For more than 110 years, they’ve been producing paper at the mill on the Flambeau River that dominates Park Falls, a city of 2,700 in northern Wisconsin. So the historic, red-brick headquarters, built in 1927, might seem like an unlikely place for a glimpse of the future.

But at Flambeau River Papers LLC, William “Butch” Johnson and the 315 employees of the company intend to develop the first paper and pulp mill integrated with a biofuels plant in this country. If pilot projects for the biofuel processes go as expected, Johnson intends to break ground next April for a $270 million plant that will produce 7.7 million gallons of “green” diesel fuel along with parafinic wax and enough steam heat to eventually help make the old paper mill “fossil-fuel free.” That would also be a first in this country.

The future of the paper industry in Wisconsin, beset by declining sales, escalating fossil-fuel costs, increasing foreign competition and the recession, could be linked with the use and development of alternative energy. The paper industry is the second largest user of electricity of any manufacturing industry. Paper mills have dramatically increased their energy self-sufficiency in the last 30 years by burning waste products from the paper-making processes and other biomass to supply the steam heat and electricity to run the mills more economically. Now they are working on producing biofuels and other products that can bolster their bottom lines.

Originally, Flambeau River intended to build a cellulosic ethanol refinery next to the paper mill, according to Bob Byrne, P.E., president of Flambeau River Papers and president and CEO of Flambeau River Biofuels. That project became uneconomical, in part because of falling gasoline prices. Instead, Flambeau River Biofuels will focus on making sulfur-free “green” diesel. The new plant will use two commercially proven technologies to produce clean renewable energy and biofuels. It will gassify forest residuals, agricultural waste and other biomass into a synthesis gas, which will be catalyzed using the Fischer-Tropsch process to create liquid hydrocarbons. The Fischer-Tropsch process was first developed in Germany during World War II to make diesel fuel after Allied bombing had cut off petroleum supplies.

Even before the biofuels developments, the story of Flambeau River Papers is remarkable. The future of Park Falls, the mill and several hundred area loggers who supply wood pulp to the mill looked as bleak in February 2006 as a northern Wisconsin blizzard. That’s when Smart Papers of Hamilton, Ohio, the previous mill owner, filed for Chapter 11 bankruptcy.

Johnson, CEO of Johnson Timber Co. of Hayward and owner of 13 other businesses, owned a chipping mill that supplied Smart Papers. His company was one of the largest creditors in the bankruptcy settlement.

When no one stepped forward to buy the paper mill, Johnson, now 60, a genial, 6-foot-3-inch bear of a man who appears to like challenges as big as he is, purchased the mill in July 2006. He reopened it a month later.

The decision to buy the mill wasn’t easy even for an entrepreneur as bold as Johnson.  “We didn’t know anything about the paper business,” Johnson concedes.  “It took a long family discussion to make the decision and open up a paper mill,” Johnson says of deliberations with his wife, Patricia, and their six children.

Byrne says, “Butch took a significant personal risk and used his personal fortune to restart the mill. I don’t think anyone else would have or could have done that.”

Johnson and his associate, Randy Stoeckel, now vice president and general manager of the company, needed and got plenty of help. More than 90 percent of the veteran workforce of the mill, many of whom are in their 50s, jumped at the chance to be rehired. Johnson had the wisdom to listen to their ideas and cemented their loyalty by hiring them back at the same family-supporting wages and benefits they had earned under their union contract with Smart Papers.

“The bankruptcy court said we could pay them 15 percent less than they’d earned before,” Johnson says. “But I’d rather bring employees in at full pay and have them show me how to make 20 percent more profit. I grew up here and know a lot of the people.”

“He’s open enough to listen to his employees’ suggestions,” Byrne adds. In improving operations, the mill has employed  problem-solving teams, often made up of workers from several departments, for such things as reducing down time for paper machines or decreasing water use.

A key step for Johnson in starting up the mill was to contract with CellMark, a $2 billion paper products company with headquarters in Sweden, to supply wood pulp and to market all of the mill’s production, which includes uncoated free sheet, printing and writing, colored, white, cotton bond, and parchment papers along with papers with recycled content.

In February 2007, Johnson brought Byrne aboard to supply the knowhow to help fulfill his ambitions. Byrne, now 58, had specialized in improving operations at 14 mills for his previous employer, Georgia-Pacific Corp. He had worked at the Park Falls mill from 1985 to 1996, before going to the Atlanta-based paper company.

 “I came up for a job interview, and before long they were talking about me going to a two-day workshop for the company,” Byrne recalls with a laugh.

Byrne led the way in the company’s decision to invest $19 million in improvements to the old mill. While some of the money went for maintenance deferred by previous owners, much of it went to improve energy efficiency, save on water, eliminate waste and lower operation costs.

The company received a good deal of financial assistance and technical aid from Focus on Energy, Wisconsin’s non-governmental agency that works to increase energy efficiency in industry, commercial and residential buildings. In two of the three years of its existence, Flambeau River Papers has won the Governor’s Award for Excellence in Pulp and Paper Energy Efficiency.

The 2007 award went primarily for a hot water recovery project, designed by mill employees, that cost $190,000 and saves the mill an estimated $2.1 million in natural gas costs, increases pulp mill production by 12 tons per day and improves operation of all of the mill’s paper machines.

In 2008, the company won primarily for the increased output of a boiler, paper machine steam recovery system improvements and new temperature controls. Byrne says the remainder of improvements on one of Flambeau’s three paper machines and a low-pressure accumulator project “ought to help us win again this year.”

Production at the paper mill, which was at 138,000 tons per year hit a record 151,000 tons in 2008 and is on course to set another record of about 153,000 tons this year, Byrne says. After “considerable losses” the first year and more red ink the second, Flambeau River Papers, which has sales of $150 million annually, is poised to be profitable this year. To date Johnson has been primarily dependent on his personal wealth and venture capital to finance mill operations.

The state provided $7 million in grants and loans to help re-start the plant. The federal government granted an additional $5 million for energy-efficiency at the paper mill. The U.S. Forest Service supplied $1.9 million for development of biofuels. The biggest government aid, however, was a $30 million grant from the U.S. Department of Energy  to assist in developing the biofuels plant.

The paper company is partnering with top engineers and scientists in the biofuels project including ANL Consultants, Auburn University, Brigham Young University, Citigroup Global Markets, CleanTech Partners, Emerging Fuels Technology, the National Renewable Energy Lab, Michigan Technological University, North Carolina State University, Oak Ridge National Laboratory, ThermoChem Recovery International, the University of Wisconsin and the U.S. Department of Agriculture’s Forest Products Lab in Madison.

The biofuels plant, when completed, will fill a two-block area along the Flambeau River just north of the paper mill. It will include a five-story-high gassifying tower, a catalytic converter, a steam generator, steam turbine, cooling system and wood grinder and dryer. In addition, several acres will be needed for storing the bark and other biomass for use in the plant.

The project, Byrne says, will create long-term jobs for high-skilled operators and for area loggers as well as short-term engineering and construction jobs.

In reopening the mill and rehiring most of the work force, Johnson appears to have reached the status of town hero in the Park Falls area. Wilma Thier of the city’s Chamber of Commerce, and the wife of a mill employee, says the workers showed how they felt about Johnson when they hung Christmas lights on the second-story extension of the mill over Highway 182 with the message: “Thanks, Butch.”

“That’s great,” Byrne comments about the positive reception, “but it also involves a lot of stress. A lot of people are counting on us.” 

By John Hill

You can contact John Hill by e-mail at jhoythill@sbcglobal.net.