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Testimony of WEDC Deputy Secretary and COO Sam Rikkers; Joint Public Hearing of the Senate Committee on Insurance, Licensing and Forestry and the Assembly Committee on Forestry, Parks and Outdoor Recreation

Dec. 15, 2021 –

Good morning, members of the Senate Committee on Insurance, Licensing and Forestry and the Assembly Committee on Forestry, Parks and Outdoor Recreation.

I want to thank committee chairs Senator Felzkowski and Representative Mursau for inviting WEDC to provide information on the paper and forest products industry and the role WEDC plays in supporting this critical sector of our state’s economy.

If the committee will allow, I would like to provide a brief overview of Wisconsin’s forest products and paper industry, some of the trends and challenges affecting the industry, and some of the measures WEDC has taken to support individual paper mills and communities affected by mill closings.

The timber, forest products, and paper industry is part of our state’s heritage, with the timber industry predating Wisconsin’s statehood. Today, the forest products industry is the fifth-largest manufacturing sector in Wisconsin, employing 64,000 people. It is the top employer in ten counties and makes up 14% of all manufacturing jobs in Wisconsin.

The forest products industry is uniquely important to Wisconsin given its connection to our timber industry that fuels it. Wisconsin’s timber production provides critical revenue to landowners, sustains county budgets, employs thousands of loggers, and engages a fleet of haulers transporting logs to mills on our roads and rails, before Wisconsin timber is processed into a multitude of products in our mills and factories.

Wisconsin’s paper industry is significant not only within the state: Wisconsin leads the nation in the value of products sold, the number of employees, and the number of paper mills. Twenty-four paper companies operate mills at 34 locations in Wisconsin. There is a tremendous geographic breadth of the paper manufacturing industry in Wisconsin, with 41 of the state’s 72 counties home to at least one paper manufacturing business, whether that is a mill or a converter.

To many of you, this is not news. For generations, the paper industry has sustained high-paying jobs and contributed to the prosperity of communities across our state. In recent decades, however, changes throughout the industry have left their impact on Wisconsin’s paper sector.

Many of these changes were foretold in a 2015 Milwaukee Journal Sentinel article headlined “Wisconsin’s Century-old Model of Forestry Comes Under Pressure,” which detailed the challenges facing the forest products industry: disruption caused by digital media, the break-up of family-owned woodland, and increased competition from a globalized economy, especially from warmer climates such as South America and southern Asia where pulpwood can grow more efficiently year-round. These challenges persist, and for many in the industry, the COVID-19 pandemic has only accelerated the disruption.

Despite these challenges, the state of Wisconsin’s forest product industry is in a better place today than it was a decade ago. The papermaking industry has undergone many changes, resulting in increased innovation and significant diversification. It now encompasses many products with nearly limitless everyday uses. Paper, in its many forms, is used in education, communications, hygiene, aerospace, food storage, packaging, and construction. Although demand for and production of white paper has diminished, demand for containerboard and paperboard have increased significantly in our state.

These shifts in the paper market have been reflected in the fortunes of some of Wisconsin’s mills. Over the last two years, our state has seen the closure of paper mills in Appleton, Neenah, Park Falls and Wisconsin Rapids. Yet during this same period, Wisconsin saw the opening of the first new paper mill to be built here in more than 35 years, with Green Bay Packaging investing more than $500 million in a state-of-the-art production facility.

WEDC is committed to the to the future of Wisconsin’s forest products and paper industry. To ensure its continued viability and growth, WEDC is partnering with businesses, communities and other stakeholders investing in product diversification, plant upgrades, technological advances, and improved worker training. I would like to walk the committees through some of the ways we are working to achieve this goal.

Planning for a sustainable future

Planning is critical for every industry, and the paper and forest products sector is no exception. In late 2019, WEDC reached out through Senator Baldwin’s office to engage the U.S. Economic Development Administration (EDA) in a formal process to help diversify Wisconsin’s forest product industry.

Over the last year, the Wisconsin Council on Forestry, the DNR, and WEDC’s Office of Rural Prosperity have met with stakeholders throughout the industry and across the state to build momentum around key priorities to diversify Wisconsin’s forest products industry. We now submit these priorities to the EDA, triggering the involvement of multiple federal partners to tackle key projects. We have already seen success in these collaborative efforts. WEDC and Governor Evers’ Administration have been actively supporting a broad coalition led by the Wisconsin Paper Council. Without stealing too much thunder from my colleague Henry Schienebeck with the Great Lakes Timber Professionals Association, this coalition learned just this week it had been awarded $500,000 through EDA’s Build Back Better grant program and is now competing for up to $100 million dollars to implement projects supporting Wisconsin’s forest products industry and its future.

Assisting impacted communities

WEDC has been assisting communities affected by mill closures, both in support of measures to reopen the plants and to help them explore options if the mills do not reopen. With respect to the Verso plant, WEDC has regularly engaged with Verso leadership since the announcement of the plant’s closure in June 2020, including discussions of how WEDC’s investment tools could support the mill’s reopening. WEDC’s Secretary Hughes and WEDC’s regional economic development director for the area served on Representative Krug’s and Senator Testin’s Wisconsin Rapids Together Task Force.

Earlier this year, Secretary Hughes and I met in Wisconsin Rapids with the mayor and chamber of commerce leaders to discuss the future of the mill and a path forward for the community. WEDC has provided a $36,000 grant to the Heart of Wisconsin Chamber of Commerce to create and implement a long-term plan for Wisconsin Rapids’ future growth, set goals, and plan for a prosperous future not just for the paper industry but for a wide variety of industries and all of Wisconsin Rapids’ residents. Regarding the Park Falls facility, WEDC provided a $95,000 grant to support the multistakeholder Timber Professionals Cooperative interested in acquiring and operating a Wisconsin pulp and paper mill. And since August, WEDC and the Evers Administration have been working with several investment groups interested in acquiring and operating the Park Falls mill.

Indeed, as Representative Krug’s revised Mill Bill was taking shape this fall, WEDC was working with potential investors pending approval and enactment of the bill. In fact, just last month, Secretary Hughes sent a letter to one investor group pledging WEDC’s support for its investment in the Park Falls Mill, including a $15 million loan guarantee. WEDC’s support for the forest products industry extends well beyond supporting paper mills. Last year WEDC awarded a grant to Visions Northwest to produce and distribute a video series raising public awareness across the state about the importance of and opportunities in Wisconsin’s wood products industry. Presently, WEDC is actively working to assist the expansion of the Fox Valley and Lake Superior Rail System to service the industry.

Conclusion

The future of forestry and wood products — including innovation and diversity in the products created, the renewable fuels and carbon reduction it can help produce, and the new machinery used and built in the state — is critically important to Wisconsin’s economy. A clear strategy that encompasses all the stakeholders, including the state and WEDC, will help ensure that Wisconsin continues to be part of an ever-changing and growing industry. With the current work that is taking place, WEDC is confident that we will build that strategy quickly, and assure it has the appropriate resources, and succeeds for our state.

Thank you for inviting WEDC to be here today. I’m happy to take any questions committee members may have at this time.