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Consolidated Papers, Inc.

Consolidated Papers, Inc.

P.O. Box 8050
Wisconsin Rapids, Wisconsin 54495-8050
U.S.A.
Telephone: (715) 422-3111
Fax: (715) 422-3882
Web site: http://www.consolidatedpapers.com

Wholly Owned Subsidiary of Stora Enso Oyj
Incorporated:
1894 as Consolidated Water Power Company
Employees: 6,792
Sales: $1.84 billion (1999)
NAIC: 113110 Timber Tract Operations; 113310 Logging; 322110 Pulp Mills; 322121 Paper (Except Newsprint) Mills; 322130 Paperboard Mills; 322222 Coated and Laminated Paper Manufacturing

Consolidated Papers, Inc., which was acquired by Finnish-Swedish paper giant Stora Enso Oyj in August 2000, is the leading North American producer of coated and supercalendered printing papers. These are specially finished, glazed papers used for such things as magazines, brochures, and corporate annual reports, as well as catalogs, newspaper inserts, and direct mailings. More than 85 percent of company revenues are derived from these specialty papers. Consolidated also makes specialty papers used in the packaging and labeling of food and consumer products, paperboard and paperboard products, and pulp. The company owns and manages about 700,000 acres of forestland located in Wisconsin, Michigan, Minnesota, and the Canadian province of Ontario.

Early Years

In 1894, several small water power concerns on the Wisconsin River organized to form the Consolidated Water Power Company. Eight years later, the company expanded its operations to include the manufacturing of paper, changing its name to Consolidated Water Power & Paper Company. Consolidated started up the worlds first electrically powered paper machines in 1904. Over the next decade, the company manufactured newsprint and wallpaper, as well as power. Expansions included the 1911 acquisition of Grand Rapids Pulp and Paper Company and its mill at Biron, Wisconsin, which became Consolidateds Biron Division; and the 1916 purchase of a pulp mill in Appleton, Wisconsin, which became the Interlake Division. By 1919, the company had constructed a hydroelectric plant and paper mill in Stevens Point, Wisconsin, in order to manufacture tissue, waxing, and specialty papers.

With the acquisition of Newaygo Timber Company, Limited in 1920, Consolidated grew to include timberland acreage in Ontario, Canada. The previously acquired Biron division was converted in 1929along with the Wisconsin Rapids divisionto produce book and writing papers.

1930s Through 1970s: Pioneering and Innovating in Coated Paper

Emmett Hurst launched the companys forestry program in 1930. Five years later, Consolidated developed and introduced the Consolidated Massey coater. This revolutionized the industry by producing the first coated paper manufactured by a single high-speed operation. Over the next seven years, Consolidated converted five paper machines to the high-speed coating process and began to focus on the production of coated papers.

In addition to the coating technology, Consolidated developed an exceptionally strong plastics material in 1943. During World War II, in order to produce aircraft materials, the company formed a Plastic Division, which later became Consoweld Corporation. In 1945, the company acquired Wisconsin River Paper and Pulp Company, which operated a paper mill and dam in Whiting, Wisconsin; the mill became Consolidateds Wisconsin River Division and was converted to produce coated printing papers. The merger with Ahdawagam Paper Products Company in 1948 expanded Consolidateds product line to include paperboard containers and cartons (Ahdawagam eventually became the Paperboard Products Division).

Throughout the 1950s, Consolidated concentrated on the sale and production of its coated papers, introducing a new line of coated papers and launching a major national advertising program. In 1959, a new research and development center was completed. Another groundbreaking invention in paper-coating technology came in 1961, with the Dip Roll Blade coater. At this point, the company was undergoing conversion from roll to blade coating. This same year marked the one millionth ton of enamel papers sold by Consolidateds merchants. In 1962 the company changed its name to Consolidated Papers, Inc.

Toward the end of the 1960s, construction began on a $37 million kraft pulp mill and power complex that launched the new Kraft Division. Kraft paper is a stronger grade of pulp that replaced sulfate. Consolidated purchased Castle Rock Container Company, a corrugated container plant, in 1970. The next decade reflected increased environmental as well as market considerations as the company began pouring its capital into modifications and expansions. In 1970 and 1971, the company put more than $1 million into primary wastewater treatment plants, and in 1972 announced plans for an $8.6 million treatment plant to serve the Wisconsin Rapids, Biron, and Kraft Divisions. A pollution abatement program was completed that same year. In 1973 ground was broken for a $2.7 million sheet converting plant in Wisconsin and a $5.6 million lumber/chip complex in Ontario, Canada, which closed in 1984. The following year, Consolidated began a $12.8 million modification pro-gram at its Kraft Division to increase pulp capacity by 26,000 tons a year. In 1975, the company launched a $6 million boiler plant to burn coal and bark. Consolidated then broke ground for a $4 million secondary treatment plant.

Two years later, a $64.6 million papermaking expansion project was underway at the Wisconsin River Division to in-crease enamel paper capacity by 95,000 tons per year and a new thermomechanical pulp system was begun at the Biron Division. Also in 1977, Consolidated introduced another frontrunner in paper-coating technology: the short-dwell-time applicator. This applicator was considered the progenitor of later state-ofthe-art technology in lightweight coating. Greater automation was introduced into various production aspects in 1978, such as high-speed computerized presses and an automatic splicer.

1980s: Expanding in Volatile Times

The 1980s were volatile years in the paper industry. The explosion in the use of computers and copying machines created a boom in the paper industry early in the decade. Consolidateds earnings benefited particularly with the increase in direct-mail advertising and color inserts in newspapers, which made use of the companys specialized lightweight coated papers. The company at this point had enjoyed steady, above-average profit margins and had become a solid leader in specialized papers. Consolidated started the 1980s with the construction of a new office building in Wisconsin Rapids and the celebration of its forestry programs 50th year. The company also acquired sole ownership of Consoweld Corporation that year and began a $1.5 million expansion program for that company. Consoweld was sold to LOF Plastics, Inc. in 1986.

In order to catch up with demand, Consolidated began a multimillion-dollar expansion program in 1981, seeking to in-crease capacity of specialty coated papers by 24 percent. The following year, it began a $17 million Wisconsin Rapids Division expansion. In 1985, Consolidated celebrated its 50th year of manufacturing coated printing and specialty papers. At this point, the Wisconsin-based company was considered the worlds largest producer of enamel papers. The company was also producing lightweight, coated specialty papers for packaging and labeling, in addition to more conventional corrugated containersused for shipping large items such as refrigerators and televisionsand paperboard products.

While the companys manufacturing base was centralized in Wisconsin, Consolidateds timberland base spread across 670,000 acres of Wisconsin, Michigan, Minnesota, and Ontario. By 1985, the company was generating about 23 percent of its raw material requirements, a goal it had set for itself some six years prior, when management analyzed long-term fiber requirements against softwood availability. At that point, a softwood shortage was forecast for the upper Midwest by the year 2030about the same time demand was expected to have doubled. To circumvent this shortage, Consolidateds timberlands division intensified all aspects of reforestation, including harvesting, site preparation, planting, seedling research, and production. A program was laid out that included the replanting of 2,000 acres annually for the first five years. By 1983,3,500 acres were planted. The following year, 3,300 acres were planted. Most of the acreage was being converted from low-quality hardwoods to red pinechosen for its preferred fiber and rapid growthand the goal was to plant 50,000 acres by the year 2000. In 1985, however, some 7,000 acres were being harvested annually and that was still not meeting the growth rate.

In addition to these incentives to the timberlands division, the company was instituting a program to recycle sludge material from its Water Quality Center. Made up of natural materials used in the papermaking process, sludge was spread on commercial farmland as a combination fertilizer/soil amendment. This saved on landfill costs while improving soil fertility. The sludgecalled ConsoGroand its application was the result of a six-year research program conducted by Consolidated. Another environmentally sound breakthrough about this time was the addition of peroxide to the high-density storage stage of production in order to increase pulp brightness and output. This proved an innovative solution with the added benefit that hydrogen peroxide is environmentally safe.

Company Perspectives

Our steadfast dedication to doing what we do bestproducing coated and super-calendered paperhas enabled Consolidated to prosper through nearly a century of changing markets and increasing competition. Our strong focus, combined with our commitment to continuous growth, improvement and reinvestment, is the foundation of our business philosophy. We express this philosophy through ongoing investment in our operations. This reinvestment enables us to improve and expand our line of products and our service to customers, optimize our shareholders return, and provide a stable, secure work environment for our employees. At Consolidated, our commitment to customer, investor and employee satisfaction is paramount.

In 1986, Consolidateds Biron mill won Newsweeks Mill of the Year award for the second time in four years. The Biron Division had been the focal point of Consolidateds largest capital project, an expansion investment of $215 million of internal cash flow launched in late 1984. The result was a stateof-the-art coating plant. Company Chairman and CEO George Mead told Pulp and Paper magazine in 1987, When I joined this industry, the general feeling was that companies our size did not have the muscle to keep up. They were thought to be inadequate in financing and in depth of skilled personnel. Many companies felt they had to become part of larger, more powerful organizations in order to survive. We have shown that this is not necessarily true.

The following year, Consolidated announced a $96.7 million capital expense program. This included a further $46 million expansion of pulp production at the Kraft Division. Another $22 million was slated for improvements of the production of heavier coated free-sheet papers. Some of this money was also earmarked for further computerization of inventory.

Additional expansion plans were announced in 1989 to produce top quality coated paper for annual reports and high-grade brochures. That same year the Paperboard Products Division added a seven-color press to its equipment, allowing it to produce high-quality, multicolor folding cartons. Diversifications such as these helped protect Consolidated from the rumblings in the industry caused by the recession as well as the fact that paper mills everywhere had been running near capacity and fear of a shortage was setting in. Coated paper had proven to be a more profitable and steady business than commodity paper. The companys operating margin remained more than 20 percent in eight out of ten years between 1979 and 1989.

1990s: The Final Decade of Independence

Being a largely family-run company had kept Consolidated small and disciplined. In 1992, nearly 30 percent of Consolidateds employees had been with the company for more than 20 yearsa remarkable record of loyalty. In 1989, 41 percent of company stock was in the hands of one of its founders descendants, including then Chairman George Mead. In the manner of a conservative, family-run company, Consolidated had gener-ally avoided accumulating debt, opting instead to finance capital spending out of its own cash flow. Its growth, furthermore, was always on par with industry demands and internal manageability. All of the intensive expansion projects around this time, however, resulted in a considerable long-term debt for the first time in Consolidateds history. In the early 1990s Consoli-dated generated sufficient cash to subtract from its debts, while still spending enough to keep its plants current and competitive. Nevertheless, the company did feel the effects of the recession. The early 1990s were a rough time for the entire coated paper industry as advertising in magazinesamong the largest consumers of lightweight coated papersplunged with the sustained economic downturn. Consolidateds sales were punished. The economy also affected the companys heavyweight coated paper profits as well as its overall profits, although Consolidated generally outperformed its industry competitors.

Consolidated was ahead of the landfill problems that plagued many industries in the late 1980s and early 1990s. The companys solid waste management program worked closely with consultants, regulatory agencies, and the community to develop a plan that included landfills on company-owned land as near to treatment plants as possible. Water quality and water renewal center landfills were also located on land near the treatment plants, which allowed Consolidated to keep a close watch on the operations. Such environmental requirements significantly affected Consolidateds profits in the early 1990s. Between 1991 and 1993, the company spent $34.4 million in its Kraft Division alone for environmental improvements that brought it up to regulatory codes. Also, the increased demand for recycled fiber content in Consolidateds papers introduced costly variables, as contamination of recycled fiber was a problem, and producing specialty papers of different weights with recycled pulp was a technological challenge.

In 1990, the development and expansion of wetland mitigation sites around these water quality and water renewal centers began. Consolidated also joined with the Wisconsin Department of Natural Resources to enhance wildlife management and habitat development on company-owned land adjacent to the Mead Wildlife Area. Company forestlands were managed as a source of pulpwood for papermaking, as well as a source of enjoyment to the public through hiking, hunting, and other recreation.

Key Dates

1894:
Several small water power companies on the Wisconsin River merge to form Consolidated Water Power Company.
1902:
Company expands into the manufacture of paper and changes its name to Consolidated Water Power & Paper Company.
1911:
Company acquires Grand Rapids Pulp and Paper Company, which becomes the Biron Division.
1919:
Stevens Point Division is launched with the opening of a paper mill and hydroelectric plant.
1935:
Company produces the first coated paper made in a single, high-speed operation.
1945:
Wisconsin River Paper and Pulp Company is acquired and becomes the Wisconsin River Division.
1948:
Acquisition of Ahdawagam Paper Products Company expands Consolidated into paperboard containers and cartons.
1962:
The company changes its name to Consolidated Papers, Inc.
1984:
$215 million expansion of the Biron mill is launched.
1995:
$166 million expansion of the Stevens Point mill begins; company acquires Niagara of Wisconsin Paper Corporation (which becomes the Niagara Division), Lake Superior Paper Industries, and Superior Recycled Fiber Industries.
1997:
Company acquires Repap USA, Inc., which is re-named Inter Lake Papers, Inc.
2000:
Consolidated is acquired by Stora Enso Oyj of Finland.

In October 1993 Mead stepped down from the position of CEO while remaining chairperson. President Patrick F. Brennan succeeded Mead as CEO. Brennan had joined the company in 1963 and had moved up the corporate ladder, gaining the position of president and chief operating officer in 1988. He was the first Consolidated chief executive to come from outside the Mead family.

As the paper industry recovered strongly in the robust economy of the mid-1990s, Consolidated began expanding again. The companys mill at Stevens Point was the subject of a $166 million expansion. Started in 1995 and completed two years later, the project involved the addition of a paper machine capable of producing, on an annual basis, 64,000 tons of light-weight coated specialty paper used in food and consumer product packaging and labeling, gift wrap, bar-code labels, and pressure-sensitive release papers. In addition to making capital expenditures, Consolidated also returned to the growth-through-acquisition method. In July 1995 the company acquired Niagara of Wisconsin Paper Corporation, maker of coated groundwood publication papers (which became the Niagara Division); and two Duluth, Minnesota-based companies: Lake Superior Paper Industries, maker of supercalendered paper, and Superior Recycled Fiber Industries, producer of pulp made from deinked waste office paper. In addition to transforming Consolidated into the largest maker of coated printing papers in the country, these acquisitions also expanded the company geo-graphically. All the companys mills had been located within 35 miles of the companys headquarters in Wisconsin Rapids.

Brennan retired at the end of 1995, a year in which the company set records in earnings ($229.2 million) and sales ($1.58 billion). During his tenure, Consolidated had surpassed the $1 billion revenue mark for the first time in 1994. Taking over as president and CEO was Gorton M. Evans, who had joined the company in 1973 and had most recently served as an executive vice-president. Evans led Consolidated through an even larger acquisition, that of Repap USA, Inc., which was purchased in October 1997 from Montreal-based Repap Enterprises Inc. for $258 million in cash and $419 million in assumed debt. The Repap USA operations included a mill in Kimberly, Wisconsin, located about 100 miles east of Wisconsin Rapids, with three machines that produced coated printing papers. The addition of what became known as Inter Lake Papers, Inc. increased Consolidateds share of the U.S. coated printing paper market from 15 to 20 percent.

In the last years of the 1990s, Consolidated saw its earnings fall thanks to rising pulp costs, global overcapacity, and in-creased competition from foreign players able to make inroads into the U.S. market because of a strong U.S. dollar. In response, Consolidated launched a two-year cost-cutting drive in early 1999 aimed at reducing annual operating expenses by $100 million. In addition to the implementation of various operating efficiency initiatives, the company also announced the layoff of 700 workers in mid-2000. Consolidated also dis-posed of one of its non-coated-paper operations, namely the corrugated packaging subsidiary Castle Rock Container, which was sold to St. Laurent Paperboard Inc. in May 1999.

By early 2000, with global consolidation creating ever more intense pressure on Consolidated and other smaller industry players, the company agreed to be acquired by one of the leading forest products companies in the world, Helsinki-based Stora Enso Oyj. The $4.8 billion cash-and-stock deal, which was completed in August 2000, pushed Stora Enso into the top spot worldwide in coated paper and provided the Finnish-Swedish company with its first significant presence in the North American market, the largest paper market in the world. Although the merger ended 100-plus-years of independence for Consolidated, by partnering with an internationally focused concern, Consolidated could itself gain a more global position. With the Mead familys stake in Consolidated translating into a post-acquisition interest in Stora Enso of 5.7 percent, George Mead was granted a seat on the Stora Enso board.

Principal Subsidiaries

Consolidated Water Power Company; Newaygo Forest Products Limited (Canada); Consolidated Papers Foreign Sales Corporation (U.S. Virgin Islands); Inter Lake Papers, Inc.; LSPI Paper Corporation; Superior Recycled Fiber Corporation; Consolidated Papers International Leasing, L.L.C.; CONDEPCO, Inc.; Consolidated Papers (Canada), Inc. (U.S.A.).

Principal Divisions

Biron Division; Converting Division; Kraft Division; Niagara Division; Paperboard Products Division; Stevens Point Division; Wisconsin Rapids Division; Wisconsin River Division.

Principal Competitors

Bowater Incorporated; Crown Vantage Inc.; Georgia-Pacific Corporation; International Paper Company; The Mead Corporation; Potlatch Corporation; Sappi Fine Paper North America; Westvaco Corporation.

Further Reading

Barrett, Rick, Consolidated Papers to Be Sold: Finnish Firm to Make $4.8 Billion Purchase, Wisconsin State Journal, February 23, 2000, p. lE.

Bartocci, Stephen, Consolidated Mill Adds Peroxide to Boost Brightness, Maintain Stability, Pulp and Paper, November 1985, pp. 14749.

Bergquist, Lee, Consolidated Papers Makes Deal: Planned Acquisition of Repap USA to Boost Coated Paper Business, Milwaukee Journal Sentinel, July 10, 1997, p. 1.

Coleman, Matthew, Primary/Secondary Sludge Recycled, Pulp and Paper, April 1985, pp. 13031.

Consolidated Papers Expands Pulp Capacity, Pulp and Paper, January 1988, p. 23.

Consolidated to Buy Pentair Assets, Pulp and Paper, July 1995, p. 17.

Dresang, Joel, Consolidated Papers to Lay Off 700 As Part of Cost-Cutting Plan, Milwaukee Journal Sentinel, July 20, 2000, p. 15A.

Engel, Larry, Consolidated Giving Boost to Production: Paper Machine Being Added, Milwaukee Sentinel, February 11, 1995, p. Dl.

Ferguson, Kelly H., Consolidated Keys on Coated Specialties with Startup of Stevens Point Machine, Pulp and Paper, July 1997, pp. 6364, 67-68.

Flanders, Lou, Screening Processes Introduced at MOTG-North Winter Meeting, Pulp and Paper, March 1991, pp. 11415.

Four Major Mergers: Two Trans-Atlantic Blockbusters, Pulp and Paper, April 2000, pp. 1315.

Griffin, Griff, Mechanized Site Prep Crews Lead Intensified Program, Forest Industries, April 1985, pp. 3840.

Harrison, Andy, New Technology Solves Permitting Problems for Landfill Expansion, Pulp and Paper, September 1989, pp. 21318.

Jewitt, Caroline, Stora Enso Sets Off on a Global Crusade, Pulp and Paper International, June 2000, pp. 2931.

Koncel, Jerome, Quality Emphasized in All Aspects of Pulping Operations, Paper Trade Journal, January 1986, p. 28.

Lurie, Sidney, Its the Time to Think Big, Financial World, March 7-20, 1984, p. 6.

McGough, Robert, Consolidated Papers: Family Knows Best, Financial World, May 16, 1989, p. 15.

Smith, Kenneth, Consolidated Papers Biron 26 LWC Paper Machine Starts Up Smoothly, Pulp and Paper, July 1987, pp. 11315.

Starkman, Dean, Stora Enso to Buy Consolidated Papers, Wall Street Journal, February 23, 2000, p. A3.

Stowall, Robert, A World Turned Upside Down, Financial World, February 7, 1989, p. 99.

Verespej, Michael A., Who Owns Whose Trees?, Industry Week, March 20, 2000, pp. 58 +.

Carol I. Keeley

updated by David E. Salamie

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Consolidated Papers, Inc.

Consolidated Papers, Inc.

P.O. Box 8050
Wisconsin Rapids, Wisconsin 54495
U.S.A.
(715) 422-3111
Fax: (715) 422-3469

Public Company
Incorporated: 1894 as Consolidated Water Power Company
Employees: 4,937
Sales: $904.23 million
Stock Exchanges: OTC
SICs: 2671 Paper Coated & LaminatedPackaging; 2621 Paper Mills

Consolidated Papers, Inc., is a leading producer of coated printing papers for the printed communications industry that operates more than 60,000 printing and publishing establishments in the United States and Canada. Coated printing papers, also called enamel papers, are specially finished, glazed papers used for such things as magazines, brochures, and corporate annual reports, as well as catalogs, newspaper inserts, and direct mailings. Focusing on this specialty paper has insulated Consolidated from some of the factors that have impacted the paper industry in the past decade. However, the company did fall prey to the advertising recession of the late 1980s and early 1990s, which affected magazine publishing in particular. Consolidated is also a leading manufacturer of lightweight coated and specialty papers used in food packaging and labeling. Other products include custom-designed corrugated displays and containers and paperboard products.

In 1894, several small water power concerns on the Wisconsin River organized to form the Consolidated Water Power Company. Eight years later, the company expanded its operations to include the manufacturing of paper, changing its name to Consolidated Water Power & Paper Company. Consolidated started up the worlds first electrically powered paper machines in 1904. Over the next decade, the company manufactured newsprint and wallpaper, as well as power. Expansions included the acquisition of Biron Division in 1911 and Interlake Division in Appleton, Wisconsin, in 1916. By 1919, the company had constructed a hydroelectric plant and paper mill in order to manufacture tissue, waxing, and specialty papers.

With the acquisition of Newaygo Timber Company, Limited in 1920, Consolidated grew to include timberlands acreage in Ontario, Canada. The previously acquired Biron division was converted in 1929along with the Wisconsin Rapids divisionto produce book and writing papers.

Emmett Hurst launched the companys forestry program in 1930. Five years later, Consolidated developed and introduced the Consolidated Massey coater. This revolutionized the industry by producing the first coated paper manufactured by a single high-speed operation. Over the next seven years, Consolidated converted five paper machines to the high-speed coating process and began to focus on the production of coated papers.

In addition to the coating technology, Consolidated developed an exceptionally strong plastics material in 1943. During World War II, in order to produce aircraft materials, the company formed a Plastic Division, which later became Consoweld Corporation. In 1945, the company acquired Wisconsin River Division, converting it to produce coated printing papers. The merger with Ahdawagam Paper Products Company in 1948 expanded Consolidateds product line to include paperboard containers and cartons.

Throughout the 1950s, Consolidated concentrated on the sale and production of its coated papers, introducing a new line of coated papers and launching a major national advertising program. In 1959, a new research & development center was completed. Another groundbreaking invention in paper-coating technology came in 1961, with the Dip Roll Blade coater. At this point, the company was undergoing conversion from roll to blade coating. This same year marked the one millionth ton of enamel papers sold by Consolidateds merchants. In 1962, the company named was changed to the one it holds today: Consolidated Papers, Inc.

Toward the end of the 1960s, construction began on a $37 million kraft pulp mill and power complex. Kraft paper is a stronger grade of pulp that replaced sulfate. Consolidated purchased Castle Rock Container Company, a corrugated container plant, in 1970. The next decade reflected increased environmental as well as market considerations as the company began pouring its capital into modifications and expansions. In 1970 and 1971, the company put more than $1 million into primary wastewater treatment plants, and in 1972 announced plans for an $8.6 million treatment plant to serve the Wisconsin Rapids, Biron, and Kraft divisions. A pollution abatement program was completed that same year. In 1973 ground was broken for a $2.7 million sheet converting plant in Wisconsin and a $5.6 million lumber/chip complex in Ontario, Canada, which closed in 1984. The following year, Consolidated began a $12.8 million modification program at its Kraft Division to increase pulp capacity by 26,000 tons a year. In 1975, the company launched a $6 million boiler plant to burn coal and bark. Consolidated then broke ground for a $4 million secondary treatment plant.

Two years later, a $64.6 million papermaking expansion project was underway to increase enamel paper capacity by 95,000 tons per year and a new thermomechanical pulp system was begun at the Biron Division. Also in 1977, Consolidated introduced another frontrunner in paper-coating technology: the short-dwell-time applicator. This applicator is considered the progenitor of the current state-of-the-art in lightweight coating. Greater automation was introduced into various production aspects in 1978, such as high-speed computerized presses and an automatic splicer.

The 1980s were volatile years in the paper industry. The explosion in the use of computers and copying machines created a boom in the paper industry early in the decade. Consolidateds earnings benefited particularly with the increase in direct-mail advertising and color inserts in newspapers, which made use of the companys specialized lightweight coated papers. The company at this point had enjoyed steady, above-average profit margins and had become a solid leader in specialized papers. Consolidated started the 1980s with the construction of a new office building in Wisconsin Rapids and the celebration of its forestry programs 50th year. The company also acquired sole ownership of Consoweld Corporation that year and began a $1.5 million expansion program for that company. Consoweld was sold to LOF Plastics, Inc. in 1985.

In order to catch up with demand, Consolidated began a multimillion dollar expansion program in 1981, seeking to increase capacity of specialty coated papers by 24 percent. The following year, it began a $17 million Wisconsin Rapids Division expansion. In 1985, Consolidated celebrated its 50th year of manufacturing coated printing and specialty papers. At this point, the Wisconsin-based company was considered the worlds largest producer of enamel papers. The company was also producing lightweight, coated specialty papers for packaging and labeling, in addition to more conventional corrugated containersused for shipping large items such as refrigerators and televisionsand paperboard products.

While the companys manufacturing base was centralized in Wisconsin, Consolidateds timberland base spread across 670,00 acres of Wisconsin, Michigan, Minnesota, and Ontario. By 1985, the company was generating about 23 percent of its raw material requirements, a goal it had set for itself some six years prior, when management analyzed long-term fiber requirements against softwood availability. At that point, a softwood shortage was forecast for the upper Midwest by the year 2030about the same time demand was expected to have doubled. To circumvent this shortage, Consolidateds timberlands division intensified all aspects of reforestation, including harvesting, site preparation, planting, seedling research, and production. A program was laid out which included the replanting of 2,000 acres annually for the first five years. By 1983, 3,500 acres were planted. The following year, 3,300 acres were planted. Most of the acreage was being converted from low-quality hardwoods to red pinechosen for its preferred fiber and rapid growthand the goal was to plant 50,000 acres by the year 2000. In 1985, however, some 7,000 acres were being harvested annually and that was still not meeting the growth rate.

In addition to these incentives to the timberlands division, the company was instituting a program to recycle sludge material from its Water Quality Center. Made up of natural materials used in the papermaking process, sludge was spread on commercial farmland as a combination fertilizer/soil amendment. This saved on landfill costs while improving soil fertility. The sludgecalled ConsoGroand its application was the result of a six-year research program conducted by Consolidated. Another environmentally sound breakthrough about this time was the addition of peroxide to the high-density storage stage of production in order to increase pulp brightness and output. This proved an innovative solution with the added benefit that hydrogen peroxide is environmentally safe.

In 1986, Consolidateds Biron mill won Newsweeks Mill of the Year award for the second time in four years. The Biron Division was the focal point of Consolidateds largest capital project, an expansion investment of $215 million of internal cash flow. The result was a state-of-the-art coating plant. Company chairperson and CEO George Mead told Pulp & Paper magazine in 1987, When I joined this industry, the general feeling was that companies our size did not have the muscle to keep up. They were thought to be inadequate in financing and in depth of skilled personnel. Many companies felt they had to become part of larger, more powerful organizations in order to survive. We have shown that this is not necessarily true.

The following year, Consolidated announced a $96.7 million capital expense program. This included a further $46 million expansion of pulp production at the Kraft Division. To be completed in 1989, the project was intended to increase chemical pulp production. Another $22 million was slated for improvements of the production of heavier coated free-sheet papers. Some of this money was also earmarked for further computerization of inventory.

Further expansion plans were announced in 1989 to produce top quality coated paper for annual reports and high-grade brochures. That same year the Paperboard Products Division added a seven-color press to its equipment, allowing it to produce high-quality, multicolor folding cartons. Diversifications such as these helped protect Consolidated from the rumblings in the industry caused by the recession as well as the fact that papermills everywhere had been running near capacity and fear of a shortage was setting in. Coated paper had proven to be a more profitable and steady business than commodity paper. The companys operating margin remained more than 20 percent in eight out of ten years between 1979 and 1989.

Being a largely family-run company had kept Consolidated small and disciplined. In 1992, nearly 30 percent of Consolidated s employees had been with the company for more than 20 yearsa remarkable record of loyalty. In 1989, 41 percent of company stock was in the hands of one of its founders descendants, including then chairperson George Mead. In the manner of a conservative, family-run company, Consolidated had generally avoided accumulating debt, opting instead to finance capital spending out of its own cash flow. And its growth was always on par with industry demands and internal manageability. However, all of the intensive expansion projects around this time resulted in a considerable long-term debt for the first time in Consolidateds history. As of 1992, Consolidated was generating sufficient cash to subtract from its debts, while still spending enough to keep its plants current and competitive.

Consolidated was also ahead of the landfill problems that plagued many industries in the late 1980s. The companys solid waste management program worked closely with consultants, regulatory agencies, and the community to develop a plan that included landfills on company-owned land as near to treatment plants as possible. Water quality and water renewal center landfills are also located on land near the treatment plants, which allows Consolidated to keep a close watch on the operations. Such environmental requirements have significantly affected Consolidateds profits in recent years. Between 1991 and 1993, the company spent $34.4 million in its Kraft Division alone for environmental improvements that brought it up to regulatory codes. Also, the increased demand for recycled fiber content in Consolidateds papers has introduced costly variables, as contamination of recycled fiber is a problem, and producing specialty papers of different weights with recycled pulp is a technological challenge.

In 1990, the development and expansion of wetland mitigation sites around these water quality and water renewal centers began. Consolidated also joined with the Wisconsin Department of Natural Resources to enhance wildlife management and habitat development on company-owned land adjacent to the Mead Wildlife Area. Company forestlands are managed as a source of pulp wood for papermaking, as well as a source of enjoyment to the public through hiking, hunting, and other recreation.

In 1991, Consolidated filed a patent infringement complaint against two companies that sold technology based on the short-dwell coater technology, which Consolidated had developed in 1977. Also named in the suit were several companies that licensed the paper-coating technology from the firms by which Consolidated claimed to be violated. This was a rough time for the entire coated paper industry as advertising in magazinesamong the largest consumers of lightweight coated papersplunged with the sustained economic downturn. Consolidateds sales were punished. The economy also affected the companys heavyweight coated paper profits.

In 1992, Mead announced he would step down from the position of CEO in October of 1993 while remaining chairperson.

President Patrick Brennan is to succeed Mead as CEO. Although Business Week declared 1992 paper industry earnings a nightmare, Consolidated appeared to be outlasting the soft economy and maintaining its spot in the Fortune 500 list.

Principal Subsidiaries

Consolidated Water Power Company; Newaygo Forest Products Limited.

Further Reading

Bartocci, Stephen, Consolidated Mill Adds Peroxide to Boost Brightness, Maintain Stability, Pulp & Paper, November 1985, pp. 147149.

Coleman, Matthew, Primary/Secondary Sludge Recycled, Pulp & Paper, April 1985, pp. 130131.

Consolidated Papers, Wall Street Journal, November 3, 1992, p. Bll.

Consolidated Papers Claims Patent Violation on Coater, Pulp & Paper, October 1991, p. 31.

Consolidated Papers Expands Pulp Capacity, Pulp & Paper, January 1988, p. 23.

Flanders, Lou, Screening Processes Introduced at MOTG-North Winter Meeting, Pulp & Paper, March 1991, pp. 114115.

Griffin, Griff, Mechanized Site Prep Crews Lead Intensified Program, Forest Industries, April 1985, pp. 3840.

Harrison, Andy, New Technology Solves Permitting Problems for Landfill Expansion, Pulp & Paper, September 1989, pp. 213218.

Koncel, Jerome, Quality Emphasized in All Aspects of Pulping Operations, Paper Trade Journal, January 1986, p. 28.

Lurie, Sidney, Its the Time to Think Big, Financial World, March 7-20, 1984, p. 6.

McGough, Robert, Consolidated Papers: Family Knows Best, Financial World, May 16, 1989, p. 15.

Smith, Kenneth, Consolidated Papers Biron 26 LWC Paper Machine Starts Up Smoothly, Pulp & Paper, July 1987, pp. 113115.

Stowall, Robert, A World Turned Upside Down, Financial World, February 7, 1989, p. 99.

Carol I. Keeley

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