Wausau-Mosinee Paper Corporation

1910–1997

Wausau-Mosinee Paper Corporation is a leading producer of specialty, fine printing and writing, and towel and tissue papers. Through its ten production facilities, the company manufacturers a broad range of products including labels for consumer products; specialty papers used in food, medical, and industrial applications; laser-printable copy paper; stationary; and towel, tissue, soap products, and dispensing systems. Wausau-Mosinee Paper was formed after the 1997 merger of two Wisconsin-based firms--Mosinee Paper Corporation and Wausau Paper Mills Company.

Early History

The mill that eventually became Mosinee Paper Corporation was built in 1910, 64 years after the first commercial production of wood pulp in America. First called Wausau Sulphate Fibre Company, the mill was built toward the end of a period that saw the formation of dozens of paper companies along Wisconsin's largest rivers. Located on the Wisconsin River, the Mosinee mill was the first in the state--and one of the first in the country--built specifically to produce sulphate, or kraft, pulp and paper. Among the company's founders were Olai Bache-Wiig, Louis Dessert, Karl Mathie, B.F. McMillan, and F.P. Stone, all of whom were from Wausau, Wisconsin, a well-known center of paper-manufacturing activity.

The Mosinee mill began operating in 1911, employing about 150 workers. From the start, Wausau Sulphate's core product was kraft wrapping paper. For its first several years of existence, in fact, that was its only product. In 1914 the company first began to guarantee the quality of its wrapping and packaging papers. As new uses of specialty papers began to evolve, the company found a niche as a maker of custom papers to order. With new industries appearing every year, Wausau Sulphate was able to position itself as a supplier of papers to meet the precise specifications of these emerging industries.

Two major changes took place at Mosinee in 1928. First the company changed its name to Mosinee Paper Mills Company, allowing its name to match its location for the first time. Later that year, the company purchased the Bay West Paper Company, a paper towel and tissue manufacturer based in Green Bay, Wisconsin. Bay West remained a major part of the Mosinee operation since that time and focused on essentially the same products throughout its history as a subsidiary of Mosinee--namely "away-from-home" paper towels and tissue paper for restaurants, hospitals, factories, and other institutions. Other early Bay West products included windshield wipe for use at gas stations--a product pioneered by Bay West--and the dispensers to go with a number of its paper goods.

Advances in Technology Fuel Postwar Growth

Over the next several decades, Mosinee's growth ran parallel to the overall advance of technology. As industries became more automated, their paper needs became more exacting. Mosinee continued to find a growing market for its made-to-order sulphate papers in these increasingly high-tech industries. By the middle of the 1960s, the company was producing about 40 grades of industrial papers to meet roughly 5,000 different specifications. Every order required something different, and Mosinee was equipped to make the necessary adjustments. Among the multitude of papers the company was putting out by that time were flameproof papers, moldproof papers, and creped papers. In 1964 Mosinee completed a new executive headquarters building. A new warehouse, a new water treatment plant, and at least one new machine for customizing specialty papers were also put into operation at about that time.

Work was begun in 1972 on a $1.25 million water treatment facility for its Pulp and Paper Division.

1971–1991

In 1971 the company changed its name to Mosinee Paper Corporation. After turning back an attempt that year by one of its stockholders--cheese merchant Francis Rondeau--to seize control of the company, Mosinee continued to expand its operations. Work was begun in 1972 on a $1.25 million water treatment facility for its Pulp and Paper Division. In 1974 Mosinee purchased J.U. Dickson Sawmill Inc., in Sturgis, South Dakota, a mill that employed about 50 people. Renamed Dickson Forest Products, Inc., the $1.5 million purchase was integrated into the company as a subsidiary. Mosinee also launched a $325,000 expansion program at its Converted Products Division in Columbus, Wisconsin, that year.

By 1976 Mosinee had 900 employees and annual sales of more than $60 million. With the help of over $2 million in tax credits for making large capital investments, the company turned a profit of $5.3 million that year. In 1981 James Kemerling, a 20-year Mosinee employee, was named company president. The company added another major division in 1983, when it purchased Sorg Paper Company of Middletown, Ohio, for $18 million. Initially a producer of printing and writing papers and specialty papers like deep-color tissue, Sorg's operations were restructured after a few years to produce tissue and towels for Mosinee's Bay West division. The idea was that Bay West could be made more profitable if less of its raw material had to be purchased from outside companies.

Overcoming Problems: 1980s-Early 1990s

Kemerling was given the additional title of chief executive officer in 1984. The following year Mosinee set up a new wholly owned subsidiary, Mosinee Paper International, Inc., based in the Virgin Islands. The Dickson Forest Products unit was sold off in 1986. Meanwhile, the integration of Sorg into the Mosinee process was not going as smoothly as company officials had hoped. Part of the problem was the 400-mile distance between Sorg and Bay West, resulting in higher than ideal transportation costs. While the rest of Mosinee's operating units remained profitable, Sorg lost money from 1986 to 1988.

When Kemerling resigned abruptly in May 1988, Mosinee was able to lure Richard Radt, the former head of Wausau Paper Mills, out of early retirement as his replacement. As CEO of Wausau from 1977 to 1987, Radt had overseen several successive years of record earnings. Even more impressive was the fact that those gains in income were made on fairly modest increases in sales. Radt's strategy at Wausau was to find profitable niche markets that were too small to interest the bigger companies. Shareholders at Mosinee hoped that he would be able to duplicate that plan with his new company and to yield similar results.

One of Radt's first moves as president and CEO of Mosinee was to shut down two of Sorg's paper machines and lay off 128 of its employees. Those and other cost-cutting measures enabled him to return Sorg to the break-even point by the fourth quarter of his first year at Mosinee. Radt also examined each product made by the other divisions as well, eliminating the unprofitable ones and seeking new outlets for the profitable ones. By 1989 Mosinee controlled about 20 percent of the market for roll-wrap, a wax-laminated product used by manufacturers to protect paper rolls against moisture and other kinds of damage. Another important product was the creped paper used as backing on masking tape, a big seller to such customers as 3M Corporation. By exploiting niche markets overlooked by other companies, Mosinee reached number 14 on Consolidated Paper's annual financial ranking of paper companies in 1989.

For 1989 Mosinee reported sales of $233 million. Under Radt, the company continued to cut costs wherever possible, while at the same time investing lavishly in keeping its facilities up to date. Although company sales dipped to $202 million for 1990, company officials insisted that Radt's restructuring measures would pay off soon. In 1991 alone, the company sank $100 million into capital expenditures. By that time, the Sorg subsidiary was focusing on such specialty products as vacuum cleaner bag filter paper and decorative laminate papers, and the unit was no longer losing money.

1899–1997

The Bay West operation was moved to Harrodsburg, Kentucky, at about the same time. That move put Bay West closer to both its customers and to its new source of raw materials--100 percent recycled tissue and toweling--in Middletown, Ohio, where it had taken over and refurbished part of the facility abandoned by Sorg during its downsizing process. Part of the new arrangement at the Middletown site involved an agreement by Bay West to hire some of the employees that Sorg had previously laid off. In addition, a new wholly owned subsidiary, Mosinee Holdings, Inc., was formed as a mechanism by which Bay West and Sorg could receive electricity and steam from a single shared coal-fired powerhouse at Middletown.

By the end of 1991, Mosinee had 1,200 employees, and although sales dropped slightly again (to $197 million for the year), the company's Radt-engineered overhaul was still considered promising by many investment analysts. In 1992, however, Mosinee experienced a handful of setbacks that saw its stock price plummet by 50 percent between March and October of that year. During the summer, the company lost about $2 million when a supply of waste paper it had purchased was found to be contaminated by bits of glass. To make matters worse, the paper had already been de-inked and recycled into raw material for paper towels by the time the contamination was discovered.

Another nagging problem was a steep drop in prices. The U.S. economy was so weak during 1992 that Mosinee was unable to sell some of its products at profitable prices. This problem was compounded by the actions of Fort Howard Corporation, a competitor based in Green Bay, Wisconsin. As Fort Howard cut prices on its tissue and towel products in order to keep control of its share of the market, Mosinee was forced to adjust its own prices accordingly. When the economy began to improve in 1993, Mosinee's profits began to stage a comeback as well. That year, the company reported net income of $9.6 million on sales of $244 million.

Citing health reasons, Richard Radt stepped down as president and chief executive officer of Mosinee in 1993. His successor was Daniel Olvey, formerly the company's executive vice-president and chief operating officer. Under Olvey's leadership additional gains were recorded by Mosinee in 1994, when the company earned a record $12.3 million on sales of $267 million.

Demand for Mosinee's products remained strong during the mid-1990s. Even sharp increases in raw materials, which would have been disastrous just a few years earlier, did not hurt the company, since most of this additional cost could be passed on to customers. Officials at Mosinee were confident that demand for the company's products--particularly the tissue and towels that made up 40 percent of its business--would remain strong during the near future.

Late 1990s and Beyond: Wausau-Mosinee

During the latter half of the 1990s, the paper industry as a whole experienced a wave a consolidation as many companies opted to join forces as a means of controlling costs. Sure enough, Mosinee announced in August 1997 that it would partner with neighboring company Wausau Paper Mills Company in deal that was expected to save over $20 million in costs per year. Established in 1899 by Norman H. Brokaw and brothers W.L. and E.A. Edwards, Wausau Paper had beefed up its holdings in recent years through the acquisitions of Rhinelander Paper Company, the Grovetown Mill, and Otis Specialty Papers. It soon set its sights on Mosinee, which by now was operating as one of the most profitable companies in the industry.

2000–2002

Both companies looked at the deal as a merger of equals; however Wausau Paper actually acquired Mosinee in a $477 million stock transaction. While the two companies had headquarters just 15 miles apart from each other and shared San W. Orr, Jr., as chairman, they were not considered competitors since there was little market overlap in each firm's product divisions.

After the deal was completed in December, the company operated as Wausau-Mosinee Paper Corporation. The newly merged entity faced a series of challenges as the paper industry began to suffer from low selling prices, overcapacity, and higher costs related to raw materials. In 2000, the company announced that it planned to shutter its Sorg Paper Company mill in Ohio. The 150-year-old facility had been losing nearly $750,000 per month due to the aforementioned problems.

To make matters worse, CEO Olvey resigned suddenly in 2000 forcing Wausau-Mosinee to find a successor. Thomas J. Howatt was named to the post later that year and implemented a series of cost cutting strategies to shore up the company's bottom line. At the same time, the firm embarked on a mission to develop new, cutting-edge products. A $46 million upgrade project was launched at its Rhineland facility to enable the plant to utilize a new process for manufacturing release liner paper. The new product proved to be a success, exceeding first-year expectations by nearly 50 percent.

The tough times continued into the early years of the new millennium. Howatt was quoted in an April 2002 Milwaukee Journal Sentinel article as claiming, "2001 will be remembered as perhaps the most difficult year in decades for the paper industry. Recessionary business conditions existed throughout the year, with most segments of the paper industry recording major declines in demand." Wausau-Mosinee forged ahead, determined to prevail over the hardships. Its strategy paid off and in 2002 the company reported a significant increase in earnings--over double what it had reported in the previous year.

Under Howatt's direction, Wausau-Mosinee continued to focus on increasing productivity, reducing capital spending, cutting expenses, and new product development. Against the backdrop of a weak economy, the company did not expect an upturn in the industry in the near future. Nevertheless, management remained optimistic that the firm would overcome the challenges it faced. With a long-standing history of success behind it, Wausau-Mosinee would no doubt remain Wisconsin's leading paper maker in the years to come.