Badger Paper Mills, Inc.

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Badger Paper Mills, Inc.

200 West Front Street
P.O. Box 149
Peshtigo, Wisconsin 54157
U.S.A.
(715) 582-4551
Fax: (715) 582-4853

Public Company
Incorporated: 1929
Employees: 435
Sales: $73.6 million (1994)
Stock Exchanges: NASDAQ
SICs: 2621 Paper Mills

Badger Paper Mills, Inc. is a leading producer of plain, printed, and waxed papers for the flexible packaging industry. Badger makes about two-thirds of the government butter wrap used in the United States and makes the specialty wrapping paper for many well-known products, including Tootsie Rolls, Dentyne gum, Nestle’s candies, and Bit-O-Honey candy bars. Badger also produces soap wrappers, other candy wrappers, gum wrap, meat packaging, and fast food sandwich packaging. The company has been manufacturing bread wrapping since the 1930s. Badger also produces computer paper, copier paper and other writing and printing papers, marketed under the brand names Ta-Non-Ka, Copyrite, BPM, Envirographic, and Northern Brights. Badger Paper Mills additionally specializes in custom papers developed to suit such unique customer needs as odd sizes and colors, specially perforated or punched paper, or other custom designs. The company sells its writing papers through wholesale paper merchants and operates a direct sales force to market its packaging and specialty papers. The company manages about 17,000 acres of forest land and produces about 60 percent of its own pulp. Badger also operates a subsidiary, Plas-Techs, Inc. in Oconto Falls, Wisconsin, to print and process plastic and paper substrates.

Badger Paper Mills, Inc. was founded in 1929 by a group of investors who had taken over a failing mill called the Peshtigo Paper Company. The town of Peshtigo, Wisconsin, was the site of one of the nation’s most horrific forest fires in 1871. Galeforce winds whipped flames through woods covering six counties of northeastern Wisconsin, and more than 800 people were killed in the fire. Overshadowed by the Great Chicago Fire, which occurred at the same time, the considerably more lethal Peshtigo fire left the town completely ruined. It was subsequently rebuilt, and because of its proximity to timberland and its ample waterway, the Peshtigo river, the area served as home to several paper mills. The Peshtigo Fibre Company was built in 1917, and the Peshtigo Pulp and Paper Company was built in 1918. These two were combined into the Peshtigo Paper Company in 1922, but Peshtigo Paper never did well. It was operating at only half capacity most of the time, and in November 1928, the company went bankrupt and shut down. The town of Peshtigo too was languishing. Unemployment was high, and homes were being sold for only a fraction of their value.

The failing mill was taken over in January 1929, by a group of seven entrepreneurs from Menasha, Wisconsin, led by Edwin A. Meyer. They purchased Peshtigo Paper for $250,000 and renamed the company Badger Paper Mills. Meyer and his group had expertise in the paper industry, and they believed they could revive the old plant. Meyer himself had been in the paper business for twenty years when he bought Peshtigo, and he brought with him investors experienced in every aspect of running a paper mill. When they arrived in Peshtigo. they found their newly acquired property in less than prime condition. Several carloads of obsolete equipment had to be thrown out. The tunnel crossing the river between the sulphite mill on the east side of the river and the paper mill on the west side needed to be reinforced, and up-to-date equipment had to be installed. However, the group from Menasha pooled their skills and came up with a viable plan to return the company to profitability.

Several members of the group had backgrounds in paper manufacturing equipment, and they oversaw the installation of new machinery. Badger decided to make waxed paper, and a wax machine and rewinder were installed immediately. In 1930, what had been the old boiler house was remade into the wax department, and the first wax paper printing press was installed. The company’s Fourdrinier paper machine was redesigned and rebuilt in 1931, and a second printing press was purchased in 1935. Badger improved its facilities year by year throughout the 1930s. Despite the nationwide depression that had begun in the year Badger was founded, the company prospered. Badger was able to turn a profit in its very first year.

Badger’s success was due in part to the quality products its new equipment put out, but the company was able to find buyers for its products largely because its new owners had considerable marketing skill. From the beginning, the company set up a Sales and Advertising department, which was headed by Clarence Hoeper. In addition, company president Edwin Meyer had a wide acquaintance with the heads of paper distributing companies in Wisconsin and across the country. Meyer, Hoeper, and their associates traveled tirelessly to attract buyers for Badger paper products. Commercial bread baking had become big business beginning in the 1920s, when the development of bread wrapping and slicing machines made large-scale distribution possible. Badger Paper Mills marketed its waxed paper bread wrapper to this growing industry. Because Badger’s work force was unionized, the company was allowed to print the “union label” on its wrapping. This apparently gave Badger’s product a marketing edge. Bread wrap remained one of the company’s leading products for over fifty years.

Badger’s new owners also installed a cost accounting control system for the new corporation. Sales grew as new orders came in. The company was able to continue to make improvements to its facilities, constructing a new warehouse in 1938 and digging new wells in 1941 and 1948. Badger introduced a waxed paper called FRESHrap and installed special automatic equipment for this product in 1949 and 1950.

Over the ensuing years, Badger packaging papers were used for such nationally distributed brand foods as Red Star yeast, Pepperidge Farm bread, Pillsbury Space Food Sticks, Dream Whip, Pop Tarts, Hamburger Helper, Hall’s cough drops, Sugar Daddy candy, Tootsie Pops, and myriad others. Fast food restaurants also used Badger papers to wrap and package their foods. Burger King used Badger paper to wrap its burgers, and Arby’s purchased Badger pouch containers for its trench fries. The company also sold many brands of imprinted butter wrap. In its fine paper division, Badger made several grades of copier paper, printing and writing paper, and mimeo paper.

Badger’s customers were unusually loyal, and the company made a profit every year for its first fifty years. Labor relations were stable, and the company also had a good relationship with the town of Peshtigo, supplying the town’s water until the 1960s. Badger completely rebuilt its Fourdrinier machine, which produced its fine grade papers, in 1964, then again in 1985. Major equipment improvements kept Badger’s products competitive, and efficient marketing too paid off. Badger cultivated niche markets, offering special size and color paper, for example. Because Badger procured most of its pulp from its own trees, the company exercised a high degree of control over its product through each step of the manufacturing process. Badger was able to adapt quickly to customer needs, and could add or drop products with more flexibility than some of its larger competitors.

Badger decided to enter the fanfold computer paper market in 1983. Within a few years, its SHARPrint brand computer paper comprised 20 percent of its production. Badger’s sales rose sharply in the 1980s, from $48 million in 1984 to over $72 million in 1988. The company also made a significant overhaul of its plant in the 1980s, prompted in part by air pollution problems identified by the Wisconsin Department of Natural Resources (DNR). Inspectors from the DNR discovered emergency levels of sulphur dioxide downwind from Badger’s wood pulp digesters in August 1983. The emissions were the highest ever recorded in Wisconsin at the time, and eventually the DNR filed suit against the company. Through a loan from the city of Peshtigo and an industrial development bond issue, Badger raised $14.5 million for new construction. Twelve million dollars went to rebuild its Fourdrinier machine. The company also installed a new wet scrubber system and a continuous computer monitor to take care of the sulphur dioxide emission problem, at a cost of close to $1 million.

Sales in 1990 hit a record high of over $76 million. Badger expanded by acquiring a subsidiary, Plas-Techs, Inc., in 1991. Plas-Techs, located in Oconto Falls, Wisconsin, provided additional printing capabilities for Badger’s flexible packaging papers. This market continued to improve for Badger. Badger had long made specialty papers for the fast food industry. Environmental concerns turned more and more of these companies away from polystyrene containers, to paper or paper laminate packaging, and Badger benefitted from this trend. Environmental concerns also made recycled papers increasingly popular, and Badger introduced a new line of recycled printing and writing papers under the Envirographic brand label.

The company made another acquisition in 1992, buying the Howard Paper Mill in Dayton, Ohio. The Howard Mill was able to produce higher grade printing and writing papers than Badger’s Peshtigo plant. Badger intended to develop niche markets for high-grade papers, and the company designed more than 70 new products at the Dayton plant in the year following the acquisition. None of this paid off, however. Poor market conditions and high costs kept the Howard Mill from profitability, and Badger sold it off again in 1993. Badger continued to look for niche markets. It began operating a computerized color control system that allowed Badger to produce as many as 90 different colors, according to customer specifications. With this new technology in place, Badger was able to attract new customers and increase its share of the custom color paper market. Nevertheless, a depressed market in 1993 held down the company’s profits and led to a loss at year-end of over $4 million.

The paper industry experienced erratic changes in 1994. The cost of paper fiber increased 90 percent over the year, though the price of standard uncoated free-sheet paper remained extremely depressed. Badger’s packaging paper division had strong sales, but the company ended 1994 with another loss of net earnings, this time of just over $2.5 million. In August 1994, Badger sold its SHARPrint computer papers product line to an Illinois company, CST Office Products. Though computer papers had made up a large proportion of the company’s sales in the 1980s, by 1994 Badger was refocused on its principal products, packaging and printing grade papers. By the end of 1994, the industry depression seemed to be ending, and demand for paper was on the rise again. Badger expected improved business conditions to help return the company to profitability. The company instituted an early retirement program to try to curb overstaffing and made improvements to various manufacturing processes to increase efficiency and reduce costs. Badger also made changes and improvements to some of its waste processing facilities. It redirected the waste water effluents from its mills from a settling lagoon into the city of Peshtigo waste water treatment facility. The company jointly operated this treatment facility with the city. The redirection actually resulted in less release of waste water, and Badger made plans to close its lagoon, as well as a landfill, in compliance with Department of Natural Resources regulations.