sappi Limited

Passers-by have noticed recent activity at the Potlatch mill in northeast Brainerd.

What can appear to be a hole in the roof to remove equipment is actually removal of overhead doors. A crane is being used to remove coating machine and related equipment sold to Sappi Limited in the original March 18 sale agreement that had Sappi buying Potlatch's printing paper divisions, the Cloquet mill and the coating equipment in Brainerd.

The Brainerd mill is still owned by Potlatch.

Sappi workers have been at the Brainerd mill for about a week dismantling the coating equipment and removal of the coating machine itself is expected to take more than a month. Potlatch officials reported the equipment leaving is part of the sale and the mill is not being cannibalized as attempts are under way to sell the mill in one piece.

Tom Brotski, Potlatch transition manager, said the mill had two companies come in to look at the mill last week. He said right now he is more optimistic about the mill's sale potential than he was on March 18. (Brainerd Dispatch, 30 June 2002)

August

Effort to Peddle Paper Mill Extends to China

Efforts are ongoing to look at potential buyers for the Potlatch mill in Brainerd and Friday a contingent left for exploratory talks in China.

Frank Carroll, Potlatch spokesman based in Cloquet, confirmed a small contingent of people went to China, but Carroll said the company is concerned with raising expectations. He said the team that went to China is doing due diligence to determine if a possible offer is a real one.

"The key is they are not going to come back with a huge announcement that we have a deal," Carroll said. He had no information to add on details of the trip or the company team members were meeting with.

"We owe it to people who come to us and make what we consider significant offers—we owe it to do our part to assess whether or not it is real," Carroll said.

Potlatch is involved with paperboard business in China and has a sales staff there.

Tom Brotski, Potlatch's transition manager in Brainerd, led the contingent to China. Carroll said they went to see if there was a real offer with real intent and the resources and knowledge and markets to match the interest.

"The bottom line is it is highly unlikely anything will come of this, but you never know and we owe it to everybody to follow up," Carroll said. "People ought to keep their expectations very low."

It was unknown when Brotski and the group would return.

In another Potlatch update, a ruling is expected by Oct. 30 on Attorney General Mike Hatch's effort to block a noncompete clause that prohibits anyone who buys the Potlatch mill from making coated-paper products.

Hatch has filed a motion for summary judgment in the Crow Wing County court case, asking Judge Richard Farnberg to rule before the case goes to trial. Hatch said in the motion that the noncompete clause is not enforceable and runs counter to common law in Minnesota.

Potlatch Corp. closed the Brainerd mill after selling its printing papers division and its paper mill in Cloquet to Sappi Ltd. for $480 million. The Brainerd mill employed 616 workers.

Potlatch and Sappi have until the end of September to file motions in response to Hatch's motion for summary judgment. (Brainerd Dispatch, 21 August 2002)

Finding a Buyer

Efforts Continue to Find a Buyer for Potlatch Plant

Editorial

Putting together a viable business deal can be a painstaking process. That reality is completely understandable but little solace to the laid-off employee who's looking for work.

Still, the displaced Potlatch employees and anyone else concerned about the job market in the Brainerd area can't help but be encouraged by reports that Potlatch officials continue to pursue potential buyers for the paper mill in northeast Brainerd.

Details of the group's exploratory talks in China are sketchy because the officials looking for a new buyer don't want to unduly raise hopes or expectations until a deal is sealed.

The fact that officials were willing to travel to China on the premise that a deal was possible shows they are doing more than just paying lip service to finding a good business fit for the abandoned plant. Their mission was to determine if a potential buyer had a sincere interest as well as the resources, knowledge and markets which might match that interest.

It's clear that no one is expecting a business to move in that will pay as well or provide as many jobs as Potlatch did. And some economic observers point out that it's good for a community to not put all of its economic eggs in one basket. A healthy diversity of smaller businesses is sometimes better for a community than one large employer. It can mean tough times if an economic downturn in a particular industry affects that one big employer.

The Potlatch officials who are spearheading the search for a potential buyer deserve this area's commendation and support. Even if information about their progress is lacking in detail, it's still heartening to know they are working hard toward the prospect of securing a new owner for the plant. (Brainerd Dispatch, 22 August 2002)

Life After Potlatch

Former Employees Expand Berry Farm After Mill's Closure

John Jansen figured he had two years.

By the time he was to retire from Potlatch two years from now, his home-based berry farm would be running at full production, a 10-year hobby/side business that would help him, as well as his wife Ruth, financially after his retirement. Ruth retired from Potlatch a couple of years earlier and now works as a teaching assistant at Garfield Elementary School.

But after 29 years at Potlatch, Jansen found himself without a job and an uncertain future when the paper mill closed its doors in May.

The disappointment and uncertainty after the paper mill's demise has suddenly blossomed into a budding opportunity for Jansen. He and Ruth not only plan to expand the berry farm earlier, but this fall he is enrolled in horticulture courses at Central Lakes College. His goal is to develop the best-tasting and hardiest berries and grapes in the Brainerd lakes area.

It's a dream come true.

"Potlatch has been good to me. It's the best place I've ever worked," Jansen explained. "But there's good that has come out of this. This is what I've always wanted to do."

He started horticulture courses at Central Lakes College today.

The Jansens grow raspberries, blueberries and grapes to sell on their 2 1/2-acre berry farm called Brambling Rows, located on St. Mathias Road in Crow Wing Township. He's a self-taught berry expert. Jansen has been breeding raspberries for more than 10 years, along with other fruit varieties. He and Ruth sell their fruits at the Lakes Area Growers’ Market in downtown Brainerd.

His favorite crops include his hybrid crosses of black and red raspberries and the Valiant grapes.

Grapes growing in Brainerd, you may ask?

You betcha.

Jansen's vision is that people living in this area will discover and enjoy fruits that typically aren't found here. His grapes are growing so thick on the vine that they have broken his wire trellises.

He makes wine for family and friends with the grapes, but also will start to sell the first crop of the summer at the growers market on Tuesday. People use the grapes to make jams and jellies, as well as make the sweetest homemade grape juice. They can give you the recipe if you ask. Ruth also sells her secret raspberry ice cream topping at the market.

"I won't even give the recipe to my kids," she said with a good-natured laugh. Together the couple has eight children. "I say I'm going to sell it to Dairy Queen someday and then I can really retire."

They plan to build a pit greenhouse this year to raise vegetables and other produce as well. John hopes to one day market and mass propagate his variety of black raspberries. Ruth is always busy picking berries and running the daily operation at the berry patch.

If Potlatch hadn't closed, John Jansen concedes that he probably wouldn't have gone back to college to further his passion for growing fruit. It's been a remarkable opportunity in disguise.

No sour grapes there. (Brainerd Dispatch, 27 August 2002)

September

Team Plots Strategy in Wake of Potlatch Paper Mill Closing

Elements from Brainerd, Baxter and Crow Wing County, as well as regional economic development groups, combined to create the strategy team in the wake of the Potlatch mill closing.

The group has subcommittees and has worked in three main areas—resources for Potlatch employees, effects on the community and marketing the mill with a community push. Earlier this month the strategy team met for an update.

The strategy team put together a pre-application for a planning grant from the United States Department of Agriculture. In the application is a request for a $100,000 planning grant with 50 percent to come from the USDA and the other 50 percent from a variety of area sources, cities and economic development groups. The grant could also open the door for larger funds to assist in implementing an action plan.

Efforts raised commitments of $20,000 from Potlatch, $10,000 from the Initiative Foundation, $5,000 from Minnesota Power, $5,000 from Brainerd, $5,000 from the Brainerd School District, $5,000 from Crow Wing County and $2,500 from Baxter.

But to say planners, including Sheila Wasnie Haverkamp, Brainerd Lakes Area Development Corp. executive director, and meeting facilitator Lisa Paxton, Brainerd Lakes Area Chambers of Commerce chief executive officer, were shocked at the meeting may be an understatement. They were surprised at the new requirements for the grant application.

At the meeting, Haverkamp read through the preliminary information gathered for the planning grant.

The idea was that grant money should allow the area to look at the market in-depth and help determine what initiatives could be taken to help Potlatch find a buyer and ways to absorb the displaced workers back into the community.

Even if a buyer is found for the mill, expectations are that employee numbers will be well reduced from the 616 workers displaced when Potlatch closed.

There have been several meetings where this grant application was discussed, including those with Gail Leverson, economic development director from Region 5 in attendance. Leverson brought an expert from Chicago to the recent meeting.

But strategy team members were suddenly told at this meeting they needed to answer the seven questions called the Sampson Seven in order to meet the final hurdles for funding. And those new requirements call for a lot of details and specific outcomes.

Leverson said she's been talking with government grant representatives since spring about the new requirements. But those requirements were apparently not communicated from Region 5 to the strategy team and were a surprise to the those spearheading the grant application.

Several strategy team members volunteers to work on altering the grant application to meet the new requirements and still get the grant application in for upcoming funding decisions.

The Sampson Seven asks: Are the deals market-based? Are they proactive in nature? Do they look over the immediate economic horizon, anticipate economic changes and diversify the economy? Are they maximizing private capital investment? What is the probability of success? Will the projects create an environment where higher paying, lucrative jobs are created? Are taxpayers getting a positive return on their investment? (Brainerd Dispatch, 22 September 2002)

Court Hearing Set on State's Lawsuit Against Potlatch, Sappi

A court hearing is set Wednesday in Crow Wing County on a motion for summary judgment in the state's case against Sappi Ltd. and Potlatch.

In the motion, filed July 16 by Minnesota Attorney General Mike Hatch, the state is asking the court to declare the non-compete provision between Sappi and Potlatch illegal and unenforceable.

The motion further asks if the court finds that the clause is necessary to protect some good will that Sappi acquired in its asset purchase agreement with Potlatch, the state wants an order modifying non-compete language so it doesn't extend beyond the specific circumstances necessary to secure good will.

The motion is set to be heard at 10:30 a.m. Wednesday in Crow Wing County District Court in front of Judge Wayne R. Farnberg.

On Monday, affidavits in opposition to the state's motion for a summary judgment were filed in district court. Along with affidavits from Sappi and Potlatch, the court received affidavits from Sarah Manchester, general counsel and secretary of Sappi Fine Paper North America and secretary of Sappi Cloquet; and from David Crosby and David Jaffe, attorneys with Leonard, Street and Deinard Professional Association, the law firm representing Sappi.

The non-compete provision of the asset purchase agreement between Potlatch and Sappi prevents any buyer of the Brainerd paper mill from using it to produce coated paper products for a period of seven years.

Today Frank Carroll, Potlatch spokesman in Cloquet, said the company is working on significant offers but nothing has been finalized.

"People should be very cautious," Carroll said.

But Carroll said the company was hopeful a buyer may still be found. The clock is ticking. Potlatch officials stated earlier this year the mill faces a physical challenge if it sits empty during the winter months.

The $480 million sale agreement between Sappi and Potlatch was finalized May 13. In the deal, Sappi obtained Potlatch's Cloquet paper mill and some equipment from the Brainerd mill. The closing left 616 employees without work. (Brainerd Dispatch, 27 September 2002)

European Firm No Longer Checking Out Mill

A buyer from Europe is no longer interested in the Potlatch mill and pulled out of consideration last week.

Tom Brotski, Potlatch transition manager, said he was notified of the decision through the consulting firm it hired to help find a buyer for the mill. Jaakko Poyry is a well-known forest products industry consulting firm based in White Plains, N.Y.

Brotski said there are still two other interested buyers—one from the United States and another from Asia. He said confidentiality agreements do not allow him to discuss any of the companies in more detail. Other parties also have expressed interest in the mill and ongoing visits are continuing.

There were rumors this past week that Hallmark and 3M were among names of interested bidders. Brotski said neither Hallmark nor 3M are bidders or are in the process.

More information on the mill and marketing efforts—along with the dispute between the state and Sappi and Potlatch in regard to whether the prohibition on making coated paper in Brainerd stopped buyers this summer—are expected after Wednesday's hearing in a Crow Wing County courtroom. (Brainerd Dispatch, 29 September 2002)

October

Arguments Made in Paper Mill Court Case

A district court decision ruling on whether a non-compete clause is legal in the sale agreement between Potlatch and Sappi Limited is expected in a little more than two weeks.

Primary attorneys for both sides were animated at times Wednesday in Crow Wing County District Court before Judge Wayne R. Farnberg, thumping a podium or gesturing to exhibits as they presented their cases. Arguments continued for about three hours after a brief discussion between parties in the judge's chamber.

About a dozen people attended the court proceeding. The state requested a summary judgment in the case, saying no material facts were in dispute, a fact Sappi and Potlatch attorneys quickly disputed.

At issue is a non-compete clause in the $480 million sale agreement where Potlatch sold its printing papers division to South African-based Sappi. The agreement called for Sappi to purchase Potlatch's Cloquet mill and related assets along with paper coating equipment in the Brainerd mill.

Potlatch retained ownership of the Brainerd mill and formed a marketing team to sell the northeast Brainerd facility. Potlatch agreed to a seven-year non-compete clause that stated Potlatch could not compete directly or indirectly with Sappi by selling the Brainerd mill to a buyer interested in making coated paper.

Mike Hatch, Minnesota attorney general, filed the civil suit against Sappi and Potlatch, stating the non-compete clause was illegal and was inhibiting the Brainerd mill's sale. Attorney Robert DeMay, representing Sappi, said the non-compete clause was an integral part of the sale agreement where Sappi purchased Potlatch's goodwill and intellectual property. Goodwill includes the favor or prestige or reputation a business has acquired beyond the mere value of what it sells.

In court Wednesday, Alan Gilbert, Minnesota attorney general's office chief deputy and solicitor general, said a non-compete clause to restrict trade is valid only if it is reasonable. Gilbert said the Sappi-Potlatch clause was illegal because it was broader than needed to protect the goodwill Sappi purchased.

"They have taken essentially a sledgehammer to kill an ant," Gilbert said.

A seller has every right to agree to refrain from competing with a buyer directly or indirectly, DeMay said.

"The Brainerd mill was on its way out and was going to be closed without this transaction," DeMay said. He said the mill was the least efficient, suffered years of losses in a highly competitive market and did not have the economies of scale to make it work. "It was going to be shut down if it wasn't sold. ... Nobody wanted this old and antiquated mill."

Gilbert said Sappi and Potlatch keep saying the Brainerd mill is not economically viable.

"Then why are they fighting this so hard?" he asked.

DeMay said Sappi invested $480 million to save a Minnesota business in the Cloquet facility and retain jobs. He said Sappi wanted to be sure it was protected from competition from the Brainerd mill and Sappi paid dearly for everything about the printed papers division to be Potlatch's successor.

A mill buyer could undercut Sappi's position as that successor, DeMay said. In Sappi's argument, preventing Potlatch from using the Brainerd mill to produce coated paper is permissible to protect customer relations. DeMay said the non-compete clause did not prevent Potlatch or anyone from producing coated paper, unless they used the Brainerd mill to do so.

Another issue was how employee skills or know-how or expertise fit into the intellectual property mix.

DeMay said former Potlatch employees could get together and open a mill down the street as long as they did not use the Brainerd mill. If they did, DeMay said they would reconstitute the previous business that Sappi purchased and take customer base away. DeMay said Sappi was not placing a claim on employee skills, which he said was different than the know-how Potlatch sold. DeMay said know-how is gathered from the collective group of employees using the Potlatch process.

And DeMay said the state has to show it has the right of legal action. Gilbert used highlighted and enlarged copy on display boards to illustrate his points. He said the attorney general had every right to bring the case.

Both sides accused each other of changing positions on issues and interpretations since the suit began and both said each other was avoiding the facts not in their favor.

Gilbert requested the court act quickly so parties with an interest in making coated paper could do that in Brainerd and get employees back to work. Sappi's legal representatives requested two weeks in order to prepare findings for the court.

Farnberg said he intended to rule shortly after receiving all the documents. Attorney Brooks Poley represented Potlatch at the hearing. State Sen. Don Samuelson, DFL-Brainerd, and Lucy Nesheim, Brainerd City Council president, attended portions of the hearing. (Brainerd Dispatch, 04 October 2002)

Potlatch Confident Buyer Will be found, Rep. Oberstar Told

Paper mill property when it was owned by Potlatch, October 2002. Source: Brainerd Dispatch

Potlatch officials told Congressman James Oberstar they could not name a buyer for the Brainerd mill, but they are confident one would be found.

Oberstar, D-Minn., met with most of the members of the Brainerd mill's core team on Saturday morning at Potlatch. Tom Brotski, plant transition manager, said he is "very confident" a buyer will be found and he asked for Oberstar's help in getting that buyer off to a good start, particularly in regard to reducing transportation costs.

"Unfortunately today I can't name a buyer right now," Brotski said, adding there are interested parties from the United States and Asia. "The good news is there are interested people out there. We really hope we can make the announcement soon that we have a buyer."

After the meeting, Brotski confirmed there are people putting together offers for the mill but he no agreement has been made.

"Before Christmas we will know something one way or another," he said.

Some of the products being considered for production at the Brainerd mill include supercalendar uncoated paper, label stock and book paper used in novels and text books. Those specialty niche areas are considered opportunities where the mill could produce paper.

"We are not optimistic for no reason," said Frank Carroll, Potlatch spokesman based in Cloquet. "We are talking to real people who have a real opportunity to employ people in this town. Our optimism is not false optimism. ... We look forward to selling this mill and we will."

Oberstar said he was available to meet at any time with any prospect.

The group discussed the state of the industry, international competition and how the Brainerd mill could compete in a "geographically challenged" Midwest location faced with shipping product to the nation's coasts and the costs involved.

"There are things we can do to help with this transportation cost issue," Oberstar said.

Oberstar said there are options to assist in terms of railroad competitiveness and what Burlington Northern Santa Fe Railroad charges short-hall railroad providers when using BNSF track. Other suggestions included developing freight-haul opportunities through Duluth. Another included looking at current corridor studies regarding highway congestion, particularly in the Chicago area, which affects freight sent from the Brainerd mill to the East Coast.

Brotski said the mill's sale price is not the issue, but buyers are faced with a great deal of operating costs before they will be able to gain any revenue from product sales. Brotski said anything to defer those costs from a new buyer will help.

Sen. Don Samuelson, DFL-Brainerd, said he is willing to introduce legislation that would forgive the sales tax on new machinery a buyer may have to bring in, which can be substantial in terms of multi-million dollar equipment.

Samuelson and Oberstar both said they could help in terms of transferring existing Potlatch permits, from the Minnesota Pollution Control Agency and the Environmental Protection Agency, to a new buyer.

Oberstar took the opportunity to note the state recently had an opportunity to use $175 million in federal funds, but the Legislature turned the money back instead of using matching funds to utilize it.

Oberstar also told the group he met with representatives of Potlatch and Sappi Limited, the buyer of Potlatch's printing papers division, after the sale was announced in March. Oberstar said Sappi has an "imperious attitude" when it came to regulatory review of the sale and said any tampering or opposition would mean the South African-based company would walk away from the deal.

"Why as a condition of this did Brainerd take a beating?" Oberstar said of the sale agreement and the non-compete clause prohibiting coated paper production. "What is it that Sappi is so concerned about. If it was competition why didn't they buy Blandin?" (Brainerd Dispatch, 27 October 2002)

Plant Sale Nearer

Memo Signed to Pursue Purchase of Paper Mill

If a sale of the Potlatch mill could be equated with a long-distance runner, the latest move puts a new buyer in the final stretch, but short of the finish line.

Potlatch signed a memorandum of understanding with Missota Paper Co., a newly formed company founded specifically to pursue purchase of the Brainerd mill. The memorandum, signed Friday, is an agreement to pursue a definitive purchase agreement for the sale of the Brainerd mill. Terms of the sale agreement were not announced, but are expected to become public later.

Expectations are to employ 145 to 150 people initially with one of two paper machines operating. Once both paper machines are operating, the mill is expected to employ 260 to 270 salary and hourly workers. Talks with the Paper, Allied-Industrial, Chemical, Energy union are expected.

While Potlatch and Missota Paper said the sale is not completed at this time, both sides expressed confidence in the emerging deal.

Tom Brotski, Potlatch plant transition manager, said the forest products company is excited about the prospect and while the deal is not completed, it is "darn close."

"I think it meets that major goal that Potlatch had—that is employing workers from the Brainerd mill. ... It's not a done deal," Brotski said. "There is a lot of work to do."

If plans proceed as expected, a sale agreement will be finalized by Jan. 31, with Missota Paper operating the mill beginning Feb. 1. Missota Paper Co. plans to produce uncoated freesheet paper at the mill, which can be used for office paper and fliers with the mill moving into a specialty niche. Target markets are paper used in books where product can be sold to printers and publishers. Missota Paper Co. also plans to go after greeting card market.

"There are about 90 days of hard work pulling it together," said Dan Alexander, 55, Missota Paper Co. president, chief executive officer and principal spokesman. Alexander said he understands employees will be interested in applying for work, but at this point he said it is premature.

Brotski said Missota Paper met Potlatch's criteria. He said the mill had a number of bidders. Potlatch will help Missota be successful, Brotski said.

"We believe in the project," Alexander said. "... We are happy with the deal and the deal is detailed."

However, neither Potlatch nor Missota Paper were willing to go into greater detail at this point. Issues that need to be nailed down include finalizing financing and working capital, seeking state assistance for permits and debt financing, meeting with union representatives, and confirming customer support and agreements for raw materials.

"Those are the things we will focus on really over the next month," Alexander said, adding they will know by the end of November if things are going well or poorly with their plans.

If things progress as expected, applications for work at the mill may be taken in December. Alexander did not disclose Missota Paper's ideas for future terms for wages or benefits for employees. But he said plans are to speak with union officials. Alexander said he has no problem with a union in the mill.

Alexander said the initial group involved in the preliminary agreement is made of three individuals with other financial investors from a venture capital firm. Alexander said the venture capital firm was interested in preliminary plans but now that an agreement has been signed, they will investigate the proposal further.

"We have to secure all the financing," Alexander said of details yet to be determined. "We intend to work with the state on that."

In fact meetings with state officials, including Paul Moe, Minnesota Displaced Workers Program director for the Department of Trade and Economic Development, are scheduled at the mill today. Missota will be pursuing a $5 million industrial development bond through the state for debt financing. Alexander said there have been conversations with officials for several months.

"They were willing to get started as soon as a deal was reached," Alexander said.

Financing is obviously the critical element, Alexander said. He added the state will play a key role.

"They want to see a viable business plan," Alexander said. "So we are kicking that off."

Alexander said the business plan they intend to show state officials is better than one initially presented to them in September. Alexander and one of his partners, Jim Withers, first made contact with the Brainerd mill in July. Talks and visits followed. Then came exploratory talks with potential customers. Alexander said reaction was favorable and there are plans to go back to potential customers now with a preliminary deal in place.

In the interim, work will be done to prepare the mill, which should help Missota get a jump start on operations by February.

Mike Sullivan, Potlatch director of corporate communications, released a statement noting sale discussion includes all real estate and buildings at the Brainerd site, all equipment on site owned by Potlatch, all systems and intellectual property used at the mill and owned by Potlatch. The license for operation of the dam and its hydroelectric plant and assets are included. The monofill located at the Crow Wing County landfill is not included in the sale, although a restarted mill would continue to use the monofill.

Brotski said Potlatch wanted to thank the community support, including Sen. Don Samuelson, DFL-Brainerd; Sheila Wasnie Haverkamp, Brainerd Lakes Area Development Corp. executive director; and Lisa Paxton, Brainerd Lakes Area Chambers of Commerce chief executive officer.

Alexander said the partners have a belief in the capacity of the equipment, its production quality and the people they met here.

The individuals behind Missota Paper looked at mills across the country for a couple of years, but not necessarily as a threesome. Alexander, previously involved in paper mills, said two years ago he started looking at buying a mill again. He was outbid on one prospect and found another promising one on the West Coast. A preliminary deal there fell through but Alexander said this is a different situation with a business plan that satisfies Potlatch and Missota Paper.

"The equipment and people here make us excited that we can clearly be successful," Alexander said. While there are mills in better locations in terms of transportation costs, Alexander said he would rather have a good mill with good equipment and pay a little more than work harder to sell mediocre product.

Alexander said a weak paper market is just now getting better and prices are dropping on pulp. Alexander said pulp suppliers will be interested to see a new mill open and Missota Paper intends to buy from one main pulp supplier and purchase from another two or three. Alexander said that was one more component to complete, but he was the least worried about it. Missota Paper plans to use both the railroad and trucks to move product and Alexander said they will probably use more rail than Potlatch did. Missota Paper plans to do more business with paper in rolls, which Alexander said is more conducive to go by rail car.

"We really think we are going to get this done," Alexander said. "You can't quite celebrate until you actually get to the finish line." (Brainerd Dispatch, 29 October 2002)

Court Issue Pending

A Crow Wing County District Court decision determining whether a non-compete clause is legal in the sale agreement between Potlatch and Sappi Limited is still pending.

Tom Brotski, Potlatch transition manager, said the company was unable to comment on the issue because it was still before the state court. A ruling is expected soon from Judge Wayne R. Farnberg.

Mike Hatch, Minnesota attorney general, filed the civil suit against Sappi and Potlatch, stating the non-compete clause, which prevents a buyer for the Brainerd mill from making coated paper, was illegal and was inhibiting the Brainerd mill's sale.

Missota Paper Co., which signed a memorandum of understanding to pursue a definitive purchase agreement for the Brainerd mill, plans to make uncoated paper.

Dan Alexander, Missota Paper Co. president, chief executive officer and primary spokesman, said owners say they will abide by any court decision and it will not affect the business plan.

Alexander said if the mill can make anything they want it will give them more flexibility. But Alexander said a main point is that the coater is removed from the mill. And Alexander said Missota Paper Co. has developed a good business plan with uncoated freesheet paper they think is best suited for the mill.

Alexander said the mill set-up was not suited for that production before, but Missota Paper Co. has good contacts in the book industry and modifications can be made. The result could be manufacturing the thick paper used in hard-cover books, which require a uniformity of thickness and quality.

"That's a market the mill did not look up before," Alexander said. (Brainerd Dispatch, 29 October 2002)

Potential Deal Stirs Excitement

Former Potlatch workers, area business owners and officials throughout the Brainerd lakes area were excited to hear that there is a potential buyer for the Brainerd mill.

Potlatch signed a memorandum of understanding with Missota Paper Co., a newly formed company founded specifically to pursue purchase of the Brainerd mill.

"I knew for awhile that they were very close to an agreement," said Sen. Don Samuelson, DFL-Brainerd. "There are still hurdles to iron out. If there is anything I can do through the Legislature that would be an asset to Potlatch, such as permits they need, I will try to help."

Samuelson said the tentative sale of the Brainerd mill is good news for the community.

"A lot of people have been working hard on this ... It is an important issue for us," he said.

Samuelson said the tentative sale came sooner than expected. He said he was nervous with winter approaching that the building would deteriorate and become more difficult to sell.

Bob Harting, president of local Paper, Allied-Industrial, Chemical, Energy union, said he is satisfied with the company that signed the memorandum of understanding. He said it is a good company and he made a promise to the company that if it bought the mill that he would help get employees back.

"I'm happy as heck to get people back to work," he said.

Lisa Paxton, chief executive officer for the Brainerd Lakes Area Chambers of Commerce, said she is thrilled with the tentative sale. She said everything she heard about Missota Paper Co. is positive and the company would be a great fit for the community.

Craig Nathan of Minnesota Rural Concentrated Employment Program in Brainerd said the news is great for the community. He said the impact on the community, with the payroll and getting people back to work, will have a trickle down effect on the community.

Gail Leverson, Region 5 economic development director, said its goal is job creation and the sale of the mill would meet this goal. She said she would hope the company would grow to employ 616 people and have the same level of wages.

Leverson said there is still economic development opportunities at the Brainerd site and she would encourage the growth.

"What outstanding news to the community," said Dan Vogt, Brainerd administrator. "Hopefully the unemployed will have the opportunity to become employed again."

Whether most of the more than 600 Potlatch workers will want to return to the mill depends on their current situation. Some took early retirement or opted to return to college and don't necessarily want to go back.

Pam Winterfeldt, a three-year Potlatch employee, said today she is pursuing a career in nursing and wouldn't want to return to the mill. However, she said she feels for her former coworkers who had only a few years until their retirement. She said she thinks the reopening of the mill will be a good thing for them and for the entire community.

"It's going to bring a lot of jobs back to Brainerd," said Winterfeldt. "(The mill's closing) has definitely impacted Brainerd. I have friends in retail and they say it has really impacted them."

"Well, it's good news if things go as planned," said former Potlatch worker Kyle Zelinske, vice president of Local 164. "I do think it's great. The community is going to need it. I don't know how quickly things are going to move."

Zelinske, who also is pursuing a nursing career, said he doesn't want to get his hopes up too high about the reopening of the mill. It could take longer than most people think to get the plant up and running again.

Zelinske's father, Ken Zelinske, who spent 40 years at the mill and was active in the union, said he hopes that the new owners will be able to make it work for themselves and the community.

"I think it's good news," said Zelinske. "Every time I drive by that place it makes me sad to see it empty like that."

A Potlatch employee for 29 years, John Jansen said he's not sure if he'd go back to the mill but he would consider it. It would depend on what type of work would be available. He said the new opportunities the reopening of the mill would bring will help the younger Potlatch employees he used to work with.

"I think it would be wonderful, especially for these young kids who were just starting to build their families and buying homes. They were really hurt," said Jansen. "They were just getting a good start in life. It's hard on them."

Paul Andersen, owner of Highway 25 Liquor located not far from the Brainerd mill, was ecstatic to hear that the mill may be sold.

"You just made my day," said Andersen. "You can print that. You just made my week. It's wonderful. As a business owner and a member of this community, this is great news for the entire Brainerd area."

Rick Bollum, an owner of Chopper's restaurant and bar on Mill Avenue, said business has declined about 8 to 12 percent since the mill closed May 18. He was pleased to hear the mill may have a new owner.

"It's hurt us quite a bit," said Bollum. "You can't help but notice 250 cars that aren't driving by here each day."

Brainerd City Council President Lucy Nesheim said the community as a whole worked hard to help make this happen. She also thanked the people involved for their hard work.

"It's such a blessing that we'll be able to put some of the skilled paper workers back to work," said Nesheim. "I'm real excited that it happened." (Brainerd Dispatch, 29 October 2002)

Hiring Up to 150 at First Seen

Uncoated paper trials Potlatch began before the mill was shutdown are likely to point the way for future employment.

Expectations are to employ 145 to 150 people initially with the startup of No. 6 paper machine and one sheeter. Once both paper machines are operating, the mill is expected to employ 260 to 270 salaried and hourly workers.

If the schedule is kept as planned and the agreement proceeds to a final sale, No. 6 paper machine is set to fire up Feb. 10. The No. 5 paper machine is expected to be online by September or October 2003. The other three sheeters also are expected to be operating.

"The two paper machines here made outstanding base stock," said Dan Alexander, Missota Paper Co. president, chief executive officer and primary spokesman. He said Potlatch and its personnel started pursuing noncoated paper markets and were just in the early stages when Sappi Limited purchased Potlatch's Cloquet mill and the Brainerd mill was shut down.

Alexander said samples made before the mill closed have been shown to industry people and market reception was favorable.

"We clearly could sense the enthusiasm with the staff here," Alexander said. "They would like to have the opportunity to take that to its fruitful conclusion. They want the chance to have the opportunity to succeed. We want to provide them that opportunity."

Alexander plans to be active in product sales.

Alexander said about 100 people were employed in work associated with the coater equipment and supercalendar, which put the polished finish on the paper. Without that equipment or coated paper production, Alexander said those jobs are no longer there. (Brainerd Dispatch, 29 October 2002)

Potlatch Chronology

• The Northwest Paper Co. was started in Cloquet with the efforts of Charles A. Weyerhaeuser, Rudolph Weyerhaeuser, C. I. McNair and R. D. Musser. The mill made newsprint from ground wood pulp, producing its first newsprint on April 8, 1899.

• In the first years of the 20th century, the Northwest Paper Co. purchased the Northern Water Power Co. on the Mississippi River and the C. F. Kindred Dam in Brainerd.

• In 1999, Potlatch reported the completion of the $525 million pulp mill in Cloquet. The modernization project began in 1992.

• By 2001, Potlatch determined it could not successfully compete in the fine-coated paper business on a long-term basis. Potlatch began exploring the possibility of selling the business. The company determined it would have to close the Brainerd mill.

• March 18, Potlatch announced the sale of its printed papers division and the Cloquet pulp and paper mill. Potlatch completed a sales agreement with South African-based Sappi Limited, originally known as South African Pulp and Paper Industries Limited, for the Cloquet mill and related assets for $480 million in cash.

• Potlatch retained ownership of the Brainerd mill, which employed 616 workers. The mill would close in 60 days. Market value of the land and buildings at the Brainerd mill was $8,353,400.

• May 13, the Brainerd mill ceased operation and planned to work on closing the mill during the next week with employees leaving throughout the week.

• May 18, a skeleton crew remained to market the mill, complete the shutdown process and offer human resources contacts for mill employees.

• Oct. 28, Potlatch announced a memorandum of understanding was signed to pursue a definitive sales agreement for the Brainerd mill with Missota Paper Co. If the deal progresses as planned, the sale agreement will be finalized by Jan. 31 with Missota Paper taking ownership of the mill on Feb. 1. (Brainerd Dispatch, 30 October 2002)

A NEW FIRM FOR THE OLD MILL

What is Missota Paper Co.?

Missota Paper Co. is a newly formed company incorporated specifically to buy Potlatch's Brainerd mill.

Address: 46 Sanctuary Road, East Tawas, Mich.

Owners/principals: Dan Alexander, Charlie Wemyss, Jim Withers, who will be the active senior managers of the company.

Alexander, 55, Missota Paper Co. president, chief executive officer and principal spokesman, will be involved in sales, marketing and financial functions of the company. He will be located at the sales and marketing office in Chicago.

Alexander was a member of the initial management team in the creation of Madison Paper in Madison, Maine, in 1977, becoming vice president of marketing in 1980. In 1984, he founded St. Mary's Paper by acquiring its sales and marketing company, D. C. Northam, located in the Chicago area. St. Mary's Paper was sold in 1994. Since 1994, Alexander owned and operated Silver Creek Paper as a paper sales and market consulting company. He was a founding member and twice chairman of the SC Council, which was made up of four North American and eight European paper companies. He was a member of the Premier's Council of Ontario from 1988 to 1993, an economic advisory body to the Province of Ontario premier.

Alexander has a bachelor's degree in economic geography from Eastern Illinois University.

Wemyss, 46, vice president of sales, also will be located in the Chicago office. During the past 20 years, he gained extensive management experience in sales and marketing printed papers, including establishing a U. S. sales company for the Swedish paper company, Modo Paper AB, which was sold to the Finnish company, Metsa Serla in July 2000. He managed International Data Group's paper supply company. IDG is a major publisher of computer technology related publications in 75 countries.

Wemyss' father and grandfather owned paper mills in upstate New York and northern New Hampshire and he grew up in the paper business. Wemyss has a bachelor's degree in political science from the University of New Hampshire.

Withers, 59, executive vice president and chief operating officer, will be located at the Brainerd mill. He has 35 years of paper industry experience with background in manufacturing and the technical aspects of the business. He started as a process engineer and progressed to production manager with the Kimberly Clark's Schweitzer division, a specialty freesheet manufacturer.

More recently, Withers was vice president of operations at St. Mary's Paper from 1986 to 1994. Since 1994, he operated Paper Technical Services, providing consulting and technical services to European paper companies, which manufacture coated and uncoated ground wood and freesheet papers.

Withers has a bachelor's degree in chemical engineering and a master's degree in pulp and paper technology from the University of Maine, and a Master's in Business Administration from the University of Massachusetts and completed an advanced management program at Harvard Business School. (Brainerd Dispatch, 30 October 2002)

Study Traces Impact of Potlatch Plant Closing

A new study lists $40.3 million in lost revenue, including taxes, related to Potlatch's sale of its printing papers division.

The Paper, Allied-Industrial, Chemical, Energy Union released the study Monday during a noon meeting at Brainerd City Hall. PACE represents paper workers in Brainerd and Cloquet.

Dick Blin, special projects specialist for the national union, said Potlatch severance package of full pay for 26 weeks after the mill closed will conclude in mid-November. Blin said the study was based on thorough research and it looked at the area job market data for Crow Wing, Aitkin and Carlton counties.

Looking at overtime, premium pay and wages, the study found the average annual paper mill salary in Brainerd and Cloquet was $49,037. That salary was expected to decrease to $31,368 in the first year after the mill's closing, including severance pay and jobless benefits. In the second year after workers left the mill, the paper worker was expected to make a yearly salary of $25,101, nearly a 50 percent cut from earnings while in the Potlatch mill, the study reported.

"I don't think Brainerd has felt the impact and they won't until February," said Ken Zelinske, retired Potlatch employee and Local 164 union president. Bob Harting, Local 79 union president, also noted the effects of union meeting spending, including $20,000 a year or more for meetings at area resorts and another $10,000 spent annually for gatherings at the Moose club. Union leaders also had concerns for people now going without medical benefits.

Blin said the message was to hold the line on union negotiations in Cloquet and to support the state's efforts to remove the non-compete clause from the Brainerd mill.

The study reported beyond the laid-off workers who did not seek retirement, about 829 between the two mills, another 1,215 jobs were expected to be lost in the ripple effect for a total job loss of 2,044 in lost jobs in the three study counties.

The study looked at layoffs and proposed pay cuts by Sappi Limited in Brainerd and Cloquet and measured wage and revenue shortfalls during the next two years. The study, done by the Chicago-based Center for Labor and Community Research, showed a combined tax loss of $36.5 million to date and predicts another $3.8 million in tax losses if current cuts to workers and loggers in Cloquet remain in place.

The study reported the layoffs will cost local, state and federal government $27.2 million in tax revenue, $9.3 million in unemployment benefits for a total cost to government of $36.5 million.

The data combined the 616 jobs lost in Brainerd and hourly and salary layoffs for 280 workers in Cloquet. The study used statistics from the census, Department of Labor Bureau of Labor Statistics, Minnesota Department of Economic Security, Minnesota WorkForce Center in Brainerd and area job market guides for Crow Wing, Aitkin and Carlton counties by the Minnesota Implan Group in forecasting community tax base drops and ripple effects.

PACE union representatives from Sappi mills in Michigan and Maine attended the meeting. Skip Hodgdon, Local 9 from Skowhegan, Maine, said he found he had a neighbor in Maine from Brainerd, proving again how small the world is. Hodgdon said he was in Brainerd to show the members elsewhere are concerned with what happens here. They were bringing negotiating experience from mills that Sappi purchased earlier.

"It also sends a message to Sappi," said Steve Keglovitz, union president in a Sappi mill in Muskegon, Mich. "We are disappointed in their tactics. There is no reason they can't let another employer in here. ... Businesses watch out for each other's back and the unions have to do the same." (Brainerd Dispatch, 30 October 2002)

Potlatch to Hire About 12 to Reassemble Brainerd Mill

Potlatch will hire about a dozen workers to help reassemble the Brainerd mill in preparation for a potential sale to Missota Paper Co.

Tom Brotski, Potlatch plant transition manager, said Potlatch took a lot of care to mothball the mill and as a result it will take a lot of care to get it running again. Brotski said Potlatch wants to do what it can to get Missota Paper up and running quickly once the sale is completed.

A temporary help service will be used to hire workers with the hope experienced people will apply. In the past, Potlatch worked with Kelly Services in Baxter.

Missota Paper will be in charge of hiring employees for the mill if the sale proposal proceeds as expected. A mass application process is expected in December and will be funneled through the WorkForce Center in Brainerd. Dan Alexander, Missota Paper president and chief executive officer, said Monday he has no problem with a union in the mill and that decision will be up to the employees.

Brotski said Missota Paper's equity partners will be in to look at the mill next week. If plans proceed as expected, a sale agreement will be finalized by Jan. 31, with Missota Paper operating the mill beginning Feb. 1. (Brainerd Dispatch, 31 October 2002)

November

Strategy Team Knows Job Won't End with Completion of Paper Mill Sale

While a working paper mill in northeast Brainerd will help put Potlatch workers back into jobs, the Potlatch community strategy team said not to forget about the hundreds who will still need help.

And the employee survey results show a vast majority of those former employees plan on staying in the lakes area. The results were discussed at a Potlatch community strategy team meeting Wednesday.

A proposal for Missota Paper Co. to purchase the Potlatch mill could employ about 150 people beginning in February, which could grow to about 270. But Potlatch laid-off 616 workers when the mill closed in May.

More than 500 workers responded to the Potlatch employee survey. Results were tabulated Oct. 25 with additional responses still filtering in. Responses came from as far away as the West Coast and some came back as many as four times indicating how often some people moved since May.

"It's sort of like trying to put your arms around fog in terms of trying to get this together," said Cindy Brey, Job Service representative.

The group also cautioned former Potlatch workers that their unemployment benefits come with certain training requirements and while there may be new jobs at the mill, those jobs and paychecks will not start until February.

"The other reality is that there are not going to be 616 jobs," said Tom Brotski, Potlatch plant transition manager.

Pat Rafferty, who was hired by Job Service to conduct the survey to all dislocated workers, said job benefits such as medical insurance remain a key issue. Rafferty said the extended health care coverage through COBRA, the Consolidated Omnibus Budget and Reconciliation Act of 1986 cost $800 per month for family coverage. Rafferty said the potential sale also has another ripple effect as employers are concerned if workers they hire will stay with them or go back to a newly operational mill.

Rafferty has been in contact with 30 different companies looking for employment options for dislocated workers.

The survey documented the percentage of employees in training programs and what fields of study dislocated workers were now pursuing. The survey found 56 workers, 31 percent, were in training for trades; 29 people, or 16 percent, were in medical training; 19 people, or 10 percent, were in business field training. Smaller numbers were reported for people in training for computers, accounting, communication, criminal justice/law, education, culinary arts, environmental/plant/wildlife and photography technician.

Training dollars are available to assist Missota Paper Co. and other employers who will retrain workers in new skills on the job. Training assistance funds can pay 50 percent of a worker's salary while the training is in place, which can be several months. Training dollars also are available for classroom training. On-the-job training dollars come with contracts and money goes to the employer.

Brainerd City Council President Lucy Nesheim asked if some of those dollars could go to help provide more medical field classroom training as well. Craig Nathan, operations manager of Minnesota WorkForce Center in Brainerd, said the potential is there.

Potlatch also is working on job descriptions to see how funds could be tied to retraining at the mill. Frank Rebnord, Minnesota Rural CEP team leader in Brainerd, said they will make all the contract matches they can to keep the money in the community.

The employee survey is expected to assist both Missota Paper Co. and future economic development issues. News of a signed agreement to pursue a sale is expected to affect Economic Development Administration application for short-term planning assistance in the wake of Potlatch's closing. The application requested $50,000 in federal funding, to match funds collected locally.

Lisa Paxton, Brainerd Lakes Area Chambers of Commerce chief executive officer, and Sheila Wasnie Haverkamp, Brainerd Lakes Area Development Corp. executive director, both suggested tweaking the EDA application. The strategy team will continue to discuss this with a final application expected in November.

In its letter to Robert Hutton, Region 5 Development Commission executive director, the EDA noted the area must still be eligible for the grant when the EDA receives the application and the project will compete with others for funds. The application needs to be in the EDA's Chicago regional office by Nov. 25. (Brainerd Dispatch, 01 November 2002)

More Details on Potlatch Layoffs Are Expected

More details regarding additional layoffs at Potlatch are expected Friday.

Today Mike Birkeland, Potlatch communications manager for the Minnesota region, confirmed a union vote Wednesday by the two locals, 79 and 164, of the Paper, Allied-Industrial, Chemical and Energy Workers International Union.

The union vote came after months of negotiations regarding how many hourly workers would be affected in the latest round of layoffs. The local union employees in Cloquet also voted.

"We're not able to disclose any specifics at this time," Birkeland said.

Birkeland said a meeting was expected later today with an announcement to follow late today or Friday.

In June, Potlatch Corp. laid off 126 salaried positions at its Minnesota paper and wood mills, including 16 positions in Brainerd. Potlatch employs about 650 to 700 people at its Brainerd mill.

Before the June job cuts, the diversified forest products company employed 6,700 workers with 1,700 of those on salary. In Minnesota, Potlatch employed 2,600 workers before the job cuts with nearly 800 of those in salaried positions. (Brainerd Dispatch, 02 November 2002)

Yanisch Upbeat on Missota Paper Co. Plans for Mill

Rebecca Yanisch, Department of Trade and Economic Development commissioner, said the department was pleased with the product Missota Paper Co. plans to produce. Missota Paper has been working with DTED for some time as the new firm developed a business plan.

Yanisch said DTED is working with Missota Paper to make sure it is successful and they are now working on the bond financing. Yanisch was at the mill in March when Sen. Mark Dayton and Sen. Paul Wellstone visited. Yanisch said it was fitting the potential sale of the mill came last week as she thought of how committed Wellstone was to see the mill re-open.

While Yanisch did not go into specific details as to how sure she was Missota Paper could secure all the pieces necessary to make the mill business plan go, she was able to put them into perspective with other potential buyers. (Brainerd Dispatch, 03 November 2002)

Missota Paper Co.

It Looks Like a New Company Will Fill Part of the Potlatch Void

It won't be a panacea for all of the region's economic ills, but word that a newly formed company is in the process of buying the former Potlatch paper mill was a tremendous lift for the Brainerd area.

The new company could hire up to 150 people when it starts producing uncoated paper in February. Once it's in operation, the new plant might employ up to 270 people.

Missota Paper Co. is not another Potlatch. It won't fully replace the 616 jobs that were lost when Potlatch closed its doors nor is it expected to offer wages that match what Potlatch was paying its workers. However, many economic analysts would say that's OK. It's better, they argue, for a community to diversify and have several mid-size companies rather than put the majority of its job-producing eggs in one basket.

The Missota Paper Co. has been working with the Minnesota Department of Trade and Economic Development as it formed a business plan and DTED Commissioner Rebecca Yanisch said the company is the strongest candidate that's been identified to be established at the paper mill.

A broad-based coalition of political units and economic development and civic organizations have doggedly worked to find a business that would be able to step in and fill some of the void left by Potlatch's departure. Much of their work has been done behind the scenes, but the entire community owes them thanks for their efforts. (Brainerd Dispatch, 10 November 2002)

December

State Suit Against Sappi Dismissed

On a day when the Brainerd Potlatch mill began producing steam again as a sign it was gearing back up for a possible sale, a lawsuit filed by the state of Minnesota against Sappi Limited and Potlatch was dismissed.

"We are pleased it is all resolved," Mike Sullivan, Potlatch spokesman in Spokane, Wash., said today. "It is what we expected would happen."

Attorney General Mike Hatch argued the purchase agreement that sold Potlatch's printing papers division and its Cloquet mill to Sappi unreasonably restrained trade in violation of Minnesota law. Sappi argued the state was without authority to make its argument. And Sappi argued the district court lacked personal jurisdiction over it.

Retired District Court Judge Wayne Farnberg concluded the state failed to plead or present disputed evidence of material fact and he noted affidavits were not timely filed but were accepted. The court ruled it did have personal jurisdiction over Sappi Cloquet and that the attorney general had the authority to bring the action before the court.

Sullivan said the court decision has no effect on the potential sale of the mill. Sullivan said Potlatch is progressing with work to get the mill ready to restart operations as part of a potential sale to Missota Paper.

The court case has wound its way through the court system since the complaint was filed by the state on May 16. With the sale, Potlatch closed the Brainerd mill. The sale agreement included a non-compete clause prohibiting a buyer of Potlatch's Brainerd mill from producing coated paper.

In July, the state asked for summary judgment stating no material facts were in dispute. Sappi and Potlatch disagreed in court, asking for a dismissal. The state presented its arguments for a summary judgment during an Oct. 2 hearing in a Crow Wing County Courtroom.

In his findings of fact, Farnberg noted at the time the Brainerd mill closed it had higher production costs than every other coated paper production in the world.

"The Brainerd mill is not, and cannot feasibly be made, cost competitive for production of coated paper over the long term," the court stated.

Farnberg stated Sappi's purchase of Potlatch's coated paper business was conditioned upon closure of the Brainerd mill to permit Sappi time to transition the products and associated goodwill from the Brainerd mill to the Cloquet mill and other Sappi holdings.

"From the beginning and throughout these negotiations, Sappi Limited made it clear it would consider no purchase agreement which would permit the Brainerd mill or its equipment to reappear in competition with the purchased business while the Sappi organization was in the process of securing the intellectual property, goodwill and other intangible assets of that business," the court stated.

In order to preclude Potlatch from directly or indirectly reclaiming or selling to another buyer any of the value from Potlatch's coated paper business and its worldwide reputation for quality, the parties negotiated a protective covenant.

In the court document Potlatch acknowledged that Sappi is "entitled to protect and preserve the going concern value of the business to the extent permitted by law."

The non-compete clause is in effect for seven years.

The court noted the state conceded in its discovery process that it was unable to identify any paper producers who were willing to enter serious negotiations to buy the Brainerd mill and were held back by the restrictive covenant. Potlatch stated potential buyers had not indicated potential conflict with the covenant.

Farnberg's decision was filed with Darrell Paske, Crow Wing County Court Administrator, on Nov. 26.

Sappi Fine Paper North America responded to the ruling with a written statement.

"Sappi is pleased with Judge Farnberg's decision in dismissing both counts of the lawsuit. This decision will allow Sappi to continue to focus on making the Cloquet pulp and paper mill a world-class facility improving the mill's technology, infrastructure, and cost structure to allow it to compete on the world stage for many years to come.

"This is the single most important step Sappi can take to secure a long-term future for fine paper manufacturing and hundreds of jobs in Minnesota." (Brainerd Dispatch, 04 December 2002)

Potlatch Heats Up Mill Again

Potlatch is now heating the mill, one of the first steps in putting the mill back together after it was mothballed for the long haul when the mill closed in May.

Jim Withers, Missota executive vice president and chief operating officer, said Thursday that things are going along well and Missota is still working its way through due diligence, working with potential customers and working with the financing for a Brainerd mill purchase.

Withers said the quick answer is "so far so good and we continue to be on schedule."

Withers said seeing the steam rising out of the mill is a sign of the activity.

"That's a nice sight from my point of view," he said.

Missota Paper has had discussions with Potlatch union Local 79 and Local 164.

"We have had some discussions and they have been very constructive," Withers said. "They have been very supportive."

Talks also are progressing between Missota and the Department of Trade and Economic Development.

"It is a nice mill. I've been in the paper industry for a long time," Withers said. "It's a tough market situation and the economy is what it is. I think it is a good opportunity and I think so far so good.

"It's too early to say it's a done deal by any means."

Withers said he was not going into too much detail because it was better not to be overly optimistic.

"Each week gives us more confidence, but it will be early January before we have enough information to say it is really looking good. That is what the original schedule was."

And Withers said they are still on it. As for the court decision dismissing the state's case against the non-compete clause agreement between Sappi and Potlatch, Withers said Missota's business plan was not based on being able to produce coated paper so it did not effect them. (Brainerd Dispatch, 08 December 2002)

City Conduit for $500,000 Missota Loan

The city of Brainerd will act as a conduit for a $500,000 loan from the Minnesota Department of Trade and Economic Development to Missota Paper Co.

Missota Paper Co. was formed specifically to pursue purchase of the Potlatch paper mill in Brainerd. The $500,000 loan, if approved by the state, would be used toward the purchase.

The Brainerd City Council Monday passed a resolution in support of the loan pending review from Steve Bubul, an attorney with Kennedy and Graven, Minneapolis, the city's bond counsel, and Springsted Inc., the city's financial consultant.

The $500,000 loan from the state is through the Minnesota Investment Fund program. If approved by the state, the loan would be issued to the city of Brainerd, which in turn would loan the $500,000 to Missota at 2 percent interest over seven years. As the loan payments are made by Missota the city would retain the first $100,000 in principal plus interest paid to that point. After that all payments would go to the state.

Missota Paper Co. signed a memorandum of understanding Oct. 25 with Potlatch to pursue a definitive purchase agreement for the sale of the Brainerd mill. Terms of the sale agreement were not announced, but are expected to become public later.

Expectations are to employ 145 to 150 people initially with one of two paper machines operating. Once both paper machines are operating, the mill is expected to employ 260 to 270 salary and hourly workers.

The sale agreement between Potlatch and Missota is anticipated to be finalized by Jan. 31, with Missota Paper operating the mill beginning Feb. 1. Missota Paper Co. plans to produce uncoated freesheet paper at the mill, which can be used for office paper and fliers with the mill moving into a specialty niche. Target markets are paper used in books where product can be sold to printers and publishers. Missota Paper Co. also plans to go after greeting card market. (Brainerd Dispatch, 17 December 2002)

BRAINERD'S POTLATCH MILL CLOSES

After Months of Rumors, Mill Avenue Plant Shuts Down,

Ending a Century of Papermaking in Northeast Brainerd

Even after rumors circulated about Potlatch's future for many months, news the mill was going to close came as a shock.

On March 18, Potlatch announced the sale of its printed papers division and the Cloquet pulp and paper mill along with the closing of the Brainerd mill.

The move ended a papermaking era in northeast Brainerd that spanned a century and put nearly 616 people out of work.

In many cases several members of a single family crossing two and three generations were employed at the mill.

Potlatch made the sales agreement with South African-based Sappi Limited for the Cloquet mill and related assets for $480 million in cash. A non-compete clause was attached preventing coated paper making in Brainerd.

Potlatch retained ownership of the Brainerd mill, announcing it would cease production on its two paper machines in May. Market value of the land and buildings at the Brainerd mill was $8,353,400.

News of the closing brought statewide attention to the area and highlighted a troubled industry. Minnesota Sens. Paul Wellstone and Mark Dayton arrived to meet with Potlatch workers and officials. An active community strategy team was formed to work with Potlatch to market the mill.

Mike Hatch, Minnesota attorney general, filed a lawsuit opposing the non-compete clause. In court, both sides agreed the mill had a worldwide reputation for paper quality. Hatch's lawsuit was ultimately dismissed by the district court judge.

Potential suitors toured the mill and Potlatch officials made a trip to Asia in marketing efforts.

Northwest Paper Co. established the mill in Brainerd in the first years of the 20th century. The mill was shut down in 1911, dismantled in 1914 and re-established on the Mississippi River's east side opening in 1917.

The mill also closed for nine months during the Great Depression, transforming itself from making newsprint to making wallpaper.

Many hoped for a similar rebirth and gained inspiration when Missota Paper Co. expressed an interest in buying the mill. While the deal is not done, Potlatch and Missota Paper representatives reported they were optimistic about a sale agreement in early 2003. (Brainerd Dispatch, 27 December 2002)

2003

January

Lawmakers Breath Easier

Brainerd area lawmakers were breathing easier this morning after state officials clarified that loan money for purchase of the Potlatch mill was not in jeopardy despite Thursday afternoon's state spending memo calling for a freeze on discretionary spending.

Rep. Dale Walz, R-Brainerd, said initial word that the Pawlenty administration memo might endanger the Missota Paper Co.'s plans to buy the Potlatch mill prompted him to call Charlie Weaver, the governor's chief of staff, at home Thursday night.

Walz said Weaver promised him that if the funds in question were a loan then the Brainerd mill would get its $2 million from the Department of Trade and Economic Development—a key component of a $5 million funding package for the establishment of a new paper making business at the northeast Brainerd site.

Walz said a representative of the governor's office told him today that the Missota Paper Co. loan "should be secured by the end of the day."

Sen. Paul Koering, R-Fort Ripley, canceled his plans to return to the district Thursday night to stay in St. Paul and help clarify the situation. He said a representative of the governor's office had assured him today the DTED money will be moving forward very quickly.

"He assured me the governor is all for this and all for the 200 jobs up in Brainerd and he'll make sure the money is delivered and it's put on the fast track," Koering said.

The first-term senator said there was an apparent miscommunication and that grants were being targeted rather than loans.

"This is a loan to Missota Paper for $2 million and they're going to pay it back in seven years," he said. "It's not a giveaway.

"It (news of the spending freeze) scared me last night. I didn't come back to the district because of that." (Brainerd Dispatch, 10 January 2003)

Momentary Snag

Spending Freeze Memo Nearly Derails Pending Deal on Potlatch Mill Sale

A state spending freeze memo from the governor's office created initial shock waves Thursday that a purchase plan for the Potlatch mill was in serious jeopardy.

Today those concerns were alleviated and Missota Paper announced it is proceeding with plans to buy the mill with a closing date expected in mid-February.

Missota Paper Co. temporarily put its plans to buy the mill on hold Thursday and owners expressed grave concerns the entire deal was at risk of unraveling just when it appeared to be near completion.

At issue was a freeze on state spending that was apparently a mixture of miscommunication in St. Paul. The freeze was originally thought to include the $2 million in funding the Department of Trade and Economic Development planned to loan Missota Paper as part of an overall $5 million package.

Today state officials confirmed the $2 million loan from the Minnesota Agriculture and Economic Development Board was not affected by the freeze.

"It is going through," Kit Borgman, DTED communications director, said today. "The governor's office has assured us and they will be assuring Potlatch as well."

A flurry of phone calls between Potlatch, Missota Paper Co., elected officials and the governor's office began Thursday afternoon and continued into the night and this morning.

"We've heard indirectly that our project is not caught up in this freeze," Missota Paper Co. president and CEO Dan Alexander said today.

Later Alexander received confirmation from the state.

The governor's spending freeze memo came out Thursday morning. By 2 p.m. Thursday afternoon Potlatch and Missota Paper Co. received a call from DTED telling them the expected $2 million loan was now on hold indefinitely.

The call announcing the spending freeze could not have come at a more critical time. Missota Paper owners set today as a deadline to make a decision whether they would go forward with the project.

And Thursday afternoon Alexander said the total project was in jeopardy of not happening.

With the state leading the way, a Minnesota bank, the Initiative Foundation and Minnesota Power were the other players in the $5 million Missota Paper owners originally stated was needed to proceed.

Charlie Weaver, Gov. Tim Pawlenty's chief of staff, said the state spending freeze was intended to stop last-minute spending of grant money. "We noticed a lot of money being spent in the last couple of weeks," Weaver said. "We wanted to let them know that would not be looked upon with favor."

A conference call was scheduled today with all the Missota Paper equity investors. Alexander said Missota Paper had two proposals to choose from in terms of working capital loans. He said the deal was 98 percent complete with expectations to be 99 percent complete by today. The last percent was getting to the closing.

Relief was apparent with the state's confirmation the $2 million loan is still on track.

Missota Paper plans to take possession of the mill are a little delayed from an earlier schedule that proposed a Jan. 31 closing date. Alexander said all the legal documentation could not be done by the end of the month, but plans are set to begin that push next week.

The spending freeze memo caused ripple effect shock waves beyond Brainerd. The freeze also stopped the state's dislocated worker program, which has assisted Potlatch workers with job counseling and retraining, just when the program was expected to help nearly 300 workers who recently lost their jobs with Blandin Corp. in Grand Rapids. (Brainerd Dispatch, 11 January 2003)

February

Potlatch, Missota Expect to Finalize Sale of Mill Feb. 14

After wooing each other for months, Missota Paper Co. and Potlatch expect to close on the pending sale of the Brainerd mill on a day made for sweethearts.

Missota Paper is paying $5 million for the Brainerd mill. The sale is expected to close Feb. 14. Dan Alexander, Missota Paper president and CEO, said the entire project will cost Missota Paper $24.5 million. Missota Paper has $6 million in equity for the first four to six months of operational costs, plus a $12 million revolving line of credit to be drawn against receivables and inventory. Earlier, the Minnesota Agricultural and Economic Development Board agreed to provide $2 million.

Missota plans to first make paper for reply card inserts in magazines and high-quality paper for advertising. Later, the product line will be expanded to greeting card paper, file folders and annual-report covers.

Missota Paper expects to employ 145 people in the Brainerd mill by March and about 260 people by fall. A draft contract was prepared by the Paper, Allied Industrial, Chemical and Energy Workers International Union.

Marv Finendale, PACE International Union representative based in Superior, Wis., met with Missota owners last Thursday. Missota outlined wage and work rules in a letters of agreement with the union. Alexander said he expects more than 90 percent of Missota employees to be former Potlatch workers. Wages are expected to be about 17 percent less than workers were making before.

"We are pretty close to getting that contract in place," Finendale said, adding there has not been a lot of disagreement between the union and the mill ownership. "We are in good shape and they are in good shape to make this thing go."

In Brainerd, the Job Service took applications for the mill late last month at the National Guard armory. More than 800 people attended. Larry Roulet, Job Service manager for Brainerd, Little Falls and Wadena, said interviews were conducted at the Job Service offices between Jan. 24 and Jan. 29.

Some interviews are still being conducted at the mill.

Finendale said by law if 50 percent plus one of the Missota employees are hired from the previous Potlatch workforce and the mill is making a similar product, the union has the right to re-negotiate the contract.

Finendale said there will be changes.

"It will be a totally different atmosphere than there was before," Finendale said.

He said there will be a more open attitude with people expected to do more job duties and with employees who are more involved in the mill's success and the process of keeping the mill alive.

"It's our best interest on both sides to make this thing work and do what it takes to make it work," Finendale said. "It's a good opportunity not only for the union, but for the company and the community."

Neither Alexander nor Jim Withers, Missota Paper executive vice president and chief operating officer, could be reached at the mill for an updated comment this morning.

Finendale said no date for a future meeting between the mill and Missota has been set, but he expects they will be getting together to discuss the draft contract now on the table. Finendale said he did not have information on wages as that discussion was still in process.

"If we can get that many people back to work in the area that is definitely a bonus for the community," Finendale said, adding the effort to get those people back to work combines union, mill ownership and the community. "This looks like a positive chance for all three to work together and make it work and be successful and grow that business." (Brainerd Dispatch, 04 February 2003)

Council Takes Action to Help Missota

In order to act as the conduit of federal dollars for the Missota Paper Co., the city of Brainerd adopted a residential anti-displacement and relocation assistance plan.

The city council also approved giving the Brainerd Economic Development Authority the control to handle the loan for the city.

In December the city council approved acting as a conduit for a $500,000 loan from the Minnesota Department of Trade and Economic Development's Minnesota Investment Fund to Missota Paper Co. for its purchase of the Potlatch paper mill in Brainerd.

Potlatch and Missota are expected to finalize the sale of the Brainerd paper mill on Feb. 14.

Originally the state was providing funding for the loan out of state money, but because of budget issues, DTED is instead using funds from the federal allocation, Brainerd Lakes Area Development Corp. Executive Director Sheila Haverkamp said.

One of the stipulations of the federal application process is that the city needed to adopt the residential anti-displacement and relocation assistance plan.

The requirements of the plan include that the city council or the Brainerd EDA hold at least one meeting to discuss local fair housing issues, that the city obtain fair housing brochures from the U.S. Department of Housing and Urban Development and that the city report annually on fair housing activities that have been conducted.

"There is both a positive and negative side to federal funds," said Haverkamp. "The negative items include a more lengthy application process, but a positive is that the city would get to retain $400,000 in a revolving loan fund for future projects." Under the guidelines for funding from the state, the city would've retained only $100,000.

Dan Alexander, Missota Paper president and chief executive officer, said the switch from state to federal funding wouldn't slow down the sale process.

"I think we'll still be on schedule," Alexander said. "If we're delayed beyond (Feb.) 14th, it won't be for that reason." (Brainerd Dispatch, 04 February 2003)

Missota Paper

Closing of Paper Mill Deal Will be Welcome News in Brainerd Area

It promises to be the best Valentine's Day gift the Brainerd area economy has ever received.

Feb. 14 is the scheduled closing date on the pending sale of the former Brainerd Potlatch mill to Missota Paper Co. The new firm plans to employ 145 people by March and 260 by this fall. That falls considerably short of the 600 jobs that were lost when Potlatch closed its doors but is still a sizable boost to the area economy.

Much of the work to secure a new mill operator has been done behind the scenes by a persistent coalition of government, economic development and civic organizations. Cooperation among the new mill owners, the PACE International Union and representatives of the Brainerd area community was essential in order for this transaction to be fast approaching the status of a done deal. All parties involved wisely realized that for communities such as Brainerd, the days of the industrial mega-employer such as Potlatch are a vestige of the past. In addition to employing substantially fewer people, the new paper mill will pay about 17 percent less than Potlatch's wages. A similar attitude of collaboration is evident as the new employers and the union work out job responsibilities.

"It's our best interest on both sides to ... do what it takes to make it work," Marv Finendale PACE International Union said recently. "It's a good opportunity, not only for the union, but for the company and the community."

The painstaking efforts of many people are expected to pay off when the sale is completed Feb. 14 in what could be termed a "sweetheart" of a present for the Brainerd area. (Brainerd Dispatch, 05 February 2003)

Potlatch, Missota Paper Delay Closing of Deal

Business sweethearts will have to wait a little longer as the courtship between Potlatch and Missota Paper Co. is extended.

Potlatch and Missota Paper expected to have the closing today completing the sale transaction of the paper mill in northeast Brainerd. But that has been postponed about a week.

Mike Sullivan, Potlatch director of corporate communications based in Spokane, Wash., said the delay is just a matter of paperwork and is not an impediment to the pending sale. A tentative date for the closing has been set for Feb. 21.

Jim Withers, Missota Paper executive vice president and chief operating officer, said the closing could still happen by the end of next week, but may be pushed back a few more days. He said the delay is purely for legal documentation. Additional survey work also is expected, Withers said.

Withers said Missota Paper has completed a number of employee interviews and contacted some people with job offers.

The interview process is continuing and will continue throughout the year as more machinery comes online after the initial startup.

While Missota Paper is waiting to take possession, Withers said they have a number of orders from customers for the startup and letters of intent for papermaking later in the year.

Withers said Missota Paper is in as good a shape as they wanted to be and perhaps better than anticipated. Potlatch is allowing Missota Paper to use the mill for office space before the sale is complete.

Missota Paper is arranging phone service and the myriad details associated with the startup.

"We are anxious to get to the point where we can start to do physical things," Withers said.

Marv Finendale, Paper, Allied Industrial, Chemical and Energy Workers International Union representative based in Superior, Wis., said talks are progressing with Missota Paper and a contract is expected to be in place by early March.

Finendale said the contract language, with specifics on the benefit package, is close to being "a done deal."

"So it looks good for business," Finendale said. (Brainerd Dispatch, 15 February 2003)

Sign of Hope

New Name Signals New Era at Potlatch Site

A nearly empty parking in front of the Brainerd Potlatch mill had been a sign of the end of an era.

Today the signs changed.

Literally.

Missota Paper Co. replaced Potlatch's distinctive green name on the sign leading to the employee parking lot and on the mill's front doors today. Today the sale of the Potlatch paper mill to the new Missota Paper is expected to be completed by early afternoon.

"I think the most emotional thing was driving in and seeing all the cars this morning," Kari Stoxen said.

Stoxen, longtime former Potlatch employee and member of the transition team that worked all summer to find a new buyer, was one of the nearly 80 people who attended an orientation meeting at the mill at 7 a.m. today. Stoxen will be Missota Paper's purchasing manager.

Terms of employment were expected to be signed today and a labor union contract is anticipated to be complete within a few weeks. The initial hire is about 120 salaried and hourly employees, plus a small sales staff in Chicago.

Dan Alexander, Missota Paper president and CEO, left the Brainerd mill after speaking at the meeting to return to the Twin Cities. Alexander said he expected the closing and the last signing of documents, which began Wednesday, would be completed by 1 p.m. today.

Jim Withers, Missota Paper owner, executive vice president and chief operating officer, said the document signing process for the sale may be more difficult than the work of running the mill.

If everything goes as expected, Missota Paper is counting today as Day One with a paper production target date of March 10 on paper machine No. 6. Withers said plans call for 250 employees a year from now when the second paper machine, No. 5, is operating.

Jan Olson, Withers' executive assistant and former Potlatch employee, said the mood in the mill was enthusiastic.

"It's a good feeling to come back and see all the cars out front and people coming back to work. This company is going to be successful because of the people and the leadership." (Brainerd Dispatch, 27 February 2003)

Potlatch Sale to Missota Final

Sale of the Potlatch mill in Brainerd to Missota Paper Co. is final today.

That was the word from both camps late this morning after a lengthy closing process that missed several anticipated target dates for the closing.

Potlatch Corp. announced it sold its Brainerd paper mill and related assets to Missota Paper for $4.44 million in cash.

Potlatch and Missota Paper signed a memorandum of understanding for the sale in the fourth quarter of 2002. The Brainerd mill closed in May 2002.

Potlatch Chairman and Chief Executive Officer L. Pendleton Siegel stated the company sought buyers with both the interest and ability to continue to operate the Brainerd plant and provide employment for former Potlatch employees

"We believe we found such a purchaser in Missota," Siegel stated in a news release.

Dan Alexander, Missota Paper president and CEO, stated Missota plans to begin paper production on No. 6 paper machine March 12, and projects that the second paper machine will be brought on line in the third quarter of 2003, based on market demand.

Missota anticipates that more than 90 percent of its workforce—initially expected to be about 130 with an increase to 250 workers—will be former Potlatch employees. Missota's sales office will be in the Chicago area. (Brainerd Dispatch, 28 February 2003)

March

Work Cut Out for Paper Mill

Missota CEO Says Challenge Lay Ahead in Achieving Success

Hard work and long hours lie ahead in the challenge to make a Brainerd paper mill successful.

That is what Dan Alexander, Missota Paper Co. owner, president and CEO, told about 80 people who arrived early Thursday morning for an orientation at the old Potlatch plant in Brainerd.

In the small conference room where people gathered, days and plans were displayed in colored marker on white board walls. Paper production is expected by March 10.

Alexander recapped what it took to get to this point. By Friday morning, the official change of mill ownership from Potlatch to Missota was complete.

Jim Wither, Missota Paper owner and operational manager, said Missota employees have a can-do attitude and were ready for change, something necessarily expected from a mill that has been around so long. Now he said the job safety discussions were there to make sure no one gets hurt as they return to jobs with lots of enthusiasm.

The enthusiasm will be up against tough paper markets and a soft economy.

Alexander said when he first came to the mill and met Tom Isle, now Missota Paper human resources manager, he was not sure what he was hearing had credibility.

"He was so positive," Alexander said, noting Isle said the people and the mill could produce anything.

"'The people here are great people, they just want the chance,'" Alexander recalled Isle saying. After spending months in the mill, Alexander said he had to say, "Tom, you are right."

Isle remains optimistic. During a break in the morning schedule, his expectations were for a good outcome from a mix of the people returning to the mill and the business plan.

"The sun is shinning and summer is on the way," he said.

At the orientation session, Alexander recapped what led to this point. And he thanked Potlatch.

"I know there are mixed feelings of many of you in this room," he said of Potlatch, but he said there were overriding factors that caused the sale of Potlatch's printed papers division to Sappi Limited and led to the Brainerd mill's closing.

"The tact they took for the closing of this mill was unique," Alexander said. "Potlatch was dedicated to trying to find a buyer for this facility."

Alexander and Wither came to Brainerd for the first time on the last day of July 2002.

"We were clearly impressed with the state of the mill and its assets," Alexander said.

Alexander said the mill was already a step ahead with its production—before the closing announcement came—of free sheet uncoated paper.

"The quality was exceptional—really among the best in the country."

Examples of what Potlatch workers produced were taken to potential customers and Missota Paper Co. executives stressed the customer service that would be there in the new mill.

"Because it is us in this room against the world," Alexander said, adding employees and leadership will be a team that is going to compete against every other free sheet producer in the world. Competition comes from Asia, Latin American and Europe.

Alexander said the first couple of years the mill will be heavily into commodity grades but they cannot compete with that product in the long term. Markets where they can compete well will take time to build up a market share. Alexander said for the future the mill will target more profitable niche markets. Initially production on No. 6 paper machine will include magazine reply cards and book papers. Once No. 5 paper machine is going, production is expected to include greeting cards, annual reports and high quality printing.

Missota Paper agreed to honor the non-compete clause between Potlatch and Sappi Limited, meaning they cannot produce coated paper for seven years. The clock on that clause began ticking last May.

Missota Paper is a private company and is not likely to go public unless owners are successful and then go out and acquire one or two more mills. Alexander said there are no plans to acquire more mills at this point but that is not to say they are not interested in such growth. But for the time being, Alexander said the focus is on Missota Paper in Brainerd, on No. 6 paper machine and the team being created at the mill.

"There are not many times when people get to do this—start from scratch." (Brainerd Dispatch, 02 March 2003)

Restating the Potlatch Loss in Numbers

The announcement that the Potlatch mill was closing came nearly a year ago this month. The mill sale, finalized this month with the plant purchased by Missota Paper Co. has been lauded as an initial success in getting displaced workers back on the job. Missota Paper expects to employ about 250 when both paper machines are up and running this fall.

From the remaining 366 former Potlatch workers, about 70 retired, according to the community strategy team numbers. Others have gone into training, taken college courses and found other jobs in the area. In a survey of displaced workers conducted by Job Service, most people wanted to stay in the area.

About 93 salaried employees at Potlatch earned an average of $60,000 per year. Their benefit package amounted to 28 percent of their salary expense. The 519 hourly employees earned an average of $50,000. Hourly employees had benefits that amounted to 54 percent of their salary expense. Benefits included up to eight weeks of vacation per year.

The Potlatch mill provided $43,105,400 annually in wages and benefits.

Potlatch employees represented eight counties, with 84 percent of the employees living in Crow Wing County. About 58 percent of Potlatch employees lived in Brainerd.

Crow Wing County's economy lost more than $36 million annually from the mill's closure. More than 98 percent of employees lived in Region 5, Crow Wing, Cass, Morrison, Todd and Wadena counties.

The $50,000 EDA grant came with an area match. Pledges came from: City of Brainerd, $5,000; city of Baxter, $2,500; Crow Wing County, $5,000; Potlatch, $20,000; Initiative Foundation, $10,000; Minnesota Power, $5,000; Brainerd School District, $5,000.

The community strategy team includes members from the lakes area business community, economic development, education, non-profits, elected officials, Potlatch union, Brainerd, Baxter and Crow Wing County.

Following the Potlatch closing announcement in March, the Lakes Area Response Team began meeting to develop a plan to assist the region. The team included about 50 participants from the public and private sector.

The grant planning committee includes: Sheila Wasnie Haverkamp, Brainerd Lakes Area Development Corp. executive director; Lisa Paxton, Brainerd Lakes Area Chambers of Commerce chief executive officer; Dan Vogt, Brainerd city administrator, and a city of Baxter representative.

The application was submitted by the Economic Development Department at Region 5 with Gail Leverson, economic development director. A local match of $52,500 was pledged for the project by the cities of Brainerd and Baxter, Crow Wing County, Potlatch Corp., Initiative Foundation, Brainerd School District and Minnesota Power. (Brainerd Dispatch, 08 March 2003)

Planning Grant Designed to Help Displaced Workers

Dean Logering has had a lot more time for household projects as he continues to look for work after losing his job at Potlatch last spring.

Logering spent 27 years at Potlatch. He worked in the coating department, was a tour guide and ran the United Way campaign drive. Since his job ended last May, Logering has spent time scouring want ads, attending classes at the WorkForce Center in Brainerd, painting rooms in his Merrifield home and signing up for a nine-month welding and fabricating course at Central Lakes College.

"Brainerd needs good jobs like Potlatch and I think when you have good wages you have good benefits and that helps the community," Logering said. "The more money the employees make, the more we spend."

Potlatch did a lot for Brainerd, Logering said. And he noted the effects of the closing are just reaching some people. Logering just received his second unemployment check.

  Logering, a former Potlatch employee, has been looking for work, going to classes and working on home projects since his job ended at the paper mill. He said he hopes new economic development efforts attract larger employers to the community.

"The hurt is yet to come," he said.

The 47-year-old said when he started looking for work he expected job offers to be $5 to $6 per hour less than he made at Potlatch, but not $12 an hour less.

His wife, Toni, recently took a job so they would have medical insurance coverage.

The Logerings have three teen-age children they would like to see more job opportunities in the area for as well. Logering said a large employer who can pay decent wages and offer benefits is also paying higher taxes and contributing to the community.

Displaced Potlatch workers are expected to gain from a $50,000 short-term planning grant from the Economic Development Administration. The $50,000 EDA grant is matched by pledges of $52,500 from Potlatch, the Initiative Foundation, Minnesota Power, the Brainerd School District, Crow Wing County and the cities of Brainerd and Baxter. The short-term planning project is designed to come up with a comprehensive economic development strategy in the face of the Potlatch mill closing.

"It's really a giant puzzle we are trying to put together," said Lisa Paxton, Brainerd Lakes Area Chambers of Commerce CEO.

The puzzle consists of identifying existing resources, looking at industry trends and targeting specific industries that may want to have a business start-up in the lakes area or at efforts to expand an existing company. On the asset side, the lakes area can list quality of life, an available labor force, and education and training abilities.

The goal is to find new job opportunities using a three-step approach—visioning to establish employment needs for the future, labor force research and then marketing, where the majority of dollars is advocated. Included in the target is attracting jobs with higher than average paying positions and identify target companies that may fill niches here.

The first step, now that the planning grant is secured, is to hire a consultant to work with the community strategy team. The efforts should benefit dislocated Potlatch workers, as well as others who have felt the effect of the slow economy, said Sheila Wasnie Haverkamp, Brainerd Lakes Area Development Corp. executive director.

"I think this is coming at a good time," Haverkamp said, noting the many comprehensive plan updates going on in area communities. "It just seems key right now."

Haverkamp said the planning grant is one way to access other federal programs and funding that will help implement the ideas and strategies developed now. The consultant will work to estimate future job number, wages and how the wages can contribute to the community. The vision process, expected to last the first six months in the overall 18-month project, should provide a road map of how to recruit target companies.

"It could be totally different than what we expect," said Gail Leverson, Region 5 economic development director.

Jobs that can pay above minimum wage and include benefits are being sought. Generally a livable wage is considered to be in the $10 to $12 to $14 per hour range.

Tim Finch, a former Potlatch worker, recently received a job offer from Missota Paper. Finch said when Potlatch closed the area probably lost one of the last good paying factory jobs where people could earn middle-income wages. In regard to the EDA planning grant, Finch suggested planners need to target a name employer.

"I'd be very pleased to see more industry come into Brainerd," Finch said.

Craig Nathan, WorkForce Center in Brainerd, said they were able to sign and approve 62 on-the-job training contracts with Missota Paper Co. accessing dislocated worker grant dollars and those efforts will continue.

Before the end of the month final interviews are expected to fill the visioning consulting position the EDA grant and area matches are helping to fund. The visioning consultant will be paid $30,000 with $5,000 available for travel, supplies and others, per authorized budget. The job was posted February 26 and Request for Proposal replies are due March 19. One interested call came from Oregon. Interviews will be set March 27.

The consultant is expected to provide an overall look and assessment of existing resources in the lakes area, identify economic development assets, needs and future trends, develop a strategic plan through community meetings, identify lakes area labor force skills and market the area to new businesses or assist existing businesses expand future job opportunities.

Logering said the WorkForce Center in Brainerd, with classes on stress, budgeting and insurance, has been a help for displaced workers, but individuals also have to be willing to help themselves.

With hundreds of people all looking for work, Logering said: "They can't say here's a job for Dean, here's a job for Sue—you can't do that." (Brainerd Dispatch, 08 March 2003)

PAPER MILL ROLLING AGAIN

Operations Resume at Old Potlatch Plant

Five days shy of the one-year anniversary of the Potlatch closing announcement, the mill is doing something some people feared would never happen again—making paper.

This time it's Missota Paper Co. paper.

Paper was rolling off the No. 6 machine and onto the winder to become a giant roll today. The paper machine's first paper after the restart was actually produced Wednesday. Missota Paper employees worked 24-hour shifts for the last three days to move the mill into production status.

"It's not something you could ask people to do, they just do it," Jim Withers, Missota Paper executive vice president and chief operating officer, said of the tremendous work effort involved in the startup. "People don't wait to be asked."

Withers said the work had little to do with Missota Paper and everything to do with the opportunity to start the mill again. There were starts and stops as the computers and machinery came back online.

And then in the wee hours this morning No. 6 was back to making paper.

Not all of the ingredients were there, but the paper quality was so good, managers said making paper good enough to sell was something they expected today with a little fine-tuning. Withers said they are still in the startup process; things can go wrong and will.

"If nothing major goes wrong with it, it will be a great startup," he said. "... The fact that the mill is up and running is wonderful."

It is not quite the bustling mill from last spring. But the atmosphere is radically altered from the palpable sadness and shock of a year ago. Smiles were at the ready on employees wearing safety glasses and brightly colored ear plugs on neck strings.

"We're making history," said Tom Isle, Missota human resources manager. He picked up a piece of paper from a discarded bunch next to No. 6 and held it up to the light. The paper formation is beautiful already, Isle said.

They plan to call the paper Crow Wing offset, in recognition of the community effort that went into making paper here a reality again. "This is a community paper," Isle said.

"It was exciting yesterday to have them come up with the paper," said Laurie Miller, Missota Paper receptionist and purchasing assistant. "We were all grabbing samples."

Miller said she had days when she thought she would be back at work in the mill and days when she did not expect that to happen.

"It feels so good," she said. "This is home." (Brainerd Dispatch, 14 March 2003)

April

Governor Expected to Help Celebrate Paper Mill's Reopening

The governor is expected to attend a celebration in Brainerd Thursday.

The Minnesota Department of Trade and Economic Development, Minnesota Power, Missota Paper, and Brainerd Lakes Area Development Corp. are planning to celebrate and officially welcome the new paper mill in Brainerd Thursday at Missota Paper.

Gov. Tim Pawlenty and Matt Kramer, commissioner of Minnesota Department of Trade and Economic Development, are scheduled to join the celebration.

The event begins with a light lunch and refreshments at 12:30 p.m. At 1 p.m. the scheduled program includes Brainerd Mayor James Wallin, Kramer, Pawlenty and Dan Alexander, Missota Paper president. Facility tours are planned at 1:45 p.m. with the celebration concluding at 2:30 p.m. (Brainerd Dispatch, 06 April 2003)

Missota Paper

The Plant's Reopening Was an Event Worthy of Celebration

Those of us who might have griped about going to work today could learn a lesson from the hard-working Missota Paper Co. employees in northeast Brainerd. Many of them know what it's like to want to go to work and not have a job.

That's why the mood was upbeat Thursday when Gov. Tim Pawlenty and Brainerd area civic leaders celebrated the reopening of the former Potlatch plant.

A tour of the Missota plant after Thursday's festivities spurred some observations among those of us blessed with less taxing jobs.

• Manufacturing paper is hard work. The complaints sometimes heard by office workers who are either too hot or too cold seem picayune when compared to the challenging work conditions that many working men and women face everyday.

• It would have been a tremendous waste had the Missota Paper plant not reopened for business. The facility is in good shape and has everything that's needed. Another plus in the plant's favor is that an experienced and skilled work force was ready to go to work.

• Countless people, from former Potlatch employees to government officials and business leaders, worked hard to open up a new paper plant. Sheila Haverkamp, executive director of the Brainerd Lakes Area Development Corp., and Lisa Paxton, CEO of the Brainerd Lakes Area Chambers of Commerce, were among those who spearheaded the task of securing a new paper plant for the community. The effort of all of these people shows what Brainerd area leaders can accomplish when they're focused on a single goal and committed to that task.

• A sense of gratitude was seen everywhere at Thursday's celebration. Jim Withers, Missota Paper Co.'s operational manager and owner, summed up the attitude best when he said he wants to turn the compliment around when community residents say thank you for his efforts to reopen the mill. He said he's grateful for the opportunity the community has given Missota Paper Co.

• Potlatch went above and beyond the call of duty as it helped find a buyer for the mill. The corporation kept its equipment in operating condition, heated the mill through the winter and kept its management team to assist interested buyers who toured the mill. (Brainerd Dispatch, 11 April 2003)

'It's Good to be Working Again'

Pawlenty on Hand to Share Smiles at Missota

Gov. Tim Pawlenty said Thursday he could read the attitude of Missota Paper Co. employees by the smiles on their faces.

"It's good to be working again," he said, speaking for the workers at the official opening of the former Potlatch plant on Brainerd's Mill Avenue.

The plant's reopening, Pawlenty said, was the result of the energy, vision and compassion of Brainerd area leaders. Government, private foundations, workers, business people, and civic organizations combined in an exciting partnership to attract entrepreneurs who were willing to put money on the line, he said. He thanked all of those involved in the reopening of a plant that will compete in a changing business environment and noted that the state is losing too many medium-level manufacturing jobs.

"We've got to be sure we're growing jobs in this state," he said.

The mill started producing paper again March 12, almost a year after Potlatch announced it would shut down its Brainerd facility, leaving more than 600 workers without jobs.

Pawlenty, who was accompanied by Department of Trade and Economic Development Commissioner Matt Kramer, also made a plug for his budget proposals that are being considered by the Legislature.

Despite what his political opponents are maintaining, Pawlenty said, the state budget isn't shrinking. It will actually go up by more than a billion dollars, he said. The problem is that state revenues were pegged to go up by 6 percent while expenditures were expected to go up by 14 percent.

"How many paychecks are going up 14 percent?" he asked. "We're asking the state to do what families are doing," he said of the belt-tightening Pawlenty also said progress is being made at the Legislature in education and welfare reform, transportation and the promotion of bioscience knowledge, which can be applied to Minnesota businesses with the help of the Mayo Clinic and the University of Minnesota.

"We can be a world leader in this area," Pawlenty said.

Before the governor spoke Brainerd Mayor James Wallin presented him with keys to the cities of Brainerd and Baxter.

In comments after his speech Pawlenty said he was working to slow down the rate of state spending in a tough economic period.

Jim Withers, Missota Paper Co. owner and operational manager, said he appreciated the governor's appearance and the work done by the entire community to help bring about the start of the revived plant. In particular, he commended the new Missota Paper Co. employees and those former Potlatch employees who worked on a transition team without pay and without guarantee of a job. (Brainerd Dispatch, 11 April 2003)

Waiting is Over, Paper Mill on a Roll

About a year ago a similar wait took place for visiting dignitaries to arrive in a northeast Brainerd paper mill, but the mood was altogether different Thursday.

Missota Paper employees and community members sat together in folding chairs near paper stacks in the mill's shipping room Thursday. A year ago those waiting for Minnesota senators Mark Dayton and the late Paul Wellstone had an entirely different emotional setting with the knowledge the mill was closing.

Thursday afternoon smiles abounded as the wait for Gov. Tim Pawlenty and other state officials passed easily. And the change a year can make was not lost on the employees who were there on both occasions.

Gary Heiling worked for Potlatch for about 25 years, worked with the transition team and now works for Missota Paper. He recently found a stack of old newspapers from spring of 2002. The headlines were bleak with news of the Potlatch mill closing and 616 jobs lost.

"Now we have a lot to be happy about," he said during a mill tour.

Nathalja Hendrickson agreed. The former Potlatch employee spent the summer of 2002 helping to look for a new mill buyer. Thursday she was checking paper quality in the Missota mill.

"It's just a privilege to see it come full circle," she said.

Both Heiling and Hendrickson said they were glad Dan Alexander's management team was the group that purchased the mill and the uncoated paper they are making—reply cards in magazines, paper for novels and other off-set paper—is a perfect for the machines.

"I think we have the best shot of making it work," Heiling said.

Thursday's event marked the paper mill's official opening ceremony, although Missota Paper has been working in 24-hour shifts for about four weeks of paper production.

"For a lot of people our prayers have been answered," said Brainerd Mayor James Wallin.

Alexander, Missota Paper president and chief executive officer, praised Potlatch for working to keep the mill in shape after it closed and for the former Potlatch employees whose work built the mill and its reputation for quality.

"This is a special day," Alexander said. "It's a day of celebration for everybody that is in this room. ... Everybody in the room made a contribution. ... This doesn't happen by one individual. It literally took hundreds of people to pull this together."

Alexander thanked Potlatch's employee transition team, community leaders and state officials. He said after 25 years in the paper industry, the approach by the state was different and better than any he witnessed. Previously looking at buying a different mill location in a Midwestern state, Alexander said all the state provided were phone numbers for other agencies.

"The state of Minnesota was extremely proactive," Alexander said of the efforts to bring mill sellers and buyers together. In particular he noted Paul A. Moe, director of the Office of Business Finance with the Department of Trade and Economic Development.

"I think they are positioned to do well," Moe said after the ceremony. Moe said Missota Paper has adequate financing and the workers needed. "They have some strengths to make them survivors in the industry."

Minnesota Power, the Initiative Foundation, Bremer Bank, Brainerd Lakes Area Development Corp., Brainerd Lakes Area Chambers of Commerce and the city of Brainerd, were all singled out for contributions to the mill's new life.

Nancy Norr, Minnesota Power economic development manager, said it would not have happened without an entrepreneur willing to take the risk.

"We have work to do still," Norr said, noting the 300-plus former Potlatch employees who may be still looking for job opportunities. The initial hiring at Missota Paper brought about 120 people back to work. About 95 percent of the employees used to work for the Potlatch mill.

About 125 people attended the official ceremony Thursday. Mill work continued as paper rolled off No. 6, was wound onto giant rolls before being cut into small narrow rolls that moved along the mill's conveyor belts.

Jim Withers, Missota Paper Co. owner and operational manager, said the paper mill is still in a startup mode but things look good. He said the formula for success is a quality product from people who know what they are doing and competitive costs.

"We're off to a good start," he said. (Brainerd Dispatch, 12 April 2003)

May

Council Votes to Split Loan Legal Fees with Missota

Who will pay for legal fees involving a $500,000 loan received by Brainerd and to be used by Missota Paper was decided Monday.

The Brainerd City Council, by a 5-1 vote, approved splitting all legal costs with Missota Paper. Council member Mary Koep voted against the motion.

The Brainerd Economic Development Authority recommended splitting all legal costs with Missota, but an initial motion out of the Personnel and Finance Committee was to split legal fees with Missota only through April 1, and to notify Missota President and Chief Executive Officer Dan Alexander and his company's attorneys that the city wouldn't be splitting further legal bills.

Council member Lucy Nesheim, however, amended the motion to have the city pay 50 percent of all legal fees, which could in total be as high as $35,000. The amendment passed by a 4-3 vote, with council members Koep, Bob Olson and Kelly Bevans voting against. With council member Gary Scheeler absent from Monday's meeting, Brainerd Mayor James Wallin cast the deciding vote.

The $500,000 state and federal loan was granted to the city, which in turn would give the money to Missota for the purchase of the paper mill. As the loan payments are made by Missota the city would get $400,000, and Missota would retain the first $100,000 in principal plus interest paid if it meets job goals.

Originally the loan was to come from state funds, but with budget issues federal money was being used, bringing in more creditors and thus complicating the issue, Nesheim said.

Nesheim said since the city was getting $400,000, she didn't see the legal fees as a cost to the city.

"This is what it is suppose to be used for, to help the developer move along," said Nesheim. "It's a grant to the city, a loan to the company. His (Alexander's) logic was it made sense to the city and would be a win-win situation. I think we should follow the recommendation from the EDA."

Council member Bob Olson noted the legal fees, which currently are about $26,000, were increasing because of continued requests to the city's bond counsel from Missota's creditors.

Council member and Personnel and Finance Chair Kelly Bevans said while Nesheim had valid points, paying only through April 1 didn't prohibit the city from paying more in the future.

"But at this point, because of all the complexities (Nesheim) alluded to, we could be getting ourselves into a huge financial obligation," said Bevans.

Also mentioned Monday was a memo from Olson in which he claims City Administrator Dan Vogt received a letter from Alexander that stated Alexander believed the city would be paying for the legal fees. Olson also stated $1,491 in legal fees had been paid from the EDA account. In his memo, Olson stated Vogt didn't forward this information to the EDA or council.

In a letter to Vogt dated May 12, Alexander said Missota would be willing to pay the legal fees now if the city would deduct the expense from the company's $400,000 loan.

In the Personnel and Finance Committee meeting Vogt took issue with Olson's accusations, and said he wanted to discuss them with the entire city council. Council President Jim Dehen, however, didn't entertain discussion on the issue because it didn't pertain to the motion on the floor. (Brainerd Dispatch, 20 May 2003)

July

Missota Working to Curb the Smell

Missota Paper has been attracting a little unwanted attention lately and the direction of the interest changes with the wind.

What can be described as an unpleasant aroma has been one of the byproducts of the mill operations. The smell is coming from the paper mill's waste treatment plant.

"We've been working on it ever since we first noticed it doing a variety of things," said Jim Withers, Missota Paper Co. vice president and principal owner. "We haven't fixed it yet. But we are doing a few things this week that we think will make the situation better."

Withers noted the approaching Fourth of July holiday and warm weather with people enjoying the outdoors. The mill has a consultant and is working to combine three measures to combat the offensive smell. Remedies include getting the excess sludge out, using a hydrogen peroxide treatment and a second treatment using basically a nitrate salt all to work to reduce the odor.

Previously the mill was using a slow, methodical approach to solve the problem, which apparently went largely unnoticed during the winter months. Withers said the methodical approach was not working. He said he received a number of calls and is responding to each one.

"The fact of the matter is we are smelly," Withers said Tuesday. "I think it must be we did not start treating for odor soon enough and when we started up in the winter it wasn't an issue."

Later in the spring when the aroma was detected, the mill tried different measures. But the smell may have reached a critical mass by that time and getting it back into the bottle is going to take a little work.

"I think we started too late and did not start until it was an issue," Withers said. "We think we are getting there. ... We intend to fix it and are working hard to fix it."

The smell is coming from wood fiber that stayed in the treatment system too long. The fiber is spoiling. The smell is unpleasant.

On other fronts, Withers said the mill is running well and on the right track for production levels and product quality and cost and in line with the business plan. But the paper market is not good and prices are lower now than when Missota started, Withers said.

"The market side is a challenge but raw material costs are starting to drop," he said.

Attempts to create trials with new paper products and get those out to potential customers has been going well. But Withers said it takes time to reach those people, have them try to like the product and then have them use what supplies they already have on hand so they order more.

"It's like the economy," Withers said. "You'd like it to go faster."

As for the aroma, Withers said he believes the things the mill is doing this week will create a significant improvement.

"We don't want to be what people are talking about and we are doing our best to fix it." (Brainerd Dispatch, 02 July 2003)

August

Reunion of Potlatch Workers Aug. 23-24

When the Potlatch paper mill in Brainerd closed its doors in May 2002, more than 600 workers lost their jobs.

Now several former Potlatch employees are planning their first Potlatch reunion for former employees and their families.

Carolyn Hyatt, who worked at Potlatch 18 years, is one of the event organizers. Her husband, Roger Hyatt, worked at the plant for 30 years before he was laid off last year.

Hyatt said the reunion is being planned as a way for everyone to reconnect with their former coworkers and to find out how everyone is faring.

The reunion will be Aug. 23-24 at St. Mathias Park. All former Potlatch employees—salaried, hourly, retired and spouses of deceased employees—and their families are encouraged to attend. Participants may bring motor homes, campers and tents and camp at the park.

A pig roast is planned for 4-6 p.m. Aug. 23. Other activities include a bonfire and musical entertainment, said Hyatt.

Cost is $10 per family. Organizers request that participants bring a dish to share at the potluck dinner.

Hyatt said organizers are hoping at least 300-400 people attend.

For more information and to let organizers know that you and your family plan to attend the reunion, call Carolyn and Roger Hyatt at 764-2275 or Dick and Sue Rofidal at 829-4127. (Brainerd Dispatch, 13 August 2003)

Sad Parting, Happy Reunion

ST. MATHIAS—When the Potlatch paper mill closed its doors in May 2002, leaving more than 600 workers without jobs, many of them at the time were in shock and some were in tears, worried about the uncertain future and how they would support their families.

But when they left the mill, a place where many had worked for most of their lives, they also left behind friends and coworkers they'd seen nearly everyday for years.

Now, more than a year later, about 150 former Potlatch workers and their families gathered at St. Mathias Park Saturday and Sunday for the first-ever Potlatch reunion.

The event was a happy and spirited occasion in sharp contrast to their last day of work at the mill.

Carolyn and Roger Hyatt, both longtime Potlatch employees, helped coordinate the reunion, which included a pig roast and potluck, musical entertainment, a bonfire and a Sunday community breakfast at St. Mathias Park. About nine former Potlatch employees and their families brought campers and stayed there for the weekend-long reunion.

Lonnie Callahan, who spent 24 years in the finishing department, drove up from Osteen, Fla., to attend the reunion. Her husband had been living in Florida, waiting for her to retire with him when the mill shut down.

"When the doors closed, he said, 'Pack your bags,'" said Callahan, who is now attending school in Florida to become a law systems specialist.

She hadn't seen her former coworkers since the mill closed.

"I missed some of the people I worked with," said Callahan. "There is life after Potlatch, but you like the people you worked with. Everybody is real glad to see everybody. They've put the year behind them and moved on."

Many of the former Potlatch workers are in college, found other jobs or started their own businesses. Others returned to Missota Paper Co., which purchased the Potlatch mill and reopened in February.

Les Museus, Brainerd, who spent more than 30 years at Potlatch, returned to Missota.

"It feels like it was yesterday," said Museus, of seeing his former coworkers. "You don't always bump into them downtown. They're a good bunch of people."

Mike Williams, Pillager, who along with his wife, Isabella, started their own disk jockey company, Brother Jukebox/Sister Wine, after the mill closed, provided the music for Saturday's dance at the reunion. An electrician, Williams returned to Missota about a month ago. He had spent 30 years at Potlatch.

"They were foolish enough to let me back in the door and I was foolish enough to go back," Williams said with a laugh.

"When it closed, it was sad," said Carolyn Hyatt. "It's like a family and all of a sudden you don't have a family any more."

Hyatt decided to host a reunion shortly after the decision was announced to close the plant. Her husband and Clem DeRosier roasted the two pigs for Saturday's pig roast in two large hog roasters.

Hyatt worked for 18 years at Potlatch while her husband spent 30 years at the paper mill. Carolyn Hyatt said there were several people from each department who worked at the plant, from salaried to hourly employees. Of the 17 employees in the shipping department, nine of them showed up for the reunion, including Carol Treska, Pine City.

Treska, her former coworkers said, hated to use the computers at Potlatch. That's why it shocked Colleen Turner when she recently received an e-mail that listed Treska's home e-mail address.

"Carol Treska's got a computer?," said Turner. She couldn't believe it.

Six months after Potlatch closed, Treska said she broke down and bought a computer.

"I was bored to death and lonesome," Treska said with a smile.

While many said they have more time for their families now that they aren't doing shift work at the mill, for others, it hasn't been easy since the mill closed.

Pam Johnston worked in the finishing department for 13 years before Potlatch closed. Unable to find a full-time job that could help support her family like her job at Potlatch, she now works 14 hours a day five days a week in the St. Cloud area at two different factory jobs. Her husband, Dick, a retired railroad worker, stays home with the two youngest of their six children while Pam lives during the week with her daughter in St. Cloud.

"I'm trying to get back to Brainerd," said Johnston. "I work 14 hours a day and it still isn't coming anywhere close (to Potlatch's wages)."

Hyatt said a committee will be formed this year to plan the second Potlatch reunion next year. She is hoping that even more former Potlatch workers will come next year.

The date for the next Potlatch reunion has been set for July 31-Aug. 1, 2004, at St. Mathias Park. (Brainerd Dispatch, 25 August 2003)

November

Missota in Extended Shutdown

Missota Paper Co. has begun an extended production shutdown at least through November.

"It's not a closure. It's an extended shut(down)," Jim Withers, Missota Paper chief operating officer, said today.

The downtime may be extended beyond November depending on market conditions. A skeleton crew is being retained at the mill. The bulk of the 145 employees will be laid off in the interim.

The news came as Missota Paper had reached about nine months of operation. The company reported it will continue to market its products and work with business partners with the "full intent of resuming operations."

Withers said a decision about the mill's future is not at a critical moment and the decision to shutdown is a way to develop a plan to go forward.

Withers said he and Dan Alexander, Missota Paper president and CEO, think the mill's chances are good.

"We don't intend to wait for the market to get better," Withers said. "We intend to move into the higher market grades."

Withers said the transition has been to get larger orders for paper with higher value but in the slow market that has taken a long time. Seeking other investors for the mill is also part of the mix.

In a statement Dan Alexander, Missota Paper president and CEO, said, "Under the continuing difficult market environment, we are left with no choice but to suspend production until the paper market shows signs of recovery or we can assemble a financial plan that can support our growth and development.

"This has been an extremely difficult decision for us to take, particularly in light of the outstanding efforts of our employees. We have a modern facility that produces very high quality paper, and has extensive capacity, but it is our employees that are the real strength of our organization."

Today Missota Paper officials were conducting meetings with managers and workers. Monthly payroll for the mill is about $500,000 a month.

Missota Paper announced it had witnessed "constant deterioration in pricing in nearly all market segments" since the company started in March.

Missota Paper reported "despite significant support from all parties involved—including state and local authorities, financial backers, the PACE union and its exceptionally dedicated employees—the pricing in the market place" has affected the company's financial results.

"Over the past few months, the company has established itself as an innovator in the marketplace, successfully developing and selling a variety of exceptional new grades of paper," Missota Paper reported.

Two grades of reply card, high post-consumer waste file folder and book papers, a superior "hi-brite" opaque, high end shopping bag paper and other uncoated freesheet paper grades have been targeted toward specialty and technical end use markets, Missota reported.

Lisa Paxton, Brainerd Chamber of Commerce CEO, talked to Withers this morning. Paxton said she's been impressed with the paper quality and the dedication behind the operation.

"We are hopeful they can establish the partnerships to bring the plant back into full operation," Paxton said. "The community and the chamber are ready to help the Missota leadership do so."

What exactly those efforts may entail, Paxton said it was too early to say. She said they needed to sit down the Missota and the Brainerd Lakes Area Development Corp. to discuss what may be needed.

Sale of the Potlatch mill in Brainerd to Missota Paper Co. was final in February. Potlatch Corp. sold its Brainerd paper mill and related assets to Missota Paper for $4.44 million in cash. Potlatch closed its Brainerd mill in May 2002.

When it opened Missota anticipated more than 90 percent of its workforce—initially expected to be about 130 with an increase to 250 workers—would be former Potlatch employees. In April, Gov. Tim Pawlenty arrived at the mill to celebrate its reopening. (Brainerd Dispatch, 04 November 2003)

City Leaders Huddle with Missota

Missota Paper's announcement of an extended shutdown was the subject of a community meeting Monday.

Jim Withers, Missota Paper chief operating officer, met with representatives from the city of Brainerd, Brainerd Lakes Area Chambers of Commerce, Brainerd Lakes Area Development Corp., Initiative Foundation and the WorkForce Center.

Lisa Paxton, Brainerd chamber CEO, said the purpose of the meeting was to create lines of communication and understand the market conditions Missota Paper is facing.

Paxton said today the meeting reaffirmed the community is ready to help Missota. But she said there were no specifics on what the mill may need at this point.

Missota Paper announced a production suspension at least through November. They are keeping a skeleton crew on board and will continue to market products. The bulk of the 145 employees will be laid off in the interim.

Brainerd Mayor James Wallin attended the Monday meeting. Wallin said the paper market is soft now and some of the mills that normally make high gloss paper have reverted back to making same kind of paper as Missota.

Wallin said Missota is still optimistic but the mill does not have no date when they'll be up and running.

"Hopefully it'll turn out better for them and they'll continue making paper in our community," Wallin said. (Brainerd Dispatch, 04 November 2003)

December

MISSOTA PAPER CO.

Missota Opens, Now in Shutdown

A month into 2003, the sale of Potlatch's Brainerd mill to the newly formed Missota Paper Co. was finalized with hope for jobs and a new start.

As 2003 was drawing to a close the news came that the new mill was in an extended shutdown with an uncertain future. Throughout the months in between, Missota Paper owners always said restarting the mill would be an uphill battle.

Earlier this year about 160 people, most of them former Potlatch workers, reclaimed jobs. Monthly payroll for the mill was about $500,000 a month. And hopes were high for a new chapter in Brainerd's paper-making history.

Gov. Tim Pawlenty arrived in April to help christen the new mill operation.

But lurking in the wings was a down economy that never seemed to spark into a real recovery.

In early November, Missota Paper announced it had witnessed "constant deterioration in pricing in nearly all market segments" since the company started in March.

Missota Paper reported "despite significant support from all parties involved—including state and local authorities, financial backers, the PACE union and its exceptionally dedicated employees—the pricing in the marketplace" has affected the company's financial results.

"Over the past few months, the company has established itself as an innovator in the marketplace, successfully developing and selling a variety of exceptional new grades of paper," Missota Paper reported.

Sale of the Potlatch mill in Brainerd to Missota Paper Co. was final in February. Potlatch Corp. sold its Brainerd paper mill and related assets to Missota Paper for $4.44 million in cash. Potlatch closed its Brainerd mill in May 2002.

When it opened, Missota anticipated more than 90 percent of its workforce—initially expected to be about 130 with an increase to 250 workers—would be former Potlatch employees.

Earlier this month, Jim Withers, Missota Paper executive vice president and chief operating officer, said the mill could be up and running in two to three weeks. A skeleton crew is working now.

"It's still early but we've had a number of strategic partners or customers we are talking with and so far all have expressed interest, but that is still a long ways from having an agreement with someone, but that's why I am optimistic."

By the middle of January, Missota Paper ownership should have a better idea about its future and the likelihood of success. On Dec. 19, Missota Paper reported a $750,000 loan from a private lending partner will allow the paper company to meet its payroll, which will allow the plant to stay open, though idle, for the next couple of months. However, the future of the plant was described as bleak during an emergency meeting of the Brainerd Economic Development Authority. (Brainerd Dispatch, 31 December 2003)

2004

January

Council Wants Paper Company to Reimburse Legal Fees Paid on Its Behalf

City Stops Money for Missota

The attorneys representing the city of Brainerd in Missota's financing are being advised to stop further work until the paper company reimburses the city for legal fees.

The Brainerd City Council Monday unanimously approved having City Administrator Dan Vogt request Kennedy and Graven, the law firm representing the city in the Missota project, to forgo any further expenditures for Missota until the city council advises the attorneys otherwise.

Vogt said the November and December legal fees of $1,780 paid by the city on behalf of Missota haven't been reimbursed to the city. That total doesn't include a December special meeting held of the Brainerd Economic Development Authority concerning a loan from another organization to Missota.

Before November, Missota and the city agreed to split the cost of legal fees, which amounted to $27,657. Half of those fees were paid by Missota.

Dan Alexander, Missota president and chief executive officer, said in an interview today his company intends to pay the outstanding legal fees incurred by the city. He also said the council's action Monday, of which he was unaware before being informed about it in an interview, could be moot as no legal work is currently being done for Missota.

"There's nothing to review, no work to be done, so it's not like their (the council's) action has a detrimental effect one way or another," Alexander said.

Though no city money was invested in Missota for the purchase of the mill, the city and the EDA acted as a conduit for $500,000 in loans from the state, of which repayments by Missota would be made to the city—up to $400,000—into a revolving loan fund.

In October, Missota defaulted on several loans and in November announced an extended shutdown. In a December emergency meeting, the EDA learned Missota, which operates in the former Potlatch paper mill, has been losing about $1 million a month for the past 10 months. At that meeting the EDA approved signing subordination and forbearance agreements that would allow Missota to receive a $750,000 loan from another organization in order to stay Missota to meet its payroll and stay open, though idle, for two months. It is from that loan that the city's legal fees will be paid, said Alexander.

Council member Mary Koep, who made the motion to ask the city's attorneys to stop work on the Missota project, said Missota should pay its bills before the city does any more work.

"We need to tell them it's time to fish or cut bait," said Koep, comparing the legal fees the city is paying on behalf of Missota to the $1.25 million the city lost 15 years ago in the Brainerd International Trade Centre scandal in which the city guaranteed loans to British-native Colin Hall to start Trailer Systems 2000 Inc., a bus manufacturing company, at the Northern Pacific Center.

Added council member Bob Olson: "I don't think there's going to be any money coming back, so what are we protecting? I have a hard time going along with more legal fees."

Later in Monday's city council meeting, council member Lucy Nesheim defended the city's assistance to Missota. She said all parties involved, including the state, Brainerd Lakes Area Development Corp. and the Brainerd Lakes Area Chambers of Commerce acted properly.

"We tried to help them in very way that we could and everything has been done in proper order, as far as I know, to reopen this plant in working order," said Nesheim. "I'm pleased that we did it. The main goal was to put people back to work. They have been working. The company has not given up."

At the December emergency meeting of the EDA the future for Missota was described as bleak and in need of a miracle by a representative of Bremer Bank, who along with the city and three other organizations is an investment partner in Missota. Alexander said while his company is in a challenging time, it won't need a miracle to survive.

"It's going to take a lot of hard work and that's what we're doing in trying to put this thing together," said Alexander. "What we know is it's an outstanding mill in terms of its physical attributes, it produces an outstanding product and we have outstanding employees. Those are the three key ingredients." He added that the recent economic recovery has not filtered down to paper marketplace, but his company is in the process of establishing strategic alliances other companies and he hopes that within the next couple of months they can resume production. (Brainerd Dispatch, 07 January 2004)

JUST IN CASE

City Orders Default Letter on Missota Loan

Brainerd has taken steps to protect itself if Missota Paper Co. is unable to make loan payments to the city.

In a joint session Monday of the Brainerd Economic Development Authority and the Brainerd City Council, the EDA approved, by a 5-1 vote, directing Kennedy and Graven, the law firm representing the city in the Missota project, to prepare a letter of default on a $500,000 loan that the EDA acted as a conduit for between Missota and the Minnesota Department of Employment and Economic Development.

Voting against preparing the letter of default was EDA member Erik Bonde.

Kennedy and Graven recommended the city pursue the letter of default with Missota.

However, because of a forbearance agreement signed at an emergency meeting of the EDA in December, in which the city consented to a $750,000 loan from another financing agency to Missota, the letter of default would be sent only if Missota isn't current on loan payments by Feb. 15.

There also are $4,742 in outstanding legal fees Missota owes the city.

Jim Withers, Missota chief operating officer, said Missota is working on forming partnerships with other paper companies that would allow the mill, which has been shut down since November, to restart. Withers also said Missota plans on paying the legal fees it owes the city this week.

"Hopefully we can get the mill restarted and allow the mill to generate some income," said Withers.

Following the EDA's decision, the city council Monday in 4-3 vote authorized paying Kennedy and Graven to do the work on the letter of default. Voting against the motion were council members Gary Scheeler, Kelly Bevans and council President Jim Dehen.

Dehen and Scheeler both said with a month left on the forbearance agreement they feared sending a wrong message to Missota.

"While it may not change Missota's options ... I'm trying to figure out why we're getting on the train so fast when they're not defaulted yet," said Dehen.

Council member Mary Koep said she too would like to send a message to Missota—that it's time for Missota to pay its bills or tell the city it can't.

Brainerd has a second position, after Bremer Bank, on real estate and equipment sold if Missota declares bankruptcy.

Though she voted in favor of having Kennedy and Graven prepare the letter of default, city council and EDA member Lucy Nesheim several times reminded the council that no city money was invested in Missota for the purchase of the mill. While the EDA acted as a conduit for $500,000 in loans from the state, repayments by Missota would be made to the city—up to $400,000—into a revolving loan fund.

"We want to do everything possible to help them through this. It's just a matter of time until they make an alliance," said Nesheim. "Maybe this is a legal technicality and if we do file a letter of default one way or another, it's nothing against the plant."

Koep said Brainerd residents have paid for Missota, not only through city taxes for legal fees but in state taxes for the $500,000 loan. (Brainerd Dispatch, 13 January 2004)

February

Council OK’s Paperwork on Missota

The city of Brainerd advised its attorneys to prepare the necessary paperwork should Missota Paper Co. declare bankruptcy.

In an unanimous vote Monday, the Brainerd City Council directed Kennedy and Graven, the law firm representing the city, to prepare bankruptcy letters in the event Missota doesn't find business partners.

However, Missota has not declared bankruptcy and has been working to form partnerships with other paper companies that would allow the mill, which has been shut down since November, to restart.

"We don't intend to file bankruptcy," said Dan Alexander, Missota president and chief executive officer, in a phone interview today. "I'm not sure of the action they (the Brainerd City Council) are taking. Whatever it is, it's not particularly helpful or constructive, but they have to do what they think is in their best interest. From our perspective, we have to continue to work to come up with a plan to get mill running."

Dan Vogt, Brainerd city administrator, said other Missota lenders, including Bremer Bank, have begun to prepare bankruptcy letters. Brainerd has a second position, after Bremer Bank, on real estate and equipment sold if Missota declares bankruptcy.

"Doesn't it put us in position to protect the city's assets? That's my understanding," said council member Mary Koep.

Added council member Bob Olson: "It's in our best interest to do what the other lenders are doing."

The Brainerd Economic Development Authority acted as a conduit for $500,000 in loans between the Minnesota Department of Employment and Economic Development and Missota. Missota in turn would repay up to $400,000 of that loan to the city of Brainerd.

Because Missota hadn't been repaying the loan, the EDA directed Kennedy and Graven to prepare a letter of default on the $500,000 loan at a joint meeting of the EDA and the council on Jan. 12. Following the EDA's decision, the city council authorized paying Kennedy and Graven to do the work on the letter of default.

However, because of a forbearance agreement signed at an emergency meeting of the EDA in December, in which the city consented to a $750,000 loan from another financing agency to Missota to allow the paper mill to remain at "warm idle," the letter of default would be sent only if Missota isn't current on loan payments by Feb. 15.

Alexander said Missota is still working on forming partnerships and has recently received a marketing study, analyzing capabilities and direction, completed by an outside firm. He said with a soft marketplace for paper goods it's been difficult setting up alliances. However, he remains certain the Missota will open again in Brainerd.

"The mill is a very good mill. It's in good physical shape, a modern facility and makes very good paper. The capability and attitude of employees is outstanding and as a result I firmly believe mill will run again," said Alexander. "All we can do is work on things we can control and ask for the continued patient of everybody to allow us to get there." (Brainerd Dispatch, 03 February 2004)

Missota Given More Time to Repay Its Loans

Financial lenders to Missota Paper Co. have agreed to give the owners of the Brainerd paper mill more time to pay back its loans.

With the deadline on a forbearance agreement set to expire Sunday, senior lender Bremer Bank and its partners—Minnesota Power, the Initiative Foundation and the Department of Employment and Economic Development—met Thursday and agreed to extend the forbearance until late June or early July, Dan Alexander, Missota president and chief executive officer, said in a phone interview Friday.

"It's much easier to find an interested investor or partner if you're not in a bankruptcy proceeding," said Alexander. "We're quite pleased with the action they are taking and confident of going forward from here to get something accomplished." He said he expects to have the forbearance extension documents with Bremer to be signed by Tuesday.

Alexander said he hopes to make the same extension request to the Brainerd Economic Development Authority and the Brainerd City Council when he arrives in Brainerd Thursday.

Dan Vogt, Brainerd city administrator, said the city is still waiting to hear from the senior lenders about their decision. Missota has been set as an item on Tuesday's city council agenda. A possible meeting between Alexander, the council and the EDA could be set at that time, said Vogt.

The EDA acted as a conduit for $500,000 in loans between DEED and Missota. Missota in turn would repay up to $400,000 of that loan to the city of Brainerd. Aside from attorney's fees, no city money was invested in Missota.

In October, Missota defaulted on several loans and in November announced an extended shutdown. In December the EDA and other lenders signed the forbearance agreement, which was set to expire Sunday, after Missota received a $750,000 loan from another financing agency which allowed the paper mill to remain at "warm idle" while searching for business partners.

On Thursday, Missota sold 35 acres of land, located across the Mississippi River, to a private developer. The sale will allow the paper company to stay at "warm idle" through the forbearance extension, said Alexander. He declined to say what the purchase price for the land was, but that the proceeds would allow the company to look for a partner or investors—or another owner—for the mill.

Alexander said his focus has never been on Sunday's forbearance deadline, but on working with lenders to come to a solution. Even without the extension, he said Missota would continue trying to get the mill running again.

"What it amounts to is I'm working to do this regardless. I don't care (about the forbearance)," he said. "What I care about is seeing this plant run again, whether by Missota or by someone else, and that's it. This mill should run. These people are entitled to jobs. They're good people and it's a very good mill."

Missota bought the paper mill and related assets from Potlatch Corp. in February 2003 for $4.44 million in cash. Potlatch had closed the Brainerd mill in May 2002. (Brainerd Dispatch, 13 February 2004)

Missota, City Officials to Discuss Mill's Future

Dan Alexander, Missota president and chief executive officer, will meet with Brainerd officials Thursday to discuss the future of the paper mill.

Alexander, in a phone interview Friday, said the senior lenders to Missota agreed to extend a forbearance agreement on repayment of loans until late June or early July. The forbearance agreement was set to expire Sunday. The extended time will allow Missota to seek more investors, a partner or a buyer for the paper company, he said.

The Brainerd City Council Tuesday adjourned its regular meeting to 5 p.m. Thursday to meet with Alexander.

Council members are hoping to do more on Thursday than just approve the forbearance extension. Council member Mary Koep asked Dan Vogt, Brainerd city administrator, to request from the state of Minnesota all documents it has pertaining to Missota. Council member Bob Olson asked for a copy of a market study recently completed on the paper mill and for information on how one lender to the paper mill, CIT Group, perceived the forbearance.

Vogt noted Bremer Bank and its partners—Minnesota Power, the Initiative Foundation and the Department of Employment and Economic Development—would be seeking the proceeds from the sale of 35 acres of Missota-owned land across the Mississippi River to offset part of what the paper mill owed the bank. Alexander, however, noted it was Missota's intention to use the proceeds of the land sale to continue to stay at "warm idle" through the extended forbearance.

Vogt said he hadn't heard anything from the senior lenders about the forbearance extension. Olson suggested Vogt call Bremer Bank to see where the bank is at with the negotiation.

The EDA acted as a conduit for $500,000 in loans between DEED and Missota. Aside from attorney's fees, no city money was invested in Missota.

In October, Missota defaulted on several loans and in November announced an extended shutdown. In December the EDA and other lenders signed the forbearance agreement. (Brainerd Dispatch, 19 February 2004)

MISSOTA TRYING TO SELL MILL

Alexander Says Fair Price Would Be $18-20 Million

Dan Alexander is no longer looking to make a profit at the Missota Paper Co. His goal now is to recoup money for lenders to the mill.

"As management we represent the creditors, not the shareholders anymore," said Alexander, Missota president and chief executive officer, at a Thursday joint meeting of the Brainerd City Council and its Economic Development Authority.

"We are maintaining the facility for the benefit of the senior lenders, the subordinate lenders and the uninsured creditors. ... We're attempting to sell the mill for a higher price so we can cover as much as we owe to creditors as we can."

To do that, Alexander said the mill would have to form a business partnership with another paper company or sell the mill outright.

In early February, Missota received a $3.3 million offer for the paper mill from a Chinese company, but turned it down. The company responded with a $3.5 million counteroffer, which also was rejected by Missota. Alexander said a fair price for the mill would be about $18-$20 million. The paper company is about $16 million in debt to its lenders.

Alexander said a potential buyer of the paper company will be visiting the mill in the next few weeks. Barring a sale or a partnership, Alexander said the chance of getting the mill to operate again is slim, about 20 percent. The chance of selling the mill is about 50 percent, he added, and if the paper market improves about 75 percent.

Alexander, however, said he remains committed to the paper mill.

"I can't say that strongly enough to you. I can't say it with enough emotion. We believe in this mill," said Alexander. "Whether or not Missota owns it, I don't care. My objective is to get that mill to run again."

Alexander updates mill status:

Alexander used his opportunity to speak before the city council and the EDA to give a rundown of Missota's history, from its purchase of the former Potlatch paper mill in February 2003 to its Nov. 1 shutdown and beyond.

Alexander said in the beginning the mill was expected to lose money for about 18 months but that losses would eventually diminish as the paper mill captured more of the market share as paper prices increased. However, prices went down and after losing about $1 million a month most of Missota's employees were laid off and the mill announced an extended shutdown. What was left was a skeleton crew to maintain the mill and keep it heated in case a prospective partner or buyer would approach.

Lenders in December approved a forbearance up to this past Sunday on loans Missota owed. Recently Alexander has approached the senior lender Bremer Bank and its partners, Minnesota Power, the Initiative Foundation and the Department of Employment and Economic Development, for a forbearance extension to July. While Alexander has said the forbearance agreement has been approved, he has yet to receive documentation from the senior lenders.

In the interim, Missota has sold 38 acres of land it owned across the Mississippi River for about $425,000. Of that portion, Bremer was paid $125,000, which would be applied to the principal on its loan to the paper company. The remainder of the proceeds will be used to cover Missota's expenses into July and to pay 2004 property taxes.

Missota has received a marketing study analyzing the capabilities and direction of the plant, and Alexander noted that the paper market appears to be improving. Bills to vendors have been paid in full. Alexander said he has been in contact with numerous paper companies about possibly forming partnerships or even buying the paper mill.

Alexander said if a mill is shutdown for more than six months, the company has to declare a permanent shutdown and layoff of its employees. The declaration itself would require 60 days notice. Alexander said Missota will inform its employees of a permanent shutdown, which in turn will allow its employees to receive benefits through the trade relocation act.

That doesn't mean that Missota will stop looking for a buyer or partners.

"It's not a matter that it's a permanent closure, that we're giving up, but from a legal standpoint it's a benefit for our employees," said Alexander.

Council, EDA members respond:

Council members Mary Koep and Bob Olson both expressed doubts about Missota's prospects and both were upset at the lack of information they've received about the Missota project from the state of Minnesota. Olson and Koep said with the information they've received from the state they wouldn't have loaned any money to the paper company.

"I wouldn't have lent 20 cents to anyone based on that material," said Koep. The city of Brainerd, however, invested no money into Missota. The EDA acted as a conduit for $500,000 in loans between DEED, which received the money through the Housing and Urban Development Office, and Missota. Missota in turn would repay up to $400,000 of that loan to the city of Brainerd.

EDA member Tom Johnson said the EDA action was like placing a bet with someone else's money—there was no downside for the city.

"I don't think it was an unreal way to go at it," said Johnson. "We only had an upside ... and there may still be an upside when the question comes in what is the value of that whole complex."

Brainerd, as one of Missota's subordinate lenders, has a second position after Bremer Bank on real estate and equipment sold if Missota declares bankruptcy.

Sheila Haverkamp, executive director of Brainerd Lakes Area Development Corp., said the only risk to the city was in not receiving the $400,000 grant.

Koep responded it was still taxpayer money.

Johnson noted it was state and federal taxpayer money. But he said if the city and EDA hadn't acted as a conduit for this loan, the money would have gone elsewhere.

"I think it was a good idea," said Johnson.

EDA chairman Ed Menk said the city has received value from its decision to back the loan from the state to Missota. He noted 120 people were employed for about seven months, vendors were paid for providing services to the mill and Brainerd shared in the property tax revenues paid by Missota—all of which probably wouldn't have happened if the mill were permanently shut down.

Koep said she was intrigued by the fact that from 1990 to the present Potlatch put $100 million in equipment into the paper mill yet sold it to Missota for only $4.4 million. She said if a company as large as Potlatch found the mill insufficient, why would Missota think it could make money out of the mill.

Alexander said being a big company doesn't necessarily mean it is a smart one. He noted Potlatch was in debt and was selling assets in its packaging and coated paper divisions, which included the Brainerd and Cloquet paper mills. Sappi bought the Cloquet mill, but didn't want the Brainerd mill, said Alexander.

Johnson said it would have been better if Missota would have included the city in discussion about the sale of land across the Mississippi River.

Alexander apologized to the city council and the EDA for not keeping the entities in the loop on business it was conducting with other lenders.

"I apologize to you all for taking you for granted and I will make a better effort in the future to keep you informed," said Alexander.

Council member Gary Scheeler said he disagreed with Koep. He said the city council chamber is not a courtroom and Missota shouldn't be chastised for trying to get the mill operational again.

"They've done a heck of a good job," Scheeler said.

The Brainerd City Council unanimously approved having the information concerning the extension of the forbearance agreement forwarded to Kennedy and Graven, the law firm representing the city in the Missota project, as soon as it is received. They also authorized the payment for the Kennedy and Graven work.

The council also expressed interest in seeing whether the city could share in the proceeds from Missota's sale of 38 acres of land across the Mississippi River and also asked for a legal decision on whether the council or the EDA board should be the primary entity dealing with Missota. (Brainerd Dispatch, 21 February 2004)

An Inquisition

Missota CEO Says He'll Work to Get Plant Up and Running

DAN ALEXANDER

Guest Column

I am astonished and dismayed by the position being taken by the two city council members, Mary Koep and Bob Olson, on the status of Missota Paper and our efforts to find a partner and/or a buyer for the mill. Their opinion is that the city of Brainerd and the local taxpayers are being taken advantage of by Missota regarding the EDA loan which had been issued to the company last spring.

The facts of the matter are: The $500,000 loan through the EDA is HUD funds from the federal government provided to the state of Minnesota who, in turn, awarded the funds to the EDA. A positive feature of the HUD loan was that when it was repaid, the city of Brainerd would be entitled to keep $400,000 for future economic development activities. The funds had to be used for capital investment, which Missota accomplished by installing equipment to replace what had been removed by Sappi when the mill closed in 2002.

The purpose of the funds was to create jobs. With the acquisition and re-start of the mill last year, Missota employed over 140 people and paid over $4.35 million in wages and benefits during the eight months of operation until the mill went on an indefinite layoff. Since the layoff the mill has continued to employ approximately 20 to 25 people to keep the mill heated and maintained. We have also been looking for ways to utilize some of the assets of the mill to generate some revenue and bring as many people back to work as possible until the full mill can be brought back online.

An outside consultant was hired to evaluate the business prospects of Missota and the mill. The results of the study were that in today's difficult market the likelihood of Missota re-starting is only 20 percent and the likelihood of a sale of the mill at a value greater than what is owed to the secured lenders is 50 percent. However, the report also stated that given six months and an improvement in market conditions, those prospects would improve to 50 percent and 70 percent, respectively.

Missota has asked all of its creditors for their continued patience during this difficult period while we attempt to find new partners or a buyer for the mill. We have received their support with the belief that this action is in the best interest of all of the creditors and our employees, and is preferable to bankruptcy.

We specifically approached our senior secured lenders for an extension of time and the use of proceeds from the sale of 38 acres along Riverside Drive. They agreed to extend a forbearance to the end of July and allow the use of some of the proceeds of the sale to pay our property taxes which are due in May and to cover our operating expenses during May, June and July.

We attended the city council meeting, Feb. 19, to give the council an update, to ask for its support and give members the opportunity to ask any questions. I personally apologized because the council and the EDA rightfully felt that we have been taking them, and their approval, for granted.

However, the Feb. 19 meeting turned from discussion to an inquisition in which it appears Ms. Koep and Mr. Olson arrived at the conclusion that Missota's efforts to continue to seek partners or a buyer for the mill was pointless and a waste of the city's and taxpayer's money. Ms. Koep voiced that the mill should be foreclosed and our employees should face reality, get re-trained and go get jobs. We do not believe this is the view of the entire council.

The two council members inferred that Missota had not been forthcoming last year in providing information that justified the EDA loan. They both stated that based on their review of the material that had been provided that they would not have loaned 20 cents to Missota.

I personally attended the city council meeting on Feb. 3, 2003, with Sheila Haverkamp of Brainerd Lakes Area Development, to answer any questions the council might have regarding the issuance of the loan through the EDA. The council unanimously approved the action required to proceed with the loan. Mr. Olson stated several times during the meeting that no city or local taxpayer funds were going toward this loan.

Now here we are a year later and we, the management of Missota, are being accused of misleading the citizens of Brainerd, misusing taxpayer funds, and generally we are not very smart. I fervently disagree and object to the first two, and I'm unsure about the third point, because to me the logic is pretty compelling that Missota should continue to pursue either partners or a buyer, that it is everybody's best interest, including the city of Brainerd.

A sale or a re-start of the mill means 150-250 high paying manufacturing jobs. That type of business is hard to find or replace. In 2003 Missota paid $258,591 in property tax, and $134,000 is due in May. Foreclosing the mill and placing it into bankruptcy is only going to lower that tax base on the property and therefore the taxes paid to the city. The implication is that if proceeds are collected against the EDA loan in a foreclosure that they will go to the city, but I do not believe this is the case. They will be returned to the state because the job criteria duration will not have been met.

Lastly, who really are the injured parties? First is our suppliers, who are unsecured creditors, who will likely get nothing out of a bankruptcy, and some of these suppliers are local businesses, your neighbors. Second, are the owners of Missota who have invested $7.25 million or 44 percent of Missota's outstanding obligations. But most important, is the impact to Missota's dedicated, hardworking employees.

Missota plans to attend the next city council meeting to request a resolution of support from the city council and the EDA. As we show the mill to prospective investors and buyers, it is important that they know the city of Brainerd and the EDA support the re-start of the mill. The public perception at this point is that the city opposes the mill operation and our efforts to re-start the mill.

Regardless of how insulting and maddening Ms. Koep's and Mr. Olson's views are of Missota, it's owner, and it's management, I intend to continue to do everything in my power to get the mill operational again. Our employees, the Brainerd lakes area and the state of Minnesota deserve our best efforts, and Jim Withers and I intend to continue to give it. (Brainerd Dispatch, 21 February 2004)

Missota Must Be Sold

Missota has three of four necessary ingredients for operating the paper mill.

1. A work force that is dedicated, hard working and very experienced in the art of paper making.

2. Machinery that is in excellent condition.

3. A structure that is well constructed and workable.

4. What is lacking is the fourth important ingredient, working capital or just plain hard old cash that is so important to have in times of declining paper markets.

Our Brainerd lakes area was devastated and emotionally shocked when Potlatch closed and over 600 citizens were out of work.

There was a united effort by the state of Minnesota, chamber of commerce, elected officials, private business sector, a lending institution and many other citizens that banded together to find a buyer.

Dan Alexander appeared and with loans from the state of Minnesota -$2.5 million, Bremer Bank -$1.5 million, Initiative Foundation -$1 million, and Minnesota Power -$500,000, purchased Potlatch for $4.4 million.

Because of various reasons and conditions given by Dan Alexander the mill closed on Nov. 1, 2003, operating 8 months and losing $1 million a month.

Missota was about out of working capital in November and December 2003, the lenders like CIT and other lenders were filing a notice of default. The city received a letter on Dec. 10, 2003, from Gene Bygd of Bremer Bank with the following information:

"The debtor has not provided any definitive plan to restart the mill.

"The company will run out of working capital before the market returns, unless CM Equities is willing to continue to fund the company."

At an EDA meeting Dec. 19, 2003, Mr. Bygd says in the minutes, "Unless a miracle happens in the next 30 - 45 days the company will be in bankruptcy."

Dec. 12, 2003, Dan Alexander, in a letter to Bremer Bank states Missota is working in earnest to develop a plan to restart the business. He also states there is no one left to advance funds other than CM Equity. The lenders agreed to approve a forbearance agreement to Feb. 15, 2004. This would allow Mr. Alexander time to find new funding or business partners or sell the business. On Feb. 19, Dan Alexander was at the city council meeting providing the following information. The lenders have verbally agreed to an extension on the forbearance agreement until July 2004.

A Chinese company made an offer of $3.5 million for the plant. Missota rejected the offer.

Missota is about $16 million in debt.

Mr. Alexander felt a fair price for the mill was about $18 million to $20 million. He is asking 4 to 5 times the price he paid for the mill. He has increased the sale price to cover his operating losses.

Missota sold land for $425,000. The bank will take their pro rata share of net sale proceeds and apply to the principal on their loan. Missota wants to use the balance of proceeds for operating expenses.

A business is in real serious financial problems if assets are sold to supply funds for operating expenses. If these assets are sold, the proceeds should be applied to the loan.

At the Council meeting on Dec. 19, 2003, I asked Mr. Alexander if he and his partners planned to invest their own funds to help with the operating expenses until a buyer was found. His answer was no.

I asked Mr. Alexander if he and some of his partners were being paid a salary from Missota. His answer was yes.

On Feb. 20, 2004, I had contact with an individual from Gold Maple Realty. He informed me a Chinese company, Nanping, wanted to purchase the paper mill. This is a $340 million company with a cash flow of $85 million.

They would pay $3.5 million and could possibly employ 300 to 400 citizens and pay the prevailing wages. This is the company that Missota rejected their offer.

Nanping had wanted to purchase Potlatch when the mill was sold to Missota.

I have sent a letter to our governor, state senator, state representative and other state officials suggesting the governor and his staff, and state officials contact and investigate this Nanping company.

I also informed the governor that I did not think it would be in the best financial interest of our citizens to give an extension on this forbearance agreement. Signing this forbearance agreement until July will just delay the chances of creating jobs and we could lose the Chinese as a buyer. If there is fear of the Chinese moving the equipment to China, have them sign an agreement that the equipment cannot be moved.

Mr. Alexander must be convinced that it is in the best interest of all concerned that he sell this mill for $3.5 million and the $425,000 from the sale of the land will bring the purchase price to $3.9 million.

There is no doubt the lenders will not recover 100 percent of their loans, but can sell to the Chinese and recover at least 60 percent of the loans. But remember, there is a possibility to employ 300 to 400 workers or grant an extension on the forbearance agreement and maybe recover only 10 percent of their loans. And maybe no jobs.

I am sympathetic for Mr. Alexander and his partners with the loss of money and their business. But really, how much money was invested by this group? It is the lenders and workers who really need the sympathy in the closing of Missota.

Did Mr. Alexander and his partners have enough net worth and liquid cash available? Also, did they have the ability to borrow all of the funds needed in case of an emergency situation? Was there background research done on Mr. Alexander and his partners as to their ability to manage the business? What research was done to see if Missota would be able to capture their market share?

I will, to the best of my ability, work with the elected officials, state government, the private sector and other citizens to try and reopen this paper mill and provide jobs for our citizens.

We need to move on and work with this Chinese company or other companies to provide the necessary jobs for the Brainerd lakes area and I will not vote for the extension of the forbearance agreement that Mr. Alexander wants. A number of years ago a Canadian by the name of Colin Hall appeared in Brainerd with promises to employ hundreds of workers and build buses. Do you citizens remember that fiasco? (Brainerd Dispatch, 28 February 2004)

March

Missota

Brainerd Council Should Back Firm's Forbearance Extension

Missota Paper Co. officials are trying to make the best of a bad situation.

Declining paper prices dealt a serious blow to the company that stepped in after Potlatch quit making paper at the northeast Brainerd site. Owners are trying to find an owner for the paper plant and are hoping that the mill will resume operations some day. Last week's permanent layoff of 148 employees was described as a procedural move that will allow workers to qualify for state and federal benefits.

Missota officials are expected seek a vote of confidence as they look for a forbearance extension to their loans at Monday's Brainerd City Council meeting.

The council should support Missota in hopes that it will be successful in its efforts to find a new owner. The city has invested no money into the Missota operation. There's no risk to the city by extending the plant its support. Granting the Missota Paper Co. a little more time could allow it to pay off its creditors, many of whom are private lenders.

Brainerd's Missota plant will rise or fall on its own merits in the free enterprise system. State and city government leaders want to see people working at the Brainerd plant but realize there is a limit to how much financial support it can give.

Missota's attempts to seek a forbearance extension at this juncture is a reasonable request. (Brainerd Dispatch, 01 March 2004)

Council Votes to Back Missota

The city of Brainerd is putting its support behind Missota Paper Co.

The city council Monday, at the request of Missota, unanimously passed a motion that states the city will support Missota in its efforts to find a partner or sell the mill.

Jim Withers, Missota chief operating officer, said it was important for potential partners or buyers, many of whom learn about the city of Brainerd from The Dispatch's Web site, to see that the city is behind Missota's effort.

"I think that's an easy request," said council member Mary Koep, who made the motion, "that we express, most emphatically, that we want to see the mill in operation as quickly as possible."

Withers said Missota has had contact with three potential investors, partners and buyers.

"We've had some discussions and they haven't said no," said Withers.

At a Feb. 19 special meeting of the city council and the city's Economic Development Authority, Dan Alexander, Missota president and chief executive officer, informed council and EDA members that a fair price for the mill would be about $18 million to $20 million. Missota paid about $4.4 million to Potlatch Corp. for the mill.

In early February, Missota received a $3.3 million offer for the paper mill from a Chinese company, Nanping Paper Co., but turned it down. Nanping responded with a $3.5 million counteroffer, which Missota also rejected.

Council member Bob Olson on Monday presented the city council with correspondence he has had with James Chung, of Gold Maple Realty in Minneapolis, which is representing Nanping in its pursuit to buy a paper mill in the United States.

An e-mail Olson provided, written by an unnamed Nanping official to Chung, noted the Chinese paper company would bring 100 to 150 technicians, engineers and management to the mill for its initial startup period, and after the mill was stable would keep about 30 people from China at the mill. Nanping guessed between 450 and 500 local workers would be employed at the mill.

Olson said Chung would meet with state officials about Nanping's possible purchase of the mill. Olson himself has sent letters to Gov. Tim Pawlenty and other state representatives about Nanping's bid to buy the mill.

"It's something that this is all about, the jobs," said Olson. "It's very important that who we endorse has financial resources to get through very tough times."

In a second e-mail Olson provided, Chung wrote that Nanping was becoming impatient in its pursuit of the Missota paper mill and that the need to buy the mill is now. Otherwise, Chung wrote, Nanping will forget about Missota and pursue the purchase of another U.S. paper mill.

Missota bought the mill from Potlatch in February 2003. After losing about $1 million a month, Missota announced an extended shutdown in November. To keep the mill at warm idle Missota requested and was granted by lenders to the mill an extension on forbearance of loan repayments. In February, Missota requested a further forbearance into July, but has yet to receive a definitive answer from senior lenders.

The city of Brainerd has no money invested in Missota. The EDA acted as a conduit for $500,000 in loans between DEED, which received the money through the Housing and Urban Development Office, and Missota. Missota in turn would repay up to $400,000 of that loan to the city of Brainerd. (Brainerd Dispatch, 02 March 2004)

Olson's Missota Plans Met With Silence

An attempt by one council member to get the city involved in the sale of Missota Paper Co. was greeted with silence by the Brainerd City Council.

Council member Bob Olson proposed two resolutions to the Brainerd City Council Monday—that the city request the senior lenders to Missota not sign further forbearance agreements with Missota and funds used from Missota's sale of 38 acres be used to pay back loans; and to ask Dan Alexander, Missota president and chief executive officer, to consider an offer of $5.5 million from Nanping Paper Co. of China, provided the lenders approve a forbearance extension. If that wasn't acceptable, Olson said a professional broker should be hired.

In early February, Missota received a $3.3 million offer for the paper mill from Nanping Paper Co. but turned it down, Alexander said during a previous city meeting. Nanping responded with a $3.5 million counteroffer, which Missota also rejected.

Both of Olson's motions failed for lack of a second. Olson said he had a third motion, but didn't make it.

"I won't waste my breath or council's time," said Olson.

Before presenting his motions, Olson updated the city council on his work in bringing Missota and Nanping together.

On March 4, Olson set up a meeting between several state officials and James Chung, of Gold Maple Realty in Minneapolis, which is representing Nanping in its pursuit to buy a paper mill in the United States. Olson said the meeting was successful.

In correspondence between Olson and Nanping officials, the Chinese paper company has stated it would bring 100 to 150 technicians, engineers and management to the mill for its initial startup period, and after the mill was stable would keep about 30 people from China at the mill. Nanping guessed between 450 and 500 local workers would be employed at the mill.

Olson said Jim Withers, Missota chief operating officer, also has approached him about setting up a meeting with Chung.

Council President Jim Dehen interrupted Olson's update, saying while the council appreciated his efforts, the discussion wasn't germane to Monday's meeting. Olson responded that the Missota sale was an important issue.

"No one is arguing that, but this is a private sale. The city has no say in it," said Dehen.

Olson disagreed with Dehen, saying that if the city doesn't get involved Missota would declare bankruptcy and everyone would lose out.

"If we fool around they'll sell the equipment and there won't be any jobs," said Olson, who suggested if the city could get Nanping to raise its offer to Missota to $5.5 million that would bring the senior lenders out of debt. Olson also said the city could offer a business subsidy or an application for the JOBZ program.

At a Feb. 19 special meeting of the city council and the city's Economic Development Authority, Alexander informed council and EDA members that a fair price for the mill would be about $18 million to $20 million, which includes about $16 million in debt to lenders. Missota paid about $4.4 million to Potlatch Corp. for the mill.

Missota bought the mill from Potlatch in February 2003. After losing about $1 million a month, Missota announced an extended shutdown in November. To keep the mill at warm idle Missota requested and was granted by lenders to the mill an extension on forbearance of loan repayments. In February, Missota requested a further forbearance into July, but City Administrator Dan Vogt said he hasn't received any information about a proposed agreement from the city's counsel, Kennedy and Graven.

The city of Brainerd has no money invested in Missota. The EDA acted as a conduit for $500,000 in loans between DEED, which received the money through the Housing and Urban Development Office, and Missota. Missota in turn would repay up to $400,000 of that loan to the city of Brainerd. (Brainerd Dispatch, 16 March 2004)

EDA Backs Missota Land Sale to Private Developers

The city of Brainerd has given its approval for a 38-acre land sale between Missota Paper Co. and private developers.

The Brainerd Economic Development Authority, by a 4-3 vote Tuesday, approved a partial release of Missota's mortgage, allowing the paper company to sell the land, located across the Mississippi River on the west side of Riverside Drive, at a cost of $425,000. The buyers, Fred Heidman and James Donovan, are planning a 38-home development.

Voting against the partial release were EDA members Tom Johnson, Rick Kummet and Bob Olson. Voting in favor were Tom Pearson, Eric Bonde, Ed Menk and Lucy Nesheim.

Missota will use a portion of the proceeds of the land sale to keep the mill at "warm idle" while searching for a partner or buyer for the mill.

Johnson, worried that the sale of the land would be the start of a process of selling the paper mill off piecemeal, said he would have been in favor of the release had all the proceeds of the land sale been applied to Missota's $5.5 million in outstanding loan to principal lender Bremer and its partners, Minnesota Department of Employment and Economic Development, the Initiative Foundation and Minnesota Power.

Bremer Bank, which has approved the release on Missota's mortgage, plans to use its share of the proceeds—about $125,000—toward the principal on its loan to Missota. Its partners, however, have agreed to allow Missota to use the proceeds from the land sale toward operating costs.

"I think we're right in saying if you're going to sell collateral, at least apply it to the loan," said Johnson.

Nesheim said if the senior lenders were willing to go along with the release, the EDA should, too.

"If there's a possible chance to keep that mill at warm idle, create jobs and help with the sale of the mill we have to take that chance," said Nesheim.

The city of Brainerd has invested no money into Missota. The EDA acted as a conduit for $500,000 in loans between DEED, which received the money through the Housing and Urban Development Office, and Missota. Missota in turn would repay up to $400,000 of that loan to the city of Brainerd. As one of Missota's subordinate lenders, the city has a second position after Bremer Bank on real estate and equipment sold.

Heidman said the sale of the land should be viewed as a positive step by city officials because the 38 acres could be a bridge for further annexation north along Riverside Drive. He also said if the land stayed with Missota and was included in any sale of the paper company it probably wouldn't ever be sold for private development.

Olson offered an amendment to the original motion, saying that the EDA would agree to the release only if the proceeds from the land sale went entirely to paying off loans. But the amendment failed as Pearson, who made the original motion, and Nesheim, who seconded the motion, didn't agree to the amendment.

Olson said the release would just prolong an inevitable declaration of bankruptcy by Missota.

"This land sale is not the answer," said Olson.

Missota bought the mill from Potlatch in February 2003. After losing about $1 million a month, Missota announced an extended shutdown in November. To keep the mill at warm idle Missota requested and was granted by lenders to the mill an extension on forbearance of loan repayments. Missota has requested a further forbearance into July, but nothing has come before the EDA regarding the extension request.

In early February, Missota received a $3.3 million offer for the paper mill from a Chinese company, Nanping Paper Co., but turned it down. The company made a $3.5 million counteroffer, but that too was rejected by Missota. Dan Alexander, Missota president and chief executive officer, has said a fair price for the mill would be about $18-$20 million, which includes about $16 million in debt to lenders. Missota paid about $4.4 million to Potlatch Corp. for the mill. (Brainerd Dispatch, 23 March 2004)

Second EDA Vote Doesn't Change Missota Land Issue

Two votes in two days did not change the overall outcome as the Brainerd Economic Development Authority revisited the issue of a land sale between Missota Paper Co. and private developers.

The EDA met Thursday morning after members requested a special meeting. Ed Menk, EDA chairman, said a ruling made to not allow an unfriendly amendment two days earlier was found in error in terms of procedure.

"I made a mistake and I tried to rectify it by having a second meeting on it and the original motion stood the test of time," Menk said after the meeting.

At issue is sale of 38 acres located across the Mississippi River from the paper mill. Missota is selling the land to Fred Heidman and James Donovan for $425,000. The sale is expected to close today.

Tuesday the EDA board voted 4-3 to approve a partial release of Missota's mortgage, allowing the paper company to sell the land. Thursday the board considered whether to revisit the issue. The city of Brainerd has invested no money into Missota. The EDA acted as a conduit for $500,000 in loans that came from the federal government through the state to Missota.

The point of contention for some board members was a lack of information on how the money from the land sale would be spent. Other members were concerned about creating problems for the closing.

"Frankly we want to know where the money is going," EDA member Tom Johnson said. "We are not trying to (squelch) anything here."

Rod Osterloh, with Close Converse Commercial and Preferred Properties, said the EDA action could impede the closing.

Bob Olson, EDA member, said the land sale could go through, but he suggested the money go into an escrow account until further notice. Olson said putting the money into an escrow account did not affect the closing.

This morning a motion failed 4-3 to have the surplus money after Bremer Business Financial, one of a group of four senior lenders, takes about $125,000 to apply to its loan to Missota put into an escrow account. Bremer Business Financial is a separate corporation from the bank in Brainerd. The other senior lenders are the Department of Employment and Economic Development, the Initiative Foundation and Minnesota Power. The city of Brainerd is a subordinate lender with a second position after Bremer Business Financial on real estate and equipment sold.

Voting in favor of the escrow were Olson, Johnson and Rick Kummet. Voting against were Tom Pearson, Eric Bonde, Ed Menk and Lucy Nesheim.

Jim Withers, Missota chief operations officer, said a lack of information to the EDA was unfortunate and not intended. He said details regarding the fund spending week by week and month by month has gone to Bremer. Withers said one third of the money will go to property taxes, with the balance to pay ongoing expenses such as labor costs, insurance and environmental permit fees and items to keep the mill going. CM Equity, an owner of Missota, is making that proposal to the senior lenders and it will be up to that group to approve the plan or not.

Johnson said he was concerned the city was weakening its position as collateral is spent.

I’m not trying to hurt anybody here, he said.

Nesheim said the senior lenders are in charge of the funds regardless of what the EDA does.

In an update on the mill, Withers said the senior lenders are supportive of Missota's plan to find a buyer or investor for the mill. Plans submitted by CM Equity would make it responsible for the mills sale for the next few months. Withers said the mill is working with two companies involved in sheeting and packaging and Missota expects a trial run next week that would create jobs and revenue helpful at a time when they are searching for a buyer.

Paul Moe, DEED business finance office director, reached by phone this morning, said the EDAs action allows the land sale to continue and the state will continue to work with Missota to reestablish operations or sell the mill. In regard to information being passed on to the EDA, the senior lenders involve private entities reluctant to disclose all the negotiations involved. How the money from the land sale will be spent has not yet been decided and is currently being evaluated, Moe said.

Moe said the state was happy with city involvement and he did not believe the city's position regarding the $400,000 revolving loan fund it expected from Missota, will be harmed for the future. (Brainerd Dispatch, 25 March 2004)

April

Missota Given More Time to Find Buyer

Missota Paper Co. will have more time to find an investor or buyer.

The Brainerd Economic Development Authority voted unanimously Monday morning to give the idled paper company a forbearance through September. That means the company will have additional months to search for a strategic investor or a buyer. As part of the forbearance agreement, which has given Missota more time to pay back its loans, Missota will have two months to redeem the property in a foreclosure compared to the normal 12 months time.

Paul Moe, director of business finance at the state Department of Employment and Economic Development, attended the short meeting, and concurred Missota would have two months from the end of September to voluntarily give up the property if it could not sell it.

The EDA voted to accept the forbearance agreement and voluntary foreclosure agreement.

Present at the meeting were EDA members—Ed Menk, Tom Pearson, Bob Olson, Lucy Nesheim and Erik Bonde. Tom Johnson and Rick Kummet were absent.

Olson asked for clarification on division of money made when Missota sold land across the Mississippi River from the paper mill, which is located in northeast Brainerd. Moe said of the net land sale proceeds of $388,233 the divisions have $116,470 going to reduce the Bremer Bank loan with $134,428 in escrow for property taxes and $137,335 budgeted for maintenance and administration—such as wages and benefits for 10 people, property insurance, utilities, workers' compensation, environmental license fees and about 9 percent for sales process and legal expenses. Moe said Missota will fund the remainder of those expenses.

In an update on the mill, Jim Withers, Missota chief operations officer, said an investment banker whose fee is based on the success of selling the mill is finalizing a plan that will be used to market the plant to a new buyer. Missota has received paper to do a trial with one of two prospective companies that Missota officials are still talking to, but Withers said they do not have commitments from either one. (Brainerd Dispatch, 05 April 2004)

May

Ex-Potlatch Employees Find Education Brightens Future

When the Potlatch paper mill closed in Brainerd two years ago, more than 600 employees were out of work. In the summer of 2002, the first of nearly 100 displaced Potlatch employees enrolled at Central Lakes College in Brainerd and Staples. Today, many are graduating from CLC ready for good jobs and promising new careers.

Here are a few examples to remind us that when one door closes, another door opens.

David Fletcher is a Brainerd High School graduate who didn't think he'd ever get a college education. He is a military veteran, disciplined and thick-skinned.

In March of 2002, after Potlatch shut down, he had to deal with unusual emotions. He felt despair, frustration, abandonment—and a fear of the unknown future.

Thanks to a government safety net and local access to higher education, Fletcher and many other dislocated workers obtained government-paid training with minimal out-of-pocket costs in pursuit of new careers. A federal program, Trade Act Assistance, has financed the bulk of their education.

"I have found out that you are never too old to learn," said Fletcher, who graduated with high honors and a CLC legacy of nearly perfect grades. He has earned not one, but two degrees from the college: the associate in arts for completing general education and critical thinking obligations, and the associate in applied science degree in business management.

"He is one of our top graduating students, even while taking a huge course load of 18 to 20 credits per semester," said Deb McCarthy, a business management instructor.

Fletcher had spent six years in the Navy and taken a course or two as part of a military education. He never thought he'd see the inside of a college campus back in his hometown. Especially once he settled in at Potlatch, where he spent seven years as a machinist and four as an electrician. His goal is to become a business owner as an electrical contractor.

"I'd never had guessed how great it really is to be here, around so many people dedicated to learning," Fletcher said. "And these younger students have shown that they are on the ball.

"I've been here almost every day, and it has been tough," said Fletcher. "Even with my wife having a good job it'd be tough to get through financially without the dislocated worker education program."

Two days after her last day of work at the closed Potlatch paper mill, Carla Christopherson's mother died of cancer.

After 21 years following mom's footsteps into the job, Christopherson was at a mid-life crossroad. She had lost the one parent who had shared her life. Dad had died before her first birthday.

"I was with mom in the hospital a lot before the end," said the woman who had left professional music ambitions behind to join her mother in the Potlatch work force, hired first as a vacation replacement. "I saw so many great nurses."

These caregivers inspired her. "I started asking them questions, such as how much education does it take." Some were Central Lakes College graduates.

Christopherson could have reached back two decades to draw upon her aptitude nurtured at the University of Minnesota-Duluth, where she had earned her bachelor of music degree.

Instead she participated in an assessment offered to all Potlatch employees who sought career training in a new direction. She decided to become a nurse.

"At first I felt a little out of place. In the summer with that first class in the nursing program, here I was with all these 18- to 22-year-olds with belly button rings," she said. "But in the fall I started seeing more students my age, even former co-workers. I felt more comfortable."

Last month she earned an academic achievement award as one of 42 CLC students recognized for perfect grades during their entire enrollment.

Christopherson anticipates fitting right in for night shifts wherever she is employed as a nurse. She favored the overnight shift at Potlatch. "I don't mind working weekends either."

She will tap into savings to attain her goal—a career as a registered nurse.

Christopherson has been inspired by the confidence instructors have shown toward the future of their students. "We are told over and over, 'Nurses, you CAN do this'."

David Ferrian, an Army veteran and a 1983 Brainerd High School graduate, had a strong mechanical background and worked in quality control at Potlatch. He had an idea of his strengths. But he needed to research the job market before going into the ring against his personal Goliath.

"I looked at careers that are forecasted to be strong in coming years," he said. He liked what he found at CLC despite doubts that he should go "home again." Ten years earlier, Ferrian had graduated from the college's automotive technology program.

He had always been learning, often required to do so just to keep up with changing production processes. His technical savvy and hands-on disposition fit nicely with the knack for fixing.

The computer information technology program at CLC "just seemed right," said Ferrian. One of the most demanding and most rewarding programs, it offers myriad career opportunities in a wired global community.

Microsoft Certified System Engineer credentials will open many doors, but you'd better know what you're doing when you tinker with technology.

"We require an internship of at least 48 hours over about two or three months," said Dar Houle, a computer information technology instructor. Ferrian chose the Lakes Area Senior Activity Center in Brainerd for his internship.

The center, where computer usage among members is on the rise, was sorely in need of networking, hardware and software updates.

Donations have enabled the senior center to acquire an inventory of hard drives that could be linked by someone with the know-how to rebuild and interface and even replace a server. That's exactly what Ferrian has done. To do it, he went way beyond the required 48 internship hours.

With help from sons Dan and Reid, Ferrian cleaned up 20 donated machines from Riverwood International at Crosby. They contained the elements that could be incorporated into a group of computers networked not with outdated Windows 95 but offering the dynamics of Windows XP.

"David has done an absolutely wonderful job for us," said Wayne Holtmeier, executive director at the senior center.

Computers were formatted, "and we had fun," Ferrian said of the time spent with sons who were up for something different to do with Dad.

Thanks to this ex-Potlatch computer whiz, the 1,100 members of Lakes Area Senior Activities Center now have a room full of powerful tools.

Carol Miller, a former coach at the college, came back to CLC for a medical administrative secretary degree after a decade on the production floor at Potlatch.

Her master's degree from St. Cloud State University served her well as a high school teacher of English, physical education and health, then as basketball, tennis and softball coach at then-Brainerd Community College.

But her latest—the associate in applied science degree—means as much or more. At age 58, Miller takes the AAS with her in a career she knows is right for her. Medical transcription is a field of opportunity.

She came to CLC after the Workforce Center helped her investigate potential careers that fit her interest and aptitude. And a friend in the medical field ultimately talked her into the commitment.

"I really feel that I have learned a lot and have had excellent instruction," she said. The program provides a solid base for work in areas such as insurance, secured management and other related secretarial positions, Miller said.

She gravitated toward transcription, which requires crucial spelling knowledge and a memory strong enough to comprehend complex medical phrasings and sometimes foreign accents.

It was a challenge. "I didn't even know how to turn a computer on," she said of her first days in the program. "I had a manual typewriter and never planned to need a computer."

"You CAN teach an old dog new tricks," she said. "With a very helpful instructor who takes the time to explain things, and other students who help each other, it can be an enjoyable experience."

Former colleagues at Potlatch are everywhere at CLC. "Four of us were in this class, and that was wonderful to share the experience," Miller said. Some had never set foot on a college campus, which makes the 2004 graduation an especially proud affair.

Reflecting, Miller smiled. "It has been a neat experience. I've lived through it."

This academic year, 59 former Potlatch workers are graduating from CLC. (Brainerd Dispatch, 12 May 2004)

July

Missota Paper Continues to Seek Partner or Buyer

With three months left until the forbearance extension is up, Missota officials continue to look for a partner or buyer for the Brainerd paper mill.

"Things are progressing well," said Dan Alexander, Missota president and chief executive officer.

The mill has been shut down since November. Senior lenders to the mill have approved extensions on forbearance agreements while Missota officials seek a buyer or partner.

Alexander said, through working with investment banking firm Houlihan Lokey Howard & Zukin, Missota officials have been talking with interested parties and have given a few tours of the mill. Interest in the mill has increased because the paper market has been improving, he said.

"There's been a dramatic (market) improvement that has occurred the last three months and part of that is in the recovery of what's been lost last year," Alexander said. What was lost in the paper market was made up with price increases in March and April. A price increase in June gave a net gain from 2003 prices, he said.

Alexander has said a fair price for the mill would be about $18 million to $20 million, which includes about $16 million in debt to lenders. Missota paid about $4.4 million to Potlatch Corp. for the mill in February 2003.

In early February, Missota received a $3.3 million offer for the paper mill from a Chinese company, Nanping Paper Co., but turned it down. The company made a $3.5 million counteroffer, but that too was rejected by Missota, and the Chinese company withdrew interest in the mill. (Brainerd Dispatch, 01 July 2004)

September

Missota Moves Toward Sale

Purchase of Paper Mill by BM Paper Co. May Happen Monday

In a first step to selling the Brainerd paper mill, Missota Paper Co. filed an application to transfer its hydroelectric plant to BM Paper Co.

Aside from saying BM Paper Co. was in negotiations with Missota to buy the paper mill, Dan Alexander, Missota president and chief executive officer, wouldn't comment on the possible purchase because of a confidentiality agreement between the two companies.

"We have a letter of intent signed with this company but until we actually have a signed agreement, we're not at liberty to talk about it publicly," Alexander said. He said BM Paper Co. is a subsidiary of another paper company, which he declined to identify, and was created specifically for the purchase of the Brainerd paper mill.

Alexander said he expected to have new drafts of purchase documents and schedules created by the end of this week, with a possible signing of all purchase documents by Monday.

"We're hoping by Monday to finally be able to be in a position to actually talk about the whole deal and what we are trying to accomplish," Alexander said.

According to the application filed Sept. 10 with the Federal Energy Regulatory Commission, BM Paper Co. LLC is purchasing the hydroelectric plant and the factory assets in order to expand the paper-making business for itself and its affiliated companies.

The contact listed for BM Paper Co. in the application was Elizabeth Whittle, an attorney with the Nixon Peabody LLP law firm in Washington, D. C. Calls to Whittle's office Wednesday weren't returned.

As part of the application to transfer the license from Missota to BM Paper Co., an Oct. 18 deadline for filing of comments, protests and motions to intervene was set.

Alexander said if there are no objections the license would be transferred and the sale of the paper mill complete.

"But until the license is transferred, we can't sell the mill because part of (the proposed purchase agreement) is the hydroelectric facility and that needs to go with it," he said.

Missota has been shut down since November. Senior lenders to the mill have approved extensions on forbearance agreements while Missota officials seek a buyer or partner. In June, Alexander said interest in the mill had increased because the paper market has been improving.

Alexander has previously said a fair price for the mill would be about $18 million to $20 million, which includes about $16 million in debt to lenders. Missota paid about $4.4 million to Potlatch Corp. for the mill in February 2003.

In early February, Missota received a $3.3 million offer for the paper mill from a Chinese company, Nanping Paper Co., but turned it down. The company made a $3.5 million counteroffer, but that too was rejected by Missota, and the Chinese company withdrew interest in the mill. (Brainerd Dispatch, 24 September 2004)

October

Brainerd Mill has New Owner

Deal Finalized Late Friday

Wisconsin-based Wausau Paper signed an agreement to buy Missota Paper Co. for $9.6 million.

The deal was finalized late Friday afternoon and the closing period will take about three weeks. The northeast Brainerd paper mill will become part of Wausau Paper's printing and writing business segment.

Thomas J. Howatt, Wausau Paper president and chief executive officer, said the mill plans to hire 135 people and will look for employees with experience operating the equipment. Howatt said that experience and knowledge will be critical to a successful start for the mill.

The mill's paper machine No. 6, the higher capacity of the mill's two paper machines, will be started first. Wausau Paper announced it plans to produce up to 90,000 tons per year of premium printing and writing paper. Market factors will determine when the mill's second paper machine starts up, Howatt said. Combined, the two machines are capable of producing 170,000 tons of paper per year.

"We are coming to Brainerd with high hopes,"—Thomas J. Howatt, Wausau Paper president and chief executive officer

Wausau Paper produces fine printing and writing papers, technical specialty papers and towel and tissue products. The company has been in contact with PACE International Union representatives, and Howatt said they do not expect to see any change in employees represented by PACE at the facility.

The hiring process is expected to begin almost immediately to gauge the level of interest of former mill employees. Hiring decisions are expected to be made by the end of October. Wages will be determined by the labor agreement with the union.

At the Brainerd mill, Howatt said the production goal is for higher margin premium paper used in commercial printing for advertising and corporate brochures.

Howatt said the mill's assets were in good condition and were well-maintained with a modest amount of capital required for a startup. Wausau Papers will operate the mill's hydro plant on the Mississippi River.

Missota restarted the mill under difficult market conditions for uncoated free sheet paper, and as a smaller independent company its resources were limited and it did not have a strong path to market, Howatt said.

Dan Alexander, Missota Paper president and CEO, said he was pleased with the sale and the good fit for the Brainerd mill. Alexander has always expressed strong feelings for the mill and the people employed there.

"I have a very special feeling about the mill and about the people," Alexander said Friday. "I've never worked with a better group of people in my entire life. I mean that in all sincerity. They were a great group of people who tried everything in their power to make Missota successful."

Alexander said if Missota had started the mill a year later, it would have been successful in Brainerd. He said he strongly believes the war in Iraq affected the consumption of paper, and affected advertising and consumer confidence.

"Our business plan was the right business plan for the mill," Alexander said. "It was a matter of instead of the market picking up, it went down. Most people viewed, as we did, the market was poised for a recovery and our timing was going to be good. It was close but not there. We were off by a year."

Alexander said the Brainerd mill is an excellent one in terms of its condition and capability and Wausau Paper will be successful here. "It's an ideal fit for the mill."

In terms of making Missota work, Alexander said it was like dealing with a flood—while people were filling sandbags they were faced with a tidal wave.

"... I believe in the mill and I believe in the people who worked at the mill. They did a great job for us and they deserved the opportunity."

Alexander and Jim Withers, Missota vice president, will work with Wausau for the next three months in the transition at least to get the mill back up and running.

Wausau Paper has three mills in Wisconsin, one in Ohio and one in New Hampshire along with converting facilities in Wisconsin and Kentucky and regional distribution centers in Texas and California. Most of the company's product is shipped by truck. Wausau Paper has a strong market presence and distribution abilities, Howatt said.

"We've been very successful in recent years growing our higher margin premium paper business," Howatt said, noting it has been a cornerstone of the company's printing papers. He said the Missota paper mill was available at a reasonable price and will allow Wausau Paper to expand its sales of premium papers.

Howatt said it is a long-term commitment. He pointed to Wausau Paper's company history and a successful track record with acquisitions.

"We are coming to Brainerd with high hopes," he said. "We've just been through an unprecedented decline in uncoated free sheet markets."

Howatt said that trend is slowly reversing itself and showing modest growth for the first time in five years.

"That is an encouraging sign and that's, quite frankly, why we believe it's a good time to invest."

A transition team, created from employees from several of Wausau Paper's other facilities and likely people from Missota's former management team, will work to restart the mill. A head of operations will be named later. Wausau Papers does not produce coated papers and Howatt said the restrictions on the mill against producing coated paper (left over from the sale of Potlatch to Missota) is not a hindrance.

Howatt said: "We are truly thrilled about the opportunity to operate this facility and we think it's going to be good for us and we think it's going to be good for the community." (Brainerd Dispatch, 02 October 2004)

Wausau Paper Buys Missota

Wisconsin-based Wausau Paper signed an agreement to buy Missota Paper Co. for $9.6 million.

The deal was finalized late Friday afternoon and the closing period will take about three weeks. The northeast Brainerd paper mill will become part of Wausau Paper's printing and writing business segment.

Thomas J. Howatt, Wausau Paper president and chief executive officer, said the mill plans to hire 135 people and will look for employees with experience operating the equipment. Howatt said that experience and knowledge will be critical to a successful start for the mill.

The mill's paper machine No. 6, the higher capacity of the mill's two paper machines, will be started first. Wausau Paper announced it plans to produce up to 90,000 tons per year of premium printing and writing paper. Market factors will determine when the mill's second paper machine starts up, Howatt said. Combined, the two machines are capable of producing 170,000 tons of paper per year.

Wausau Paper produces fine printing and writing papers, technical specialty papers and towel and tissue products. The company has been in contact with PACE International Union representatives, and Howatt said they do not expect to see any change in employees represented by PACE at the facility.

The hiring process is expected to begin almost immediately to gauge the level of interest of former mill employees. Hiring decisions are expected to be made by the end of October. Wages will be determined by the labor agreement with the union.

At the Brainerd mill, Howatt said the production goal is for higher margin premium paper used in commercial printing for advertising and corporate brochures.

Howatt said the mill's assets were in good condition and were well-maintained with a modest amount of capital required for a startup. Wausau Papers will operate the mill's hydro plant on the Mississippi River.

Missota restarted the mill under difficult market conditions for uncoated free sheet paper, and as a smaller independent company its resources were limited and it did not have a strong path to market, Howatt said.

Wausau Paper

• The company employs about 3,100 people at 10 facilities in six states.

• The company's corporate office is in Mosinee, Wis., a city of about 4,162 people along the Wisconsin River in the central part of the state.

• Wausau Paper Mills was started in 1899 by Norman H. Brokaw and brothers W. L. and E. A. Edmonds.

• Mosinee Paper was established in 1910.

• In 1920, the Mosinee Paper mill became the world's first to produce 1,000 feet of paper per minute.

• In 1997, Wausau Paper Mills Co. and Mosinee Paper Corp. merged into Wausau-Mosinee Paper Corp.

• In 2004, the merged company changed its name to Wausau Paper.

• On Oct. 1, 2004, Wausau Paper bought the Missota paper mill in Brainerd.

Missota Paper

• In February 2003, Missota Paper bought the former Potlatch paper mill on Mill Avenue in northeast Brainerd for $4.44 million and hired about 160 workers, mostly former Potlatch employees.

• When Potlatch closed, it left about 600 people without jobs.

• An economic downturn hurt the young company's start. In early November 2003, Missota Paper announced an extended shutdown, noting it witnessed "constant deterioration in pricing in nearly all market segments" since the company actually started in March.

Dan Alexander, Missota Paper president and CEO, said he was pleased with the sale and the good fit for the Brainerd mill. Alexander has always expressed strong feelings for the mill and the people employed there.

"I have a very special feeling about the mill and about the people," Alexander said Friday. "I've never worked with a better group of people in my entire life. I mean that in all sincerity. They were a great group of people who tried everything in their power to make Missota successful."

Alexander said if Missota had started the mill a year later, it would have been successful in Brainerd. He said he strongly believes the war in Iraq affected the consumption of paper, and affected advertising and consumer confidence.

"Our business plan was the right business plan for the mill," Alexander said. "It was a matter of instead of the market picking up, it went down. Most people viewed, as we did, the market was poised for a recovery and our timing was going to be good. It was close but not there. We were off by a year."

Alexander said the Brainerd mill is an excellent one in terms of its condition and capability and Wausau Paper will be successful here. "It's an ideal fit for the mill."

In terms of making Missota work, Alexander said it was like dealing with a flood—while people were filling sandbags they were faced with a tidal wave.

"... I believe in the mill and I believe in the people who worked at the mill. They did a great job for us and they deserved the opportunity."

Alexander and Jim Withers, Missota vice president, will work with Wausau for the next three months in the transition at least to get the mill back up and running.

Wausau Paper has three mills in Wisconsin, one in Ohio and one in New Hampshire along with converting facilities in Wisconsin and Kentucky and regional distribution centers in Texas and California. Most of the company's product is shipped by truck. Wausau Paper has a strong market presence and distribution abilities, Howatt said.

"We've been very successful in recent years growing our higher margin premium paper business," Howatt said, noting it has been a cornerstone of the company's printing papers. He said the Missota paper mill was available at a reasonable price and will allow Wausau Paper to expand its sales of premium papers.

Howatt said it is a long-term commitment. He pointed to Wausau Paper's company history and a successful track record with acquisitions.

"We are coming to Brainerd with high hopes," he said. "We've just been through an unprecedented decline in uncoated free sheet markets."

Howatt said that trend is slowly reversing itself and showing modest growth for the first time in five years.

"That is an encouraging sign and that's, quite frankly, why we believe it's a good time to invest."

A transition team, created from employees from several of Wausau Paper's other facilities and likely people from Missota's former management team, will work to restart the mill. A head of operations will be named later. Wausau Papers does not produce coated papers and Howatt said the restrictions on the mill against producing coated paper (left over from the sale of Potlatch to Missota) is not a hindrance.

Howatt said: "We are truly thrilled about the opportunity to operate this facility and we think it's going to be good for us and we think it's going to be good for the community." (Brainerd Dispatch, 03 October 2004)

Wausau Paper Seeks Tax Benefits From City

Brainerd Council to Hear Request at Oct. 18 Public Hearing

Wausau Paper, the Wisconsin-based company that signed an agreement to buy Missota Paper Co., will seek business subsidies from the city of Brainerd.

The Brainerd City Council Monday, on behalf of the city and the Brainerd Economic Development Authority, set a public hearing for its Oct. 18 meeting for a request from Wausau Paper to receive tax benefits through the JOBZ program.

The public hearing also would cover Wausau's request to assume Missota's Minnesota Investment Fund loan with the EDA.

While the amount of business subsidy Wausau Paper requested wasn't included in the resolution to set a public hearing, the resolution document the council reviewed noted the subsidies are anticipated to be "substantially more than $100,000."

"One contingency of the purchase agreement is that financial programs be available," said Sheila Haverkamp, Brainerd Lakes Area Development Corp. executive director. Haverkamp is working with the city and Wausau to develop the documents.

The purchase agreement of $9.6 million between Wausau Paper and Missota was finalized late Friday afternoon and the closing period will take about three weeks. The northeast Brainerd paper mill will become part of Wausau Paper's printing and writing business segment.

"How exciting for our community," Haverkamp said.

Haverkamp noted the city also would need to amend its JOBZ zone ordinance to include the paper mill itself. The council passed a motion to seek approval from the Crow Wing County Board and the Brainerd School Board to modify its JOBZ zone to include the paper mill.

Council member Mary Koep said she had no problem setting the public hearing but requested more financial information be made available to the council before the public hearing and before the council makes its final decision. Haverkamp said the information to be presented at the public hearing should be available at city hall later this week. (Brainerd Dispatch, 06 October 2004)

Tax Break for Missota's Paper Mill Buildings Voted

The positives of adding new jobs in the community outweigh concerns about shifting the tax burden, Crow Wing County commissioners decided Tuesday.

In a vote, commissioners opted to support classifying the Missota Paper Co. buildings in northeast Brainerd as a JOBZ zone, which gives a tax break to the Wausau Paper Co., from 2006 to 2015. Wausau Paper entered an agreement to buy Missota earlier this month.

"It's important for our economy," Commissioner Dewey Tautges said. "These are good-paying manufacturing jobs, something we have too few of."

Wausau's purchase agreement is expected to be finalized by the end of the month.

The city of Brainerd desired to reclassify the property as a JOBZ zone. The city sought approval from the Brainerd School District and received that Monday.

About JOBZ

The JOBZ program is designed to stimulate economic development activity in distressed areas of the state by providing local and state tax exemptions.

Communities wishing to provide business assistance need to have a business subsidy policy and that includes wage requirements.

A recommended wage floor is 110 percent of the 2003 poverty level for a Minnesota family of four, or $9.73 per hour.

Property taxes are affected by the decision. The JOBZ program acts as an incentive to businesses by offering tax breaks at specific sites. The county will have to shift $82,000 per year that will not be levied against a potential Wausau Paper mill property to other taxpayers.

County Board Chairman Terry Sluss said he is less than supportive of the JOBZ program because of the tax shift. But he said if any project is worthy for the program, this seems to be it.

The property taxes not taken in by a Wausau Paper mill could be offset by property values paid by employees with jobs here versus losing people who have to move away for employment, Sluss said.

Commissioners John Ferrari, Gary Walters and Ed Larsen expressed concerns about the JOBZ program but supported the vote for Wausau Paper's request.

"The rest of the people in the county will pay more because of this," Larsen said. "I think that's important for people to understand."

The county will set a public hearing to consider a business subsidy policy and expectations for wages and job creation.

Missota Paper purchased the paper mill from Potlatch for $4.4 million in 2003. The sale price to Wausau Paper is $9.6 million. Commissioner Gary Walters asked about the revenue Missota Paper is making from the sale. Haverkamp said investors are taking a loss.

The Missota property, excluding the buildings, was previously approved in the original JOBZ application. Sheila Haverkamp, Brainerd Lakes Area Development Corp. executive director, said the buildings were operational at the time JOBZ zones were identified.

Wausau Paper went to the city of Brainerd, requested JOBZ tax benefits for the buildings and to assume Missota's Minnesota Investment Fund loan with the Economic Development Authority. The terms of the loan include a $100,000 forgivable loan with a job creation criteria of 75 jobs with wages greater than $12 per hour and a $400,000 loan for seven years at 2 percent interest.

In addition, the county approved a JOBZ zone of five acres for Barrett Ag. Services Inc. in Daggett Brook Township. Barrett is a manufacturer and wholesaler of processed fertilizer products, such as peat, organic fertilizer and pet foods. The company plans to start operations by January and create seven jobs in the first two years of operation. Prospects include adding 13 or more jobs within five years. Starting wages are expected to be $20,000, $60,000 and $70,000 per year. (Brainerd Dispatch, 14 October 2004)

Tax Break for Paper Mill OK'd

The city of Brainerd has given its blessing—in the form of a tax break—to Wausau Paper for that company's purchase of Missota Paper Co.'s Brainerd paper mill.

The Wisconsin-based company's application for business subsidies through the JOBZ program was unanimously approved at a joint meeting Monday of the Brainerd City Council and the Brainerd Economic Development Authority.

Wausau Paper bought Missota for about $9.6 million dollars. The northeast Brainerd paper mill will become part of Wausau Paper's printing and writing business segment. The deal between the two companies is expected to close Thursday.

"The acquisition of the Brainerd mill offers us the opportunity to continue to grow, especially in the area of premium paper," said Tom Craven, senior vice president of Wausau Paper. "We're excited about the prospects the Brainerd mill will bring to Wausau Paper."

Wausau Paper's move to Brainerd also was greeted enthusiastically with the city council, which rarely has been unanimous when it comes to decisions concerning business subsidies.

"It's outstanding, the fact that we have such a renowned paper company coming in," Mayor James Wallin said. "It's going to expand into a wonderful job source for the city and be an economic benefit to the whole area. I'm very glad they're here."

Part of the JOBZ program agreement with the city is that Wausau Paper will create a minimum of 75 full-time jobs at a minimum of $12 per hour. Wausau representatives had earlier said they will hire a total of 135 people for the paper mill.

In return, Wausau Paper will receive tax savings of $4,736,514 over the next 12 years to help with its purchase of Missota-owned land, assets and the production facilities.

The council and the EDA also approved having Wausau take over an EDA-administered, state-granted $500,000 Small Cities Development Program loan that was originally given to Missota—$100,000 of the loan is forgivable as long as Missota meets the job creation criteria and $400,000 will be retained by the city of Brainerd.

The city council chamber was full but few spoke during the public hearing concerning Wausau Paper's JOBZ application and the $500,000 loan. Sen. Paul Koering, R-Fort Ripley, said, "I'm really excited about Wausau Paper being interested in our facility in Brainerd. I just think it's going to be a great thing for Brainerd—not just Brainerd but for the whole community."

Koering and Gov. Pawlenty had met with Wausau representatives. Pawlenty sent a letter to Wallin encouraging the city of Brainerd to "favorably consider authorizing" JOBZ designation on behalf of Wausau Paper. Wallin said he will be pleased to send a letter back to Pawlenty noting the EDA and council unanimously approved Wausau's JOBZ request.

Locally, the purchase of the paper mill by Wausau Paper also was supported. Brian Hauck, vice president of the local labor union, said the mill, under Wausau's ownership, can and will compete and succeed in the world paper market.

"In the long range there'll be a positive trickle-down effect ... which far outweighs any negative effects you can think of. That will continue throughout the community and the surrounding area," Hauck said.

Seven minutes after it opened, the public hearing was closed. After the EDA and the council cast their affirming votes, the council chamber emptied.

Before casting her vote, council member Mary Koep, who often has voted against tax-increment financing and other business subsidies, said she had a change of heart concerning Wausau Paper after speaking with several people in the community, one of whom noted the historical importance of the paper mill in Brainerd.

"I think we need to do what we can to keep our history here," Koep said. "That mill has been here as long as I can remember and hope it will be here a long, long time."

Wausau Paper has three mills in Wisconsin, one in Ohio and one in New Hampshire along with converting facilities in Wisconsin and Kentucky and regional distribution centers in Texas and California. The company employs about 3,100 people at its facilities.

In February 2003, Missota Paper bought the former Potlatch paper mill on Mill Avenue in northeast Brainerd for $4.44 million and hired about 160 workers, mostly former Potlatch employees. When Potlatch closed, it left about 600 people without jobs.

In early November 2003, in the midst of a declining paper market, Missota Paper announced an extended shutdown. It has remained at "warm idle" while Missota's owners sought partners or a buyer for the paper mill. (Brainerd Dispatch, 20 October 2004)

Wausau Paper Completes Paper Mill Purchase

Wausau Paper completed its $9.6 million purchase of Missota Paper Co. in Brainerd.

Wisconsin-based Wausau Paper announced Thursday the sale was finalized. The northeast Brainerd paper mill, a specialty manufacturer of high-quality uncoated freesheet paper used in commercial printing for advertising and corporate brochures, will become part of Wausau Paper's printing and writing business segment.

When the sale agreement was announced this fall, Thomas J. Howatt, Wausau Paper president and chief executive officer, said the company plans to hire 135 people.

At the time Dan Alexander, Missota Paper president and CEO, equated the sale to a torch passing to someone who could be successful in the industry. Missota Paper was created to pursue the February 2003 purchase of the Brainerd mill from Potlatch. Missota was in an extended shutdown by November 2003.

"We'll just be glad to bridge the mill from the other unfortunate shutdown in 2002 to another life," he said.

Potlatch ended a century of papermaking in Brainerd when it closed in 2002, putting more than 600 people out of work. Wausau Paper employs about 3,100 people in 10 facilities in six states. Howatt said earlier the purchase of the Brainerd mill marked a long-term commitment to jobs here. (Brainerd Dispatch, 23 October 2004)

Wausau Paper Reports Gain in Earnings

Wausau Paper reported a 36 percent gain in third-quarter earnings to $8.1 million from $6 million the year before, which is the company's highest profit in five years.

Net sales increased to $262.4 million from $249.5 million in 2003. Net earnings for the first nine months of the year were $15.3 million, an increase of 45 percent compared to last year. For that same nine-month period this year net sales increased 6 percent to $778.4 million.

In a news release, Thomas Howatt, Wausau Paper president and chief executive officer, said the improvement could be attributed to strategic initiatives with 40 percent of net sales generated by products developed in the last three years. That sales percentage exceeded the company's corporate goal of 25 percent. Howatt said the strong third-quarter earnings came despite fiber-related price increases of about $9 million and natural gas price increases of $1 million and amid "only modest improvement in market conditions."

The printing and writing segment, which the Brainerd mill is now part of, reported third-quarter operating profits of $5.1 million compared to $5.3 million in 2003.

Howatt said the purchase of the Brainerd mill fits well with Wausau Paper's growth strategy and the "170,000-ton per year uncoated freesheet mill provides the capability and scale to expand our sales of higher-margin premium printing and writing papers, driving profitability and generating superior long-term growth," Howatt said. (Brainerd Dispatch, 24 October 2004)

November

Mill's Paper Machine to Start Rolling

135 Employees to Head Back to Work This Week

Mill workers expect to be making paper again in Brainerd this week.

"We are on track," said Thomas Craven, senior vice president of printing and writing for Wausau Paper. "This mill really fits our strategy of growing premium papers."

Wausau Paper produces fine printing and writing papers, technical specialty papers and towel and tissue products. The Brainerd mill will make uncoated free sheet paper. The higher margin premium paper is used in commercial printing for advertising and corporate brochures.

The publicly owned company hired about 135 employees. There are familiar names going back to Potlatch and then Missota operations, including Tom Isle, Tom Ebinger, Mike Brusseau, Gary Heiling and Kevin Kronbeck. Missota's owners and chief officers, Dan Alexander and Jim Withers, are still involved in the transition.

Wausau in Brainerd

The company hired about 135 workers (about 30 of those salary), mostly former Missota Paper employees, who in turn were mostly former Potlatch employees.

Contracts are in place with the Paper, Allied Industrial, Chemical and Energy Workers International Union.

The company expects to make 90,000 tons of paper per year using the newly named No. 7 machine.

Wausau will operate 24 hours per day, seven days a week.

The company will make pastel colored paper in a new move for the mill.

Craven said when the paper making starts this week they hope to be in continuous operation. He said a number of customers are committed to the mill. Craven was reluctant to give specifics on capital investments, saying they may give away too much information for competitors.

Wausau Paper's purchase of the former Missota Paper mill was finalized Oct. 21. Now they are close to restarting Paper Machine No. 6, which has been christened No. 7 to fit Wausau Paper's mill inventory. It is the higher capacity of the Brainerd mill's two paper machines. Craven said starting the mill's second machine is still in the future, but will depend on market factors. Combined, the two machines are capable of producing 170,000 tons of paper per year.

At the end of October, the Wall Street Journal reported the paper industry was pulling out of a "four-year funk" and regaining profitability. The Wall Street Journal noted the economic downturn after 2000 put paper makers in a downward spiral and many companies reacted by closing plants.

It's a scenario Brainerd became familiar with firsthand when Potlatch closed the mill in 2002 and then privately owned Missota Paper struggled to gain a foothold as a successor before going into an extended shutdown in 2003.

Craven said paper makers always worry about the markets.

"Our markets have gotten stronger, but there is a seasonality," Craven said. "We always hold our breath. We are never quite certain if the resurgence we see will hold."

Craven said an Olympic year and an election year mean more paper is used. Residents need only think of the massive amounts of campaign literature found in their doors to see the relationship. The year following an election typically will see the market retract a bit, Craven said. But he said if businesses feel better about themselves economically they will do more advertising and want to create splashier annual reports. That will be good for paper makers.

"It has a lot to do with the budgets businesses have for commercial printing and advertising," Craven said.

The Brainerd mill will produce bright white paper, off whites and initially pastel colors, which have markets in schools. Craven said the color will be new and different for the Brainerd mill. Wausau Paper makes deep color paper in its Wisconsin and New Hampshire mills.

Drivers in northeast Brainerd can expect to see action on the rail line running down First Avenue Northeast as it connects the mill with the Burlington Northern Santa Fe Railroad main line. While much of the company's product is shipped by truck, Craven said some customers are already set up to receive rail shipments.

"It's a good alternative," Craven said. "It is a way to hold down the cost of transportation, which is a big part of our cost."

For skeptics who wonder about the mill's potential after Potlatch's decision to exit the printing papers business, Craven said buying a mill is not something Wausau Paper does every day. The company's last acquisition was in New Hampshire in 1993.

"We look at this facility as being a real gem and the work force being equally talented," Craven said. "We take our time when we look at acquisitions. We have a good management group (in Brainerd) and good employees and we have the right customer service model for our products. I am nothing but supremely confident this will be a success.

"I just want to start making paper." (Brainerd Dispatch, 14 November 2004)

Brian Trask was named vice president of operations at Wausau Paper's Brainerd mill and will serve as top manager there. Trask was the paper mill manager in Wausau's Groveton, N.H., mill and has been the startup manager in Brainerd. A ceremony to rededicate the Brainerd paper mill is set Dec. 7 with Gov. Tim Pawlenty expected to attend. (Brainerd Dispatch, 27 November 2004)

December

Mill is Back in Operation

Wausau Paper's Brainerd Mill is producing paper.

In a start-up mode, paper production has seen anticipated peaks and valleys as machinery that sat idle is put back to work.

The mill, which employs about 135, has met sales orders and is making product for Wausau's other mills. Brian Trask, vice president of operations in Brainerd, said the remarkable effort took the mill from darkness to paper making in six to seven weeks.

Trask said there are still a few management positions to fill. He said the work ethic at the mill has been strong with enthusiastic and energetic employees. Trask said production numbers have been improving daily.

Production appeared to be on a steady pace Friday afternoon. The mill is still in a start-up period and working the bugs out of formerly idle equipment.

On Friday employees were making paper and applying fresh paint to walls as they prepared for Tuesday's recommissioning with Gov. Tim Pawlenty scheduled to attend the ceremony. Wausau Paper's purchase of the former Missota Paper mill was finalized Oct. 21. Missota purchased the mill from Potlatch and went into an extended shutdown in 2003. (Brainerd Dispatch, 05 December 2004)

Solid Sign of Success

Gov. Pawlenty Helps Usher in Wausau Era at Paper Mill

Wausau Paper's new sign on Mill Avenue in Brainerd is framed solidly in wood and the visual message was not lost on those attending the mill's recommissioning ceremony Tuesday.

The sign, which represents a sense of a solid venture, was a gift to the mill from the union employees. Thomas Howatt, Wausau Paper president and chief operating officer, said the ceremony was a way to serve notice the mill was operating and commercially viable again.

"Now we have to make money and ensure the long-term success of this mill," Howatt said.

Minnesota Gov. Tim Pawlenty attended the event along with about 150 people—dignitaries from Brainerd and Baxter, area economic development officials, and community leaders, as well as Wausau employees.

Howatt remembered his first visit to the mill, when the mill was dark, shuttered and idle.

"It was so quiet you could hear a pin drop. We believe we have the elements for success here in Brainerd," Howatt said.

Pawlenty said a great state and quality of life cannot exist without good-paying jobs that allow people to stay in their communities. Pawlenty looked at the Wisconsin-based Wausau Paper officials and drew laughs from the crowd saying he particularly liked it when such friends crossed the border. And he said while this mill's story has had its ups and downs, this chapter would not have happened without area leaders, including the city council.

This community and this company is willing to stand for jobs and economic growth in challenging times and in a challenging industry, Pawlenty said.

Shawn O'Brien worked with Potlatch for 13 years and was there when the mill closed on May 18, 2002. Two days later he was working for Wausau Paper in Brokaw, Wis. In early October, O'Brien, maintenance/planning coordinator, came back to the Brainerd mill with Wausau's team.

"Coming back here and seeing the place shut down after it was so lively, it was almost like somebody had died," O'Brien said. "A piece of us had died."

About Wausau Paper

The Brainerd mill employs 135.

More employees may be added when the mill's second paper machine is brought online. Depending on market conditions, that could be one or two years from now.

Workers put in 16 and 17 hour days to get the mill back in operation. Now the mill is producing more than 200 tons of paper daily. Customers are coming back for additional orders, O'Brien said.

"It's just an amazing feeling," he said. "I couldn't be happier. Being back here in one word—fantastic."

DeAnna Baratto, raw material coordinator, worked for Potlatch, Missota and now Wausau.

"It's so good for us and for the area," she said. "There is no 'that's not my job.' I think we all feel very fortunate to be back. It's kind of just coming home. It's like we belong here."

She said Wausau's plan for the mill feels solid and employees are positive and not worried about its future.

Brian Hauck, PACE union vice president, agreed. He said the key is to beat foreign competition and compete globally. To do that Hauck said they are taking a team approach and working with management instead of just for them. He said the gift of the sign was a statement the union wanted to make.

"We think this is going to be a good union of labor and management," he said. "We want this mill to be the No. 1 place to work in this community. I think we can achieve that. We can start another 100 years here." (Brainerd Dispatch, 09 December 2004)

Loan Helps Missota, But Future Bleak

A $750,000 loan from a private lending partner will be given to Missota Paper Co. to meet its payroll, which will allow the plant to stay open, though idle, for the next couple of months.

However, the future of the plant was described as bleak today during an emergency meeting of the Brainerd Economic Development Authority.

Missota, which operates in the former Potlatch paper mill, has been losing about $1 million a month for the past 10 months, EDA members learned in a conference call with the city's attorney, Beth Taylor, of Kennedy and Graven; and Gene Bygd, senior vice president with Bremer Bank in St. Paul—which along with the city, CM Equity Partners and CIT Group are investing partners in Missota.

In October, Missota defaulted on several loans and in November announced an extended shutdown. On Dec. 17, Dan Alexander, Missota president and chief executive officer, wrote a letter to Bremer Bank asking Bremer to consent to the loan agreement with CM Equity Partners, based in New York, for $750,000 in order to meet Missota's payroll for the next couple months. In return, CM Equity Partners would receive a second position on the inventory and accounts receivable as collateral.

In his letter, Alexander said keeping the paper mill open at "warm idle" would benefit the mill's investors as the mill is the principal collateral for the loans.

"A cold shuttered mill will sharply reduce the value of your collateral, due to the freezing and thawing, condensation, corrosion and general deterioration of the pipes, motors and other manufacturing equipment during the coming winter months," Alexander wrote. "I must be clear that by not consenting to this funding, you are precluding us from keeping the mill 'warm' and in turn could initiate a chain of events that will result in a bankruptcy filing."

Bygd said Missota is in a fragile position. He said the paper company has been seeking partners but none have stepped forward.

"In essence, bankruptcy is going to happen unless a miracle happens in 30-45 days," said Bygd in the conference call.

The Brainerd Economic Development Authority unanimously approved signing subordination and forbearance agreements, subject to the state of Minnesota's approval, that consented to CM Equity Partners loaning Missota $750,000, of which $259,000 would be paid to CIT Group.

"It's probably the only chance we have to save our position," said EDA member Tom Pearson.

Absent were EDA members Bob Olson, who also is a council member, and Rick Kummet.

Along with $500,000 the EDA was granted from the state to use as a loan for Missota when it opened, the other investing partners were Bremer Bank and its partners, with $5 million; and CM Equity Partners, with an initial $6 million as well as an additional $2 million, although only $1.25 million has been paid to date of the $2 million because of Missota's default on its loans. Bremer has a first position on Missota's real estate and equipment as collateral against the loan. The city has a second position and CM Equity Partners has a third position.

No city money was invested in Missota for the purchase of the mill as the funds given to Missota by the city were received by the city from the state. Any loan payments made to the city, up to $400,000, would have been placed into a revolving loan fund.

CIT Group loaned $3 million with the paper mill's inventory and accounts receivable as collateral. With the agreement consented to by the city, CM Equity Partners would provide the $750,000 loan with a second position on the inventory and accounts receivable as collateral.

Before consenting to the agreement, EDA members proposed to Bremer Bank a 90/10 split with the city of collateral should Missota declare bankruptcy, meaning Bremer would retain 90 percent of assets sold and the city 10 percent. Bygd said the bank couldn't approve the proposal.

All other investing partners had agreed to CM Equity Partner's loan to Missota. If the EDA didn't consent, it was likely bankruptcy would occur, leading City Administrator Dan Vogt to note the political side to the issue.

"How does this play? The EDA says no, the company goes bankrupt and people are out of work a week before Christmas," said Vogt. "It could be shown as the city's fault." (Brainerd Dispatch, 19 December 2003)

WAUSAU PAPER/MISSOTA PAPER

Wausau Paper Buys Missota, Reopens Mill

In business, it can all be a matter of timing.

When 2003 was barely a month old, Potlatch's sale of the northeast Brainerd mill to Missota Paper for $4.44 million brought hope that at least 130 jobs could be retained at the mill. After a tradition of paper making in Brainerd stretching back about 100 years, 616 people were put out of work with Potlatch's closing in 2002.

But the recession took a toll on Missota and the hoped-for economic turnaround in the paper industry never materialized. By the end of 2003, the mill was in an extended shutdown. The future was uncertain and shoppers were looking at the mill for its worth in parts.

But Dan Alexander, Missota president and chief executive officer, and Jim Withers, executive vice president and chief operating officer, worked to find a buyer interested in running the mill. Missota met with Wausau officials a year ago.

DeAnna Baratto, who worked for Potlatch, Missota and Wausau, credited Alexander and Withers for keeping the mill together until a buyer could be found. Brainerd City Council member Lucy Nesheim agreed.

"He was persistent," she said of Alexander. "He kept at it. He could have given up."

Wausau Paper completed its $9.6 million purchase of Missota Paper Co. in Brainerd in October. The Brainerd mill employs 135.

The northeast Brainerd paper mill, a specialty manufacturer of high-quality uncoated freesheet paper used in commercial printing for advertising and corporate brochures, is part of Wausau Paper's printing and writing business segment.

At the Dec. 7 recommissioning ceremony, employees wore Wausau Paper T-shirts bearing the motto—"A new mill. A new momentum."

Minnesota Gov. Tim Pawlenty attended the ceremony along with about 150 guests. Brainerd Mayor James Wallin called the mill's purchase and reopening the best Christmas present the city could have received.

Wisconsin-based Wausau Paper employs about 3,100 people in 10 facilities in six states. The Brainerd mill represents the company's first investment in Minnesota. Thomas Howatt, Wausau Paper president and chief executive officer, said the purchase of the Brainerd mill marked a long-term commitment to jobs here. (Brainerd Dispatch, 31 December 2004)

2005

January

Wausau Paper Reports $20.4 Million in Earnings

Wausau Paper reported a 2004 earnings increase of 29 percent to $20.4 million.

"Wausau Paper made strong progress in 2004 despite only modest improvement in market conditions," Thomas Howatt, company president and chief executive officer, said in a news release. "Full-year earnings increased nearly 30 percent with profit improvements in two of our three business segments and net sales exceeded $1 billion for the first time in company history. ... Revenues from products developed within the last three years substantially exceeded our corporate goal of 25 percent, productivity increased 2 percent, double our goal for the year."

The company reported fourth-quarter earnings of $5.1 million compared with $5.3 million in the fourth quarter of 2003. Net sales increased 10 percent to $262.4 million from $239.3 million last year. While the company reported average selling prices improved in all three business areas, the most significant gains occurred within the towel and tissue and specialty products.

The company's printing and writing division reported fourth-quarter operating profits of $0.4 million, compared with $3.4 million last year. Current year results included fiber and energy cost increases of more than $4 million and pre-tax operating losses of $1.9 million related to the mid-November startup and fourth-quarter operation of the Brainerd mill. Net sales increased 8 percent.

"Despite soft fourth-quarter demand and highly competitive pricing, printing and writing gained share in its target markets, with consumer products and premium paper shipments increasing 32 percent and 12 percent, respectively," Howatt said. "While quarterly profits were unfavorably affected by startup expenses, the acquisition of the Brainerd mill will allow us to expand our sales of higher-margin premium papers and improve long-term profitability."

In regard to the outlook for 2005, Howatt said market conditions remain mixed with uncoated freesheet paper demand lagging behind towel and tissue and specialty markets.

"Despite expected higher fiber prices and natural gas costs well above historical averages, we expect first-quarter earnings to modestly exceed prior year results of $0.07 per share, assuming a first-quarter impact from Brainerd operations comparable to the fourth quarter," Howatt said. (Brainerd Dispatch, 30 January 2005)

February

This is Truly a Hometown Paper

Wausau Paper found an area customer who is putting their paper product right into lakes area homes.

The Brainerd Dispatch ordered paper from the Brainerd paper mill and used it for a Cragun's Traveler publication. And Dispatch readers will be able to see and touch Wausau Paper's product when they turn to the Sunday comics.

"We like the idea we can patronize a local industry," said Terry McCollough, Dispatch publisher. The first Wausau paper off the Dispatch's printing press combined the Brainerd-produced paper, the printing process and a final product promoting a lakes area resort.

"We are really pleased with the product," McCollough said. "We are trying to find more ways to use it."

The paper is a ground wood high bright paper that is heavier and more white than newsprint, which is manufactured differently. The nearest newsprint manufacturer is in Canada. But Wausau's Brainerd mill can provide specialty paper.

"It's exciting to be able to buy this specialty paper right here," McCollough said, noting shipping is a short run across the city. "It's a chance to showcase a local product. These are Brainerd jobs we are helping to support. That is very pleasing to us." (Brainerd Dispatch, 13 February 2005)

August

Wausau Stops Continuous Operation

Pricing Issue Cited in 10-Day On, Four-Day Off Schedule

Wausau Paper's Brainerd mill is moving from continuous operations to running for 10 days and then shutting down for four days for an undetermined amount of time.

Jeffrey Verdoorn, a Wausau vice president, said the move—while not desired—wasn't unexpected or unusual after a mill is purchased. He said the focus is on growing more demand for production of premium papers to eventually fill the production gap.

"It just takes time," Verdoorn said.

At issue is pricing. Verdoorn said the company could continue to produce commodity—or general purpose—paper, but the market price for it does not make sense to do it. Taking paper-producing capacity out of the Brainerd mill was the short-term answer, he said.

Wausau Paper's Brainerd mill will run on a 10-day on and four-day off schedule for an undetermined time. No employees will be laid off. Company officials said the move was not unexpected in a newly acquired mill that is continuing to grow its customer base.

"This is certainly not something that bodes poorly for the mill," Verdoorn said. "It's a business decision. It's necessary for us to grow into our new markets."

Verdoorn said Wausau is working to gain customers for premium papers, which may sell less in volume, but gain in price as printers are willing to pay more for the higher quality print surface. The Brainerd mill makes uncoated free sheet paper. The higher margin premium paper is used in commercial printing for advertising and corporate brochures.

Employees were notified of the changes beginning Friday. None of them face layoffs, Verdoorn said.

Brian Hauck, Wausau pipefitter, said new employees were more worried about the news than those with experience in the industry. No one wants to lose work hours, but Hauck said it's just the paper industry.

"I think long range we'll be fine," Hauck said.

About Wausau

The Wausau Paper mill in northeast Brainerd employs about 170 people.

The company pays about $11 million in wages and benefits annually in Brainerd.

Verdoorn said he understood if the community has a nervous gut-reaction to any production slowdown given the mill's history.

Potlatch closed the mill in 2002 after 100 years in Brainerd. Missota Paper Co., which purchased the mill from Potlatch, went into an extended shutdown in 2003 before finding a buyer in Wisconsin-based Wausau Paper.

"The bottom line is this mill is extremely competitive and we are in this for the long haul," Verdoorn said. "I really believe that. That is not just something we are saying. I think we have the company that can back it up. We also have the products."

Verdoorn said Wausau finds niches and has been able to grow even as the industry faces declining markets for the sixth straight year. Industry issues include imports, electronic media reducing the demand for paper, pulp pricing and rising energy prices.

Verdoorn and Mike Asselin, director of operations in Brainerd, said the mill's paper machine produces the finest high quality opaque paper in North America. And they said they had the quality tests to prove it.

"This is one of the best work forces I've ever been associated with," Verdoorn said. "They are phenomenal."

Wausau Paper completed its $9.6 million purchase of Missota Paper Co. in October 2004. The Brainerd mill represents the company's first investment in Minnesota. The mill has two paper machines. The higher capacity of the two is in operation. Efforts continue to develop a different product for the second paper machine, which may produce heavier weights of paper such as card stock. Combined, the two machines are capable of producing 170,000 tons of paper per year. Currently—with one paper machine running—the mill has an annual capacity of 80,000 tons of paper. (Brainerd Dispatch, 17 August 2005)

October

Wausau Paper Says Business Improved

Wausau Paper reports improved business in October.

Jeff Verdoorn, Wausau Paper vice president of operations for the Brainerd mill, said he was guardedly optimistic for November and December because the mill was able to increase its selling price for commodity—or general purpose paper—because of its paper quality and the mill's service level.

Verdoorn said he expects the mill to run at a full operation through the remainder of 2005, although the situation will be evaluated weekly. He said Wausau will not take any additional market related downtime in October.

The mill continues to look at other premium-type paper grade markets. Verdoorn said the Brainerd mill is the lowest-cost mill in Wausau's system. The Wausau Paper mill in northeast Brainerd employs about 170 people. The company pays about $11 million in wages and benefits annually in Brainerd.

In August, the mill announced a 10-day on and four-day off production schedule instead of continuous operations as a short-term answer to the markets for commodity paper. (Brainerd Dispatch, 09 October 2005)

Wausau Paper reported a net loss of $9 million, or 18 cents per dilute share, for the third quarter, compared to net earnings of $8 million a year ago. The company said net sales rose 9 percent to $285.6 million and shipments increased 7 percent to 229,000 tons.

Wausau related the third-quarter operating results to the closure of its printing and writing's sulfite pulp mill in Brokaw, Wis. Looking at the entire year to date, the company reported a net loss of $9.7 million compared to net earnings of $15.3 million for the same time period a year ago.

"Net sales and shipments increased to record levels in the third quarter despite soft demand in printing and specialty paper markets," Thomas Howatt, president and chief executive officer, said in a news release. He said Wausau is gaining a share in target markets with recently introduced products like its hands-free towel dispensing system.

"Our progress in improving production efficiencies has been masked by sharply higher energy-related costs—most notably natural gas, transportation and fuel oil," Howatt said.

Wausau's printing and writing segment reported third quarter operating losses of $23.1 million compared to a $4 million profit in 2004. Wausau reduced production by about 5,000 tons, which included four days of down time in the Brainerd mill. The company reported a 50,000-ton-per-year paper machine in Brokaw was down for a month and remained temporarily idle.

For the fourth quarter, Howatt said energy prices are expected to cause further pressure, but conditions remain strong for the company's towel and tissue business and should remain challenging for specialty products and printing and writing. (Brainerd Dispatch, 29 October 2005)

December

Wausau Paper Officials Optimistic About 2006

Mixed Success Reported in Brainerd Mill's First Year of Operation

The year since Wausau Paper began operating the Brainerd mill has been one of mixed success, and company officers are optimistic for 2006.

"I'm pleased with the progress at this facility," said Thomas Craven, senior vice president of printing and writing for Wausau Paper. Craven was in Brainerd for a one-year anniversary celebration at the mill. He said the company's purchase of the paper mill in Brainerd is not something officers regret. "We have great expectations in 2006 in both the paper grades and financials."

Craven considers the past year a mixed success. On the downside, a depressed market for printing papers remains and costs associated with production both in energy and in fiber used for making paper are high.

On the upside, the Brainerd paper mill uses coal, which has been an advantage in energy costs.

The Brainerd mill was producing 250 tons of paper per day in November.

Wausau facts

The Brainerd mill started its initial production at 5:24 p.m. Nov. 17, 2004.

The mill employs about 160 people.

The mill produces uncoated free sheet paper. The higher margin premium paper is used in commercial printing for advertising and corporate brochures.

The Brainerd mill produced 75,000 tons of paper in the last 12 months. Wausau expects to produce 90,000 tons next year.

The papermaking industry is still experiencing plant closures. Craven said mills with low-cost machines, like Brainerd, will survive. In August, Wausau announced it was going to a 10-day on and four-day off schedule for an indefinite period to take commodity, or general purpose paper, out of production. Wausau ended up taking just four days off before resuming a continuous production schedule.

Craven said a chaotic uncoated free sheet market was behind the decision to take the low-end commodity paper out of production. Wausau stopped production on a higher cost machine in Brokaw, Wis.

Wausau official Tom Craven is happy with Brainerd mill's progress.

Wausau is pleased with the Brainerd mill's paper-producing abilities. The company transferred paper grades from other facilities to the Brainerd mill. Long noted for its ability to produce quality white paper, the mill is now making pastel shades and expects to expand color production. Craven said creating quality white paper is not a simple task and creating consistent color that consumers expect from one run to the next is demanding.

Wausau's Exact Ice, a competitive white opaque trademark paper, has been doing exceptionally well, said Jeff Verdoorn, Wausau Paper vice president of operations for the Brainerd mill.

Verdoorn said without the Brainerd mill, Wausau would have had to abandon its business model.

Wausau papermakers, many of them former Potlatch and then former Missota Paper employees, who are skilled in making white paper, now are faced with pinks, greens and blues. Between 65 percent and 70 percent of all paper being made is colored in some way.

Making colored paper has been a challenging process, said Brian Hauck, pipefitter and union recording secretary at the Brainerd mill. "It's not like making chocolate chip cookies," he said of the varying recipe for paper. Overall things are going pretty well, Hauck said. "It's a colorful mill now."

Rhonda James, Emily, is one employee working with color. She worked for Potlatch and Missota Paper. It is a job James said she loves. When she first came back to the mill with Wausau, James admits to being concerned about the future. After a 100-year run before Potlatch closed, Missota did not last an entire year.

"I was a little nervous at the start but I'm feeling better now," she said.

Craven said he feels the relationship between management and labor is good and he doesn't underestimate the appreciation for jobs that comes after a closed mill reopens. And Craven said he also doesn't want to take advantage of it.

Peggy Blistain, benefits administrator, busily snapped photos of the one-year anniversary celebration with invited dignitaries from Brainerd in attendance.

"There's one," she said of the Wausau mill's birthday number. "We'll be happy when we have a couple of zeros behind it." (Brainerd Dispatch, 11 December 2005)

2006

October

Wausau Paper Quarterly Earnings Strongest in 2 Years

Wausau Paper reported good news last week.

The paper company posted net earnings for the third quarter of $7.5 million, compared to a net loss of $9 million the year before.

"Our third-quarter performance represented our strongest quarterly earnings in two years," Thomas Howatt, president and chief executive officer, said in a prepared statement. Howatt credited record revenues, strong timberland sales gains and continued progress in the company's strategic plans. "Approximately 30 percent of revenues came from products developed in the last three years, exceeding our corporate goal of 25 percent while paper mill productivity improved 2 percent."

Wausau's net sales increased 7 percent to $306.7 million while the company reported shipments increased 2 percent to 234,000 tons, both records for any quarter.

Wausau reported net earnings of $9.8 million for the first nine months compared to a net loss of $9.7 million last year. The company's printing and writing division had third-quarter operating profits of $1.2 million compared to losses of $23.3 million in 2005.

"Energy prices have moderated while fiber prices are continuing to increase even as we enter the seasonally slower fourth quarter," Howatt said. "While underlying market conditions remain strong for our towel and tissue business, conditions remain less certain for specialty products and printing and writing." (Brainerd Dispatch, 29 October 2006)

November

EYE ON NATURE

Deep in the bowels of the Potlatch paper mill an artist worked for 22 years. But neither he nor his peers knew it.

Doug Livingston was an electrical engineer by day and auto racing enthusiast by night. He liked photography since he was a kid but didn't buy a camera until he was 25. His first photos were all of automobiles. Many were taken at Donnybrooke, where he raced dragsters and street rods for 20 years.

Automobiles to flowers might seem like an odd leap in subject matter, but for Livingston, perhaps, it was an inevitable transition.

"All my life I worked on mechanical jobs indoors," he said. "Getting outside into nature was a new and amazing thing to me, a whole different world."

Brainerd Dispatch/Vince Meyer

Minnesota's North Shore is a whole different world from Brainerd, as Livingston discovered three years ago. That's where his passion for photographing wildflowers began. On even the dreariest North Shore day the beauty of flowers can still be captured.

With Biff Ulm, Livingston started a photography club in Brainerd three years ago. Today it has 50 members. Some of the images on this page were taken while on club trips.

Where he wants to go with photography he has no idea.

Doug Livingston

"I'm retired," he said. "I don't want to make this too complicated. I just like getting together with other people and taking photos."

Livingston has sold just a few images. His only exhibit was at the First Congregational Church in Brainerd. Fame isn't his goal; a great photo is.

Doug Livingston

"I wanted to be an artist since high school," he said. "This is the closest I'll get." (Brainerd Dispatch, 18 November 2006)

2007

February

Wausau Paper Shows Gains

Wausau Paper, which owns the mill in northeast Brainerd, reported net earnings for the fourth quarter of $7.9 million compared to a net loss of $9.7 million a year ago. Net sales increased 12 percent to $300.5 million from $268.4 million last year while shipments increased 9 percent, the company reported. Wausau reported net earnings of $17.6 million compared with a net loss of $19.5 million a year earlier.

"We are pleased with the year-over-year earnings improvement achieved in the fourth quarter," Thomas J. Howatt, president and CEO, said in a news release. "Operating results improved in each of our three business segments as towel and tissue profitability reached record levels and printing and writing losses were substantially reduced. Combined with strong timberland sales gains and the elimination of pulp mill closure changes, these improved operating results drove the earnings turnaround."

Sales for 2006 were $1,188.2 million, an 8 percent increase compared to $1,097.1 million in 2005. Shipments increased 4 percent, Wausau reported.

In the printing and writing segment, Wausau reported a fourth-quarter operating loss of $2 million compared to a loss of $22.2 million from the same period in 2005. Net sales increased 23 percent while shipments improved 26 percent comparing 2006 to 2005.

Towel and tissue's fourth-quarter operating profits increased 37 percent to a record $12.9 million compared with $9.4 million the previous year. Net sales increased 10 percent. Net shipments increased 3 percent.

Howatt said strong growth in the company's "higher-margin, value-added product category continues to be fueled by innovative products, including our EcoSoft Green Seal product line, whose shipments increased more than 25 percent for the year. This growth helped towel and tissue again achieve record sales, shipments and profitability in 2006 with full-year operating profits of $44.6 million, up 17 percent over year-earlier levels."

In 2005, the company announced its plan to seal 42,000 acres of non-strategic timberlands. Howatt said Wausau was more than one-third complete in executing that plan by the end of 2006.

In regard to the outlook for first-quarter 2007, Howatt said the strong earnings momentum from the fourth quarter is "expected to carry over and drive a positive first-quarter comparison."

Wausau reported record revenues of $1.2 billion in fiscal year 2006. (Brainerd Dispatch, 18 February 2007)

March

POTLATCH TIMELINE

• Northwest Paper Co. established the mill in Brainerd in the first years of the 20th century. The mill was shut down in 1911, dismantled in 1914 and re-established on the Mississippi River's east side, opening in 1917.

• The Brainerd mill also closed for nine months during the Great Depression, transforming itself from making newsprint to making wallpaper.

• March 18, 2001 - Potlatch announced the sale of its printed papers division and the closing of the Brainerd mill and the Cloquet pulp and paper mill, putting nearly 616 people out of work.

• Potlatch made the sales agreement with South African-based Sappi Limited for the Cloquet mill and related assets for $480 million in cash.

• A non-compete clause was attached preventing coated paper-making in Brainerd.

• Potlatch retained ownership of the Brainerd mill, announcing it would cease production on its two paper machines in May. Market value of the land and buildings at the Brainerd mill was $8,353,400.

• News of the closing brought statewide attention to the area and highlighted a troubled industry. Minnesota Sens. Paul Wellstone and Mark Dayton met with Potlatch workers and officials in Brainerd. An active community strategy team was formed to work with Potlatch to market the mill.

• Mike Hatch, Minnesota attorney general, filed a lawsuit opposing the non-compete clause. In court, both sides agreed the mill had a worldwide reputation for paper quality. Hatch's lawsuit was ultimately dismissed by the district court judge.

• Potential suitors toured the mill and Potlatch officials made a trip to Asia in marketing efforts.

• In February 2003, Missota Paper bought the former Potlatch paper mill on Mill Avenue in northeast Brainerd for $4.44 million and hired about 160 workers, mostly former Potlatch employees.

• An economic downturn hurt the young company's start. In early November 2003, Missota Paper announced an extended shutdown. The future was uncertain and shoppers were looking at the mill for its worth in parts.

• Dan Alexander, Missota president and chief executive officer, and Jim Withers, executive vice president and chief operating officer, worked to find a buyer interested in running the mill.

• On Oct. 1, 2004, Wisconsin-based Wausau Paper announced it signed an agreement to buy the Missota Paper Co. mill for $9.6 million and put 135 people back to work.

• On Nov. 17, 2004, Wausau Paper began making paper at the Brainerd mill. (Brainerd Dispatch, 17 March 2007)

Closure Marked New Chapter for Potlatch Workers

POTLATCH | FIVE YEARS LATER

Plans developed in the aftermath of the Potlatch closing are still unfolding today, with hope of job creation in the future.

The lakes area job market has recaptured about 300 manufacturing jobs since Potlatch closed, the Brainerd Lakes Area Development Corp. reported. Area manufacturing jobs dropped from an average of 3,166 employees making an average of $691 a week in the fourth quarter of 2001 to 2,585 employees a year later.

In the days following the paper mill's closure, community leaders came together to form the 2020 Economic Vitality Task Force. Its goal was to develop a strategy to replace lost jobs. After years of planning and research, the 2020 plan is poised for more aggressive efforts to attract jobs, industries and services to the lakes area.

"What did we learn?" BLADC executive director Sheila Haverkamp said of Potlatch. "It's very hard to replace 600 high-paying jobs. My hope is the 2020 program will help us do that. We're creating about 60 manufacturing jobs a year."

After Potlatch closed, a federal grant was obtained to help recovery efforts. It brought together BLADC, the Brainerd Lakes Area Chambers of Commerce, Region Five Development Commission, the cities of Brainerd and Baxter, Minnesota Power, the Initiative Foundation, the Brainerd School District, Crow Wing County and Potlatch.

The first phase of the 2020 plan targeted two industry segments for growth—manufacturing and health care—and developed five-year work plans. Haverkamp said the proactive approach involves specific tasks to make contacts with industry executives and businesses already familiar with the lakes area, possibly because they vacation here. Another part of the effort is determining the customers and suppliers of existing lakes area companies to see if there are options to attract business growth here from that list.

To fund these efforts, a new BLADC membership campaign is being used to raise $20,000 this year and to raise funds through 2011 - reaching a total contribution of $112,500. In addition, local government departments are being asked to contribute annually with the hope of raising a total of $337,250 by 2011. Grants and legislative funding is proposed to bring in $246,250 by 2011.

In addition to attracting new jobs, lessons learned from Potlatch helped when AcroTech Midwest later closed its plant near Riverton.

Numerous community resources came together quickly in the immediate wake of Potlatch's closing.

"We have vast and rich resources in this community that are willing to help out in a time of need," said Craig Nathan, WorkForce Center operations manager in Brainerd.

Nathan remembered the "deer-in-the-headlights" look in people's eyes when they first learned Potlatch was closing. Many people had multiple family members working at the plant. In some cases, both spouses depended on the mill for their livelihoods. Some people who had worked at the mill all their adult lives had trouble believing it would actually close. Nathan said the job loss covered the same emotional ground as a family death or divorce.

Staff from nine other WorkForce Centers assisted Brainerd with the crush of workers needing to sort through services. Of the more than 600 workers, about 100 were salaried. Through federal and state resources, employees had access to two years of benefits. Funds came through the Minnesota Dislocated Worker Program, the Trade Assistance Act, the Trade Readjustment Act and Unemployment Insurance.

The WorkForce Center in Brainerd administered all those funds and services. There were 104 weeks of re-employment insurance and $400 a week for many while they were going to school. The value of benefits per employee during the two-year period was $40,000, the WorkForce Center reported.

The area's construction boom created job opportunities and drew from Potlatch's skilled work force of electricians, carpenters and plumbers. Some went back to work for Missota Paper and now Wausau Paper. Headhunters helped those in management positions find employment, some at other paper mills. Others took short-term training courses in computer technology. The WorkForce Center referred a smaller number of people to the Small Business Development Center so they could pursue plans to open their own businesses.

Others made dramatic switches, such as going from general labor at Potlatch to radiology. A strong interest in health care careers led to Wadena Northwest Technical College putting together a licensed practical nursing program so more people could be taken into classrooms.

More than 200 people were placed in various long-term classroom training situations for a variety of occupations.

"You know what comes back to mind is how resourceful people are and how resilient communities are," Nathan said. (Brainerd Dispatch, 17 March 2007)

2008

May

Wausau Paper Reports Net Loss for First Quarter

Wausau Paper recently reported first-quarter financial results. The company reported a net loss of $6.8 million or .14 cents per share compared with net earnings of $15 million or .29 cents per share last year.

Net sales declined less than 1 percent to $298.7 million, the company reported. Shipments decreased 8 percent, primarily associated with the 2007 closure of the Groveton, N. H. paper mill, Wausau reported.

"The general economic weakness that began in late 2007 continued into the first quarter with demand decline extending into several of our markets," Thomas J. Howatt, Wausau president and CEO, said in a news release. At the same time, Howatt said fiber and energy costs increased for a combined $17 million when compared to last year. Focusing on strategic markets has positioned Wausau for improved results ahead, Howatt said.

Howatt pointed to the company's exit from specialty products' unprofitable roll warp business and the company's emphasis on environmentally friendly towel and tissue products.

Wausau's printing and writing division had a first-quarter operating loss of $12.5 million compared to a loss of $1.8 million a year ago.

"We are pleased with the progress made against our profit recovery plan and remain on pace to return printing and writing to profitable levels in the third quarter," Howatt said, adding the transition from a three-mill to a two-mill manufacturing system has gone smoothly. Wausau opened an East Coast distribution center. Wausau's towel and tissue operations reported operating profits of $6.1 million compared to profits of $9.7 million last year. Wausau's specialty products reported a first quarter operating loss of $4 million compared to an operating profit of $2.7 million last year. Wausau sold about 1,300 acres of timberlands in the first quarter and plans to sell 42,000 acres.

"The deteriorating economy is injecting a degree of uncertainty to our expectations for the coming quarter," Howatt said, adding high energy costs show no signs of decreasing and fiber costs are at their highest level in more than 10 years. "We expect second-quarter results to improve to break-even levels from a first-quarter loss, excluding timberland sales gains and charges related to the Groveton Mill closure." (Brainerd Dispatch, 04 May 2008)

August

Wausau Paper Reports Loss, But Sees Progress Toward Profitability

Wausau Paper reported "a net loss for the second quarter of $9.6 million or $0.20 cents per share compared with net earnings of $4.8 million or $0.09 per share in the previous year."

The company reported net sales declined 4 percent to $305.2 million and shipments decreased 14 percent. Wausau Paper reported a net loss of $16.4 million for the first half of this year compared to the net earnings of $19.7 million it had for the same time period in 2007.

In a statement, Thomas Howatt, Wausau president and CEO, reported the economic weakness notable in 2007 accelerated this year adversely affecting demand in several key markets. "At the same time, record-high energy and near-record fiber costs pressured margins with those costs rising a combined $37 million through the first half of 2008 over year-ago levels."

But Howatt said progress was seen in the second quarter in the Towel and Tissue and Printing and Writing business segments. Improvements in those areas—part of the company's profit recovery plan—are expected to improve profitability in the coming quarters and enable the company to achieve its targeted profitability, Howatt said. The Printing and Writing segment reported a second quarter operating loss of $16.6 million compared to a $2.3 million loss in 2007. The company reported that was primarily because of the closure of the Groveton N. H. mill.

"We remain on pace to return Printing and Writing to profitable levels in the third quarter despite a significant decline in uncoated free sheet demand and a further escalation of input costs. Our move to a two-mill manufacturing system has allowed us to focus on core color and premium products."

The company reported it sold about 900 acres of timberlands in the second quarter and is progressing to sell 42,000 acres of what it calls non-strategic timberlands.

"We expect the economic weakness experienced in the first half of 2008 to extend into the second half of the year while fiber and energy prices are likely to remain at elevated levels," Howatt said, but he added a mixture of initiatives are creating an earnings momentum.

"As a result, we expect third-quarter results to improve meaningfully over the second quarter with earnings in the range of $0.06-0.08 per share excluding timberland sales gains and charges related to the Groveton mill closure. On the same basis, third quarter 2007 earnings were $0.09 per share." (Brainerd Dispatch, 10 August 2008)

September

ON PAPER, LABOR AND MANAGEMENT CLICK

Workers, Leaders Like the Climate at the Wausau Paper Mill

Through its history the Brainerd paper mill has been praised for capability and its skilled work force, which combine to create quality paper.

When Wausau Paper purchased the Brainerd mill in 2004, Thomas Howatt, president and chief executive officer, said the experience and knowledge of the papermakers here would be critical to a successful start for the mill. After Wausau's purchase, employees put in 16- and 17-hour days to get the mill back in operation.

Since that start the mill has grown from 135 employee to the current 175.

Anna Skrobecki, vice president of operations at Wausau's Brainerd mill, has been working at the mill since January of 2007.

"I enjoy working with these people," Skrobecki said. "I think it's a very competent work force."

Wausau Paper employees ended a shift on a weekday afternoon in August at the Brainerd paper mill.

Bruce Bourassa started working in the mill in 1970 when it was Northwest Paper. He's been there through all the companies that followed. Bourassa, union president, said experience goes into making a quality product. Bourassa points to the combination of dedicated workers and a world class mill.

"This is a very skilled work force," Bourassa said. "Out of all the years I worked here without a doubt this is the best group of hardworking and skilled (people) and they are young. They are coming up. They are our future. They are good workers. It's just a willingness to want to work and to put in the time and to learn."

And the learning curve has included the move from a coated white paper to uncoated color production. But Bourassa said the biggest change may be the partnership approach between labor and management.

"We try to work this more as a team thing more than it was in the past," Bourassa said.

Skrobecki agreed.

"We approach challenges the organization has together and we work things out together," Skrobecki said. "We all understand the success of this mill is dependent upon our ability to work together and to solve problems together. They do an excellent job of that. It's really a pleasure to work here. There is a lot of ownership I think in the work force."

Mark Levig, safety facilitator at the mill and a millwright by trade, has been working in the Brainerd mill for 25 years. He still enjoys being a mechanic and what he calls being able to work in the safety role and "still turn wrenches" as part of his workday.

Born and raised in the area, Levig said he's just one of the local people who are glad the mill is here providing good jobs.

"The mill itself is probably in the upper class as far as paper mills for the condition it's in," Levig said. "It's a clean environment. It's a good place to work. When other people come to visit us from other mills they are always amazed at how clean it is."

Additionally, Levig said the experienced workers are willing to be mentors with the younger staff members, which makes the job easier to start.

Stephanie Ferguson, who is newly in charge of human resources at the mill, recently relocated to the lakes area from Wisconsin. Wausau Paper looks for a positive attitude when hiring and is willing to invest the training needed when people possess that quality, Ferguson said.

As far as the mill's reputation, Ferguson said she heard it was a cooperative, cohesive relationship between union and management and has found that to be true.

"It's a pleasure to work here and I can say that even after only three months," Ferguson said. "It's great. You can work together. We talk through things. People find a way to get things done. They want to find a solution."

Ferguson said it's not a matter of "we can't do that" instead it's more about finding options to make things work.

In a competitive industry, Skrobecki said it's important to have as much working in a company's favor as possible.

"Certainly having this kind of a work force really helps," she said.

Bourassa said when Potlatch closed it was a wake-up call.

"The people that did come back that worked for Potlatch put in extra effort and realized that we had to change, the culture had to change," Bourassa said. "We had to change how we viewed working with the company and I think we've successfully done that in the last four or five years."

When 2003 was barely a month old, Potlatch's sale of the northeast Brainerd mill to Missota Paper for $4.44 million brought hope that at least 130 jobs could be retained at the mill. After a tradition of paper making in Brainerd stretching back about 100 years, 616 people were put out of work with Potlatch's closing in 2002.

But the recession took a toll on Missota and the hoped-for economic turnaround in the paper industry never materialized. By the end of 2003, the mill was in an extended shutdown. The future was uncertain and shoppers were looking at the mill for its worth in parts.

Wausau Paper completed its $9.6 million purchase of Missota Paper Co. in Brainerd in October 2004. The northeast Brainerd paper mill, a specialty manufacturer of high-quality uncoated freesheet paper used in commercial printing for advertising and corporate brochures, is part of Wausau Paper's printing and writing business segment.

At the Dec. 7, 2004, recommissioning ceremony, employees wore Wausau Paper T-shirts bearing the motto—"A new mill. A new momentum." And the solid wood sign bearing Wausau's name on Mill Avenue was a gift to the mill from union employees.

Levig said employees are aware of the business climate and see paper mills being shutdown on a nearly daily basis across the country.

"The doors being closed twice—once when it was Potlatch and once when it was Missota—has people thinking that you can't rely on somebody else to do what you can do to help the cause to keep the doors open," Levig said. "It's a very competitive business right now. I think people who come to work do everything they can to keep their job to keep the mill running. It's definitely a team environment. Management couldn't do it alone. The union couldn't do it alone. But together we're getting it done.

"It's good skilled labor," Levig said, noting many of the workers have been at the profession for years. And they learned from the knowledge of those who went before them. "Wausau has been in the paper industry for a long time. Ways they make paper and things they do weren't always the same as the way we did it here, but together we've taken the best methods and the machinery is in good shape. The skilled force is good. So the product is good." (Brainerd Dispatch, 02 September 2008)

Area Job Growth Seen

The Brainerd City Council will meet at noon Thursday in a special session to discuss a Wausau Paper Co. expansion project and to consider a revolving loan fund request for the Brainerd paper mill. Haverkamp said BLADC is working with Wausau to explore financing options for the plant's proposed $1.5 million expansion project. The project would involve installing new equipment at the paper mill, which would allow for the hiring of a minimum of 12 new jobs. Haverkamp said if an additional piece of equipment could be purchased, more employees would be hired. The paper mill has an estimated 175 employees right now, she said. (Brainerd Dispatch, 19 September 2008)

Wausau Paper Seeks Loans for Expansion Here

Wausau Paper is seeking $300,000 in local, state and federal loans as part of a $1.5 million project to expand operations by adding two new sheeter machines.

In a special session Thursday, the Brainerd City Council unanimously approved setting a public hearing at 7:30 p.m. on Oct. 6 at city hall to consider the business subsidy requests from Wausau for $100,000 from the city's revolving loan fund and $200,000 from the Department of Employment and Economic Development.

Because the $200,000 in state or federal funds will be channeled through the city, the council also unanimously adopted a resolution to apply for a Minnesota Investment Fund loan from DEED. A portion of that loan would be forgiven if jobs are created and retained by Wausau.

Elissa Rogers, economic development specialist with Brainerd Lakes Area Development Corp., said Wausau is considering moving to Brainerd up to two paper machines from a mill that closed in New Hampshire. The machines process paper rolls into smaller sheets.

"They're looking at difficult times in the paper industry," Rogers said. "However, Brainerd's plant is thriving and doing well."

Rogers said the proposed expansion would create 16 jobs at a pay rate of more than $12 an hour. At a minimum, the project would consist of $750,000 in improvements and create eight jobs if Wausau were to only bring one paper machine to Brainerd. Wausau currently employs about 175 people.

Council member Bonnie Cumberland asked if there was a chance DEED wouldn't approve the application. Rogers said while there was no 100 percent guarantee, she didn't foresee any problems. She said BLADC Executive Director Sheila Haverkamp met with DEED officials Thursday in the Twin Cities.

"It's been very positive and they're kind of just working out the kinks," Rogers said. (Brainerd Dispatch, 27 September 2008)

October

Hearing Held on Expansion by Wausau

Brainerd will consider asking Wausau Paper to donate a portion of paper from its new sheeter machine to the Brainerd School District.

The idea was brought to the Brainerd City Council Monday by resident Steven Wolff, an at-large council candidate.

The council on Monday conducted a second public hearing and adopted a resolution of support for a business subsidy request from Wausau Paper for a $100,000 loan from the city and a $199,000 loan from the Minnesota Investment Fund to bring sheet cutter machines to the Brainerd paper mill.

Wolff said if Wausau would donate a percentage of paper produced each month to Brainerd schools it would save the school district money. He said the first donation could be timed with the potential re-opening of Whittier school.

Council member Bob Olson made a motion to that effect but it was tabled by a 6-1 vote and referred to the Personnel and Finance Committee. (Brainerd Dispatch, 22 October 2008)

November

Wausau Paper Reports Third-Quarter Net Earnings

Wausau Paper recently reported net earnings for the third quarter of $2.3 million, or $0.05 per share, compared with $6.1 million or $0.12 per share the previous year.

The company reported net sales declined 2 percent to $312.2 million and shipments decreased 16 percent to 197,000 tons due primarily to anticipated volume reductions resulting from the December 2007 closure of the company's Groveton, N. H., paper mill and the July closure of specialty products' roll wrap operations.

In a company news release, Thomas J. Howatt, president and chief executive officer, said: "Adjusted net earnings increased from the second quarter and approached year-ago levels despite deteriorating economic conditions and historically high input costs. Although far from satisfied with absolute earnings, we are pleased with our recent progress as sequential profitability improved for all three of our businesses while two of the three improved year-over-year."

Howatt said progress in the company's printing and writing segment recovery plan combined with sales mix and pricing initiatives in Wausau's specialty products and towel and tissue segments to create a "measure of earnings momentum."

"With recessionary business conditions likely to persist for several quarters, we remain focused on executing against these initiatives and completing strategic capital projects to drive long-term shareholder value."

The printing and writing segment's third quarter operating loss of $0.7 million included pre-tax Groveton mill closure charges of $2.4 million, Wausau reported, saying the results compare favorably with an operating loss of $1.3 million last year.

Wausau reported printing and writing met the first of its profit recovery plan targets in the third quarter with operating profits approaching $1.7 million, exclusive of facility closure costs. The company stated reduced production capacity substantially improved the sales mix and helped return the business unit to a profitable position. The printing and writing unit, the company reported, is working toward the second recovery plan target of re-establishing cost-of-capital returns by the end of 2009. (Brainerd Dispatch, 02 November 2008)

2009

March

Opportunities Are Found in Job Losses

A lot of adages come to mind with a job loss, but a repeated theme emerging last week was the one about one door closing and another opening.

A panel of job loss or job change survivors shared stories at last week's Lakes Area Career Fair and Job Training Expo at Central Lakes College. Panelists included Karl Erdman, Jason Rausch, Todd Wallin and Kathy Toensing.

As older students, they juggled family and home obligations with college courses to find new career options.

Erdman was a master electrician at the Weyerhaeuser plant in Deerwood before it closed. He'd been with the company for 6 1/2 years. Given the opportunity to go to school the Navy veteran took advantage of online/long distance learning options at Bemidji State University.

"I won't need to step on the campus," Erdman said.

For every hour in a traditional class, Erdman said the rule of thumb is one to three hours of study. For online classes, he estimated it averaged three to five hours or more for each hour of class time.

"I found out time management is absolutely crucial," he said.

Erdman takes tests through a proctor at the Aitkin Public Library. At home, he has the unusual situation of convincing a teenage daughter he needs quiet time to study.

For Wallin, study time at home means he's breaking open the books along with his children. Wallin worked at the former Potlatch paper mill in Brainerd. After the mill closed, he, along with a number of displaced paper mill workers, went to school to become electricians. With the housing collapse he was laid off again and the market was flooded with electricians.

Wallin started taking online classes, which continued when he found jobs in Montana and Colorado. He's now taking college courses at the same time that he has children going to CLC. Wallin is earning his associate's degree. In the spring, he plans to start business management classes with St. Scholastica.

Toensing also worked at Potlatch. She saw her job loss as a great opportunity to do something else and began studying accounting at CLC. It can be scary but the end result may be in having more opportunities not just one specified job, Toensing said.

"It's a lot different going to school when you're 18 than when you are 37," Wallin said. "You are investing in yourself."

"You have a lot more on the line," Toensing said. "You have a lot more drive behind you."

Rausch went from working as a cook to working for Crow Wing County after he went to school for accounting.

"It was the right decision for me," Rausch said. "I wish I would have done more."

Rausch said one of the biggest challenges was trying to decide what to take. Erdman said building a base of core classes is one way to get a better idea of what an individual may want to do. He advised people to just start, take a class, make a commitment.

"I promise if you don't start the first step you'll be exactly where you are in 10 years, in 15, in 20 years as you are today. The hardest thing is just doing it. Pick something you gotta try." (Brainerd Dispatch, 28 March 2009)

April

Wausau Paper Announces Hiring Freeze, Cost Cuts

Wausau Paper announced a series of plans intended to improve financial performance, conserve cash and increase financial flexibility.

Plans are to retain cash, permanently close the remaining paper machine in Jay, Maine, authorize up to $15 million in additional borrowing on a secured basis and reduce operating costs.

Cash retention plans include suspending cash dividends, a move the company expects will result in savings of more than $16 million annually. Cost reductions and the paper mill closure are expected to improve annual pre-tax operating profits by $20 million, Wausau reports.

"In light of the continuing uncertain business environment, we believe it's prudent to take measures to conserve cash and focus on debt reduction," Thomas J. Howatt, president and chief executive officer, said in a news release.

"The dividend suspension and Jay mill closure are particularly difficult decisions to make, but are nonetheless necessary to preserve liquidity and match capacity with demand during a period of severe economic difficulty. We are confident that these actions, in addition to other cost reduction measures identified, will substantially improve the competitive position and long-term financial performance of our business."

Cost reduction and conservation measures include a hiring freeze, a salaried workforce reduction of 7 percent, a salary freeze for 2009, suspension of company match on non-bargained 401(k) plans, limitation of capital spending to essential maintenance and safety-related projects in addition to major strategic projects already underway, a reduction in spending of $6 million during the first half of 2009 targeted at manufacturing, selling and administrative costs, a reduction in working capital of $20 million with a principal emphasis on inventories.

Howatt said the move narrows Wausau's footprint to six strategic facilities that are highly competitive in the company's core markets and dramatically improves the company's cost structure.

Operations at the Jay, Maine mill will cease by May 31 and will reduce Specialty Products annual production capacity by 28,000 tons or 10 percent. Ninety-six jobs will be affected by the shutdown.

In addition, the company's board of directors has authorized additional borrowing of up to $15 million of secured debt. Collectively, these actions position the company to remain comfortably in compliance with loan covenants and provide adequate liquidity to meet the operating needs of the business, Wausau reported.

Wausau had $1.2 billion in revenues in fiscal 2008. (Brainerd Dispatch, 05 April 2009)

August

Wausau Paper Reports Second-Quarter Results

Wausau Paper reported its adjusted quarterly earnings of $.15 per share reached its strongest level in nearly five years.

Thomas J. Howatt, president and chief executive officer, reported Wausau Paper's adjusted net earnings reached their highest level in nearly five years with each of the company's three business units reporting year-over-year improvement.

"These results reflect the benefit of restructuring initiatives completed over the last two years designed to improve our competitive position and profitability, cost reductions implemented earlier this year and reduced fiber and energy prices," Howatt said in a news release. "Couple with aggressive cash conservation measures, these initiatives generated cash sufficient to reduce debt by $40 million during the second quarter, substantially improving liquidity and balance sheet strength despite recessionary business conditions."

Howatt said with little change in economic conditions expected in the near-term, the company remains focused on improving its position in core markets while continuing to contain costs, tightly manage capital spending and reduce debt.

Wausau Paper reported its Towel and Tissue segment achieved record quarterly operating profits of $13.8 million and its Printing and Writing segment, along with Specialty Products, had significant year-over-year improvements, excluding facility closure charges.

Wausau reported a second quarter net loss of $1.9 million, or $.04 per share, compared to a net loss of $9.6 million a year ago. Net sales and shipments decreased 14 percent to $262.2 million and 177,000 tons. Wausau reported those decreases were from expected volume reductions following facility closures and from continued weakness in demand in several market categories.

Second quarter results include after -tax facility closure charges of $13.4 million related primarily to the May closure of the paper mill in Jay, Maine and the announced closing of the Appleton, Wis. converting facility. After-tax gains came in a tax credit for use of alternative fuel mixtures in Mosinee, Wis. and from timberland sales.

Adjusted second quarter 2009 net earnings were $7.5 million compared to a net loss of $1.6 million last year. Adjusted net earnings for the first six months of 2009 were $10.9 million compared to last year's net loss of $4.7 million.

Printing and Writing, reported a second quarter operating profit of $.8 million compared to an operating loss of $16.6 million last year. Net sales declined by 9 percent and shipments declined by 5 percent because of demand weakness, Wausau reported. Howatt said the company expects its third quarter adjusted net earnings to approximate second quarter adjusted net earnings of $.15 per share. (Brainerd Dispatch, 09 August 2009)