PAWcast: Thomas Nelson *04 on Saving a Wisconsin Paper Mill

Find more PAWcasts online here

Wisconsin’s Appleton Coated nearly became the next American paper mill to go under, even as state officials fought to bring in a massive new electronics plant, Foxconn, with public subsidies. But Appleton didn’t go under, thanks to a fight by the mill’s workers and the county executive, Thomas Nelson *04. Nelson’s book, One Day Stronger: How One Local Union Saved a Mill and What it means for American Manufacturing, details that victory and why it reinforces his belief in American labor unions.

Listen on Apple Podcasts • Google Podcasts • Spotify • Soundcloud

TRANSCRIPT

Image

Carrie Compton: Hi and welcome to the PAWcast, I’m Carrie Compton. This interview has personal significance to me, and there’s also a bit of serendipity that went into us bringing you this to you today. In January of 2020, I took an impromptu trip home to Wisconsin to visit my grandmother, who was in hospice. Instead of flying into my hometown of Green Bay, I wound up fly in about 30 minutes south, to Appleton, a town in Northeastern Wisconsin of about 75,000 located in Outagamie County. My father picked me up at around lunchtime, and we found our way to the closest restaurant for a famous Friday fish fry. We ended up in the tiny village of Combined Locks, the hometown of my guest today, Thomas Nelson, from the graduate class of 2004. My father and I fell into conversation with a regular sitting at the bar next to us. He told us a remarkable story. He had been a longtime employee of a nearby papermill called Appleton Coated. The mill fell on hard times and everyone was laid off. For his part, he remembers thinking he had no idea what he would do next: His only skills were in working a paper mill. Then, after about six months, the mill was reopened, and he was hired back for even more money. “Wow!” I remember saying. “That never happens!” Almost a year later, I received an email from Tom Nelson describing his book, called One Day Stronger: How One Local Union Saved a Mill and What It Means for American Manufacturing. This was the inside account, from Nelson, who is the Outagamie County commissioner. He had played an integral role in keeping the mill open. Nelson, who is among the Democratic candidates for the 2022 U.S. Senate primary, joins us today. He dicusses how he did it, the importance of labor-focused governance, and what it’s like for him as a Democrat in the Republican-heavy state of Wisconsin.  

CC: Tom, thank you very much for joining me today.

Thomas Nelson: Great to be on.

CC: The premise of the story you tell in your book will sound familiar to anyone listening. A longstanding symbol of industry, in this case a paper mill, fell on hard times, went into receivership, and was bought by a scrap-metal dealer. From the workers’ standpoint, at this point it must’ve felt like just another chapter in the long history of this country’s deindustrialization. But instead of rolling with that, you, as the county executive, helped them to avoid the inevitable. Talk about how you did that.

TN: Well, it’s a long story, (laughs) which is why I wrote the book, but that’s a great question. Unfortunately, it was a truncated timeline, and less than 30 days later, which is very unusual, they had the auction, and it went to a scrap dealer. The week before, I happened to be having lunch with the state’s top insolvency attorney, Tim Nixon, who tipped me off to this and said, “They’re probably going to go to an auction and be bought by a scrap dealer. But you can do something about this, you can object to the sale if it happens, if it goes to a scrap dealer, because you have standing, you’re the county executive, you have millions of dollars on the line for the local economy, and you have over 600 jobs on the line. You have standing to object.” The day of the auction, when this scrap dealer, Industrial Assets in California, prevailed in the auction, I got a call. And they said, “The sale happened, it’s going to a scrap dealer.” And so I wrote the objection. And one of the subplots through the book is what was happening at the state level with the governor and the Republican legislature with regards to the controversial Foxconn project, which we were selected through Scott Walker, who was sort of a good friend with Donald Trump, and it was going to go into southeast Wisconsin. And the catch was that the state had to put $3.5 billion on the line, in addition to other incentives. And the day that it was announced that Appleton Coated went into receivership, there was, at the top of fold of the Appleton Post Crescent, “Appleton Coated to go in Receivership.” But below the fold was “Assembly Approves $3.5 Billion for Foxconn” on the very, very same day. And so we knew that these were going to be two different stories, and they’re probably going to have two different outcomes. And it seemed like Foxconn was going to take off because it had the full backing of the governor, the president of the United States, the Republican legislature, and then we had little Appleton Coated. And there wasn’t an outcry from the state, and that really set things at that point. 

CC: You were the only elected official to be willing to get in there, roll up your sleeves, and help with this fight. Why don’t you think others cared about this? I mean this seems like a perfect cause for politicians left, right, and center to get behind. Why were you the only one?

TN: I think a couple things. People were resigned to this fate that the conventional wisdom was, paper was on the decline, and this was just one more mill — it was just a matter of time before it closed. And this in particular, because they made computer paper, magazine paper, and book paper. And we all know what direction that’s going. 

The second thing, it really wasn’t part of the governor’s program. He was going to focus on Foxconn, like, that was his thing. He also knew at the same time that there were more and more businesses that had openings that were on the state jobs site, and a lot of them were from northeast Wisconsin, and he just thought, paper job equals, you know, a cashier or something like that. But he didn’t understand a couple things, which is these are good-paying jobs, these are generational jobs, because you had sons, dads, and grandfathers sometimes on the same progression line, as they moved up from a low-end job to the high-end job. So these were good-paying jobs, plus they had history, it was around since 1889. 

I also think looking back, I think a lot of it had to do with, this is in Outagamie County, and Outagamie County itself, we didn’t get much attention at all, and so we have not gotten a lot of attention throughout — Scott Walker’s tenure had been six-and-a-half years, and local Republican legislators just went along with it, were not helpful, and you saw that with Foxconn. So Racine received a $3.5 billion potential outlay, and we had nothing. A lot of it had to do with politics. So there was politics, there was conventional wisdom, and people just weren’t up for the fight. And I think those were really the big reasons. 

And I think if anybody ever comes back and says, “Oh, we tried helping, this and that.” (laughs) I mean this a very public process. They had court drama where they went through every single phase of the auction and why it went to the scrap dealer, so this is very public. Plus, there was a lot of coverage, I mean next to the Green Bay Packers, the Appleton Coated closure got a lot of attention, at least in local media. We were on our own. I mean even when we prevailed on the judge to give Appleton Coated a second chance, we were still on our own.

CC: Right. I mentioned to my brother, who is one of your constituents, by the way, he lives in Kaukauna — he said, “Oh, I went to the reopening, and Walker was there. I’m pretty sure he played a pretty big part in everything.” (laughter)

TN: I mean you have — I mean the chutzpah, I mean he had nothing to do with this. And then he shows up a year later and takes credit. And again, it was a slap in the face because they must have given the smallest award for an incentive for a manufacturing company like Appleton Coated, just over a $1 million. Let’s put in context again, $1 million versus $3.5 billion. But they just didn’t care. But he also wanted to have just some credit that he could talk about, especially since he was three months away from re-election, and he’d been down in the polls.   

CC: Yeah. So let’s wrap up how the mill’s saga sort of got resolved. You leveraged a relatively obscure legal strategy to object to the sale. You had a pretty understanding, diligent judge who tried to find a way to make the scrap dealer continue to run the mill until a buyer could be found, correct?

TN: Well, in the courtroom drama, you can see very clearly that the judge was working very, very hard to try to find a solution. Normally, a receivership case is open and shut within 15 minutes. But over time, there was some case law that was developed that allowed someone with standing to be able to object. We made a very, very good case. We found we made a clear case that we had a new business model that was going to be successful, so that was a big part. If they tried to run it as a mill, is it going to succeed, or are we giving false hope to these 620 workers? 

They were on the precipice of changing from white grades to brown grades — packaging — and of course Amazon was going in one direction, which has just gone to the stratosphere because of COVID. I mean right now, the vast majority of commerce, the way that Amazon works, what is Amazon? Amazon is a cardboard package on your front stoop. Who’s going to make the cardboard? Appleton Coated, Green Bay Packaging. So the timing was perfect to show that they had proof of concept that they could apply this brand-new business model and product. 

OK, but so what happened with the judge: There was still room for the scrap dealer to run out the clock because the judge was going to give 90 days, three months, the benefit of the doubt for this to work. The scrap dealer could easily have run out the clock; he could easily have not given the resources to the mill workers and the owner-managers at the time to do that and saying all right, and then scrap it. But there was a relationship with the acting president who saw that business model and kind of ran interference between Steve Mattis, who was the owner of Industrial Assets, who was just pissed off that he had to go through this anyhow. His job was to go in, scrap it, take the money, and run; he wasn’t running something. And so all these things happened, they had the first machine went on, the second machine went on, and the third machine went on, which is the capacity for Appleton Coated. All of that was taken care of by the end of March, and by the end of March, the union even had a contract. And part of the contract had a profit-sharing provision and by, I think, quarter two or quarter three, profit-sharing was kicking in. Which meant what? They were already earning a profit, March or April, they’re earning a profit, and that was less than a year after it went into receivership. 

So it’s only gone in one direction, it’s alive and well. They only brought back half of the workforce, unfortunately, but of course 300 is greater than zero, and they’re still hiring. And they sold the mill in 2019, so they only had the mill for two-and-a-half years, they sold it, and by some estimates, they cleared like $70 or $80 million. They bought it for about $20 million, and they sold it in the low nine figures, over $100 million. I mean how fair is this? I mean you have this social contract. One of the social contracts is, you take a high risk, you get a high reward. They took a high risk by putting this money in, arguing this case, time, money, resources, trying to keep hope for the workers. And how much of that sale did they get? Nothing. And if it weren’t for the steelworkers convincing a judge, not Industrial Assets, that this thing can work, he would never have made $80 million. 

It’s patently unfair that the people that positioned them to clear $80 million did not get a nickel of it. And that is the main argument for why we should move to a tripartite model of labor, local business, and local government coming together, saving those jobs, and keeping the economy alive and well. And then getting a piece of the pie if it becomes profitable, which it did in Appleton Coated case.

CC: I want to talk about Foxconn. Where did it come from? What did it entail? What has it become after all these years?

TN: I mean in one word, it came down to politics. It happened in 2017, which was a year before the election year, and Scott Walker was up for re-election, and he was going to have a really tough re-election. Now he ran against Donald Trump in the primary, but that campaign lasted like, I don’t know, a hot minute, 70 days, whatever it was. And they were selected, we were selected as this is the site where Foxconn was going to have the base for their North American operations. And this is a big, big, big company, I think their revenue is like a $1 trillion, it’s just, I mean, wow. 

And so they were able to land this. It had a lot to do with politics because it was — not only was it in Wisconsin, but it was also in Paul Ryan’s congressional district, speaker of the Congress. And it was actually, you could drop a pin — it was also in the middle of the speaker of the State Assembly’s district. And then Reince Priebus, who was the RNC chairman, who’s from Kenosha, it was next door. So I mean this was not a coincidence; this was politics, and that’s why. And Walker was able to put — was willing to put $3.5 billion on the line, which of course went up to $4 billion.

CC: What has it become?

TN: Yeah, I mean it’s a shadow of its former self. Governor Evers was able to knock down the price tag to, I think, $2.2 or $2.3 billion, so he renegotiated the contract. And that was a huge concern, is that it wasn’t a piece of legislation only; it was a contract. And whether it’s a Republican administration, a Democratic administration, the state, because it’s a contract, was going to be on the hook. But because Foxconn failed so miserably, and because they weren’t meeting these benchmarks, because they weren’t even close to meeting their promises, they really had no choice but to come to the table and hammer out an option. So the contract, as it stands right now, of course, is a lot better than what it was negotiated under Scott Walker. 

So that’s where things stand now, but you know, I mean it continues to be a blemish on our state’s reputation. And because it’s an example of wasted state resources, wasted attention, and also exhibit A of how not to do economic development. The problem with economic development — and I say it, in scare quotes, “economic development,” because it really isn’t. The problem we have in the country is that corporations pit states and cities against one another to extract as many concessions in the way of tax dollars, tax credits, and so forth, and it’s a race to the bottom. And there were other sites besides Wisconsin; I’m not sure how real of an option it was. I think at the time, it was the largest state subsidy package in the country’s history, I think, I mean it was a huge, huge amount. And we went for it, and now the administration that drove that is long gone, and we are dealing with the ramifications of that deal.

CC: How many people has it come to employ?

TN: I think it’s about 300, I mean if that.

CC: And they had promised 10,000.

TN: Yes, I mean the local state representative, Greta Neubauer, she had told me that Foxconn is really not that super popular in Racine, and she said a lot of the workers there are from elsewhere. Part of that deal was also to hire locally, and now most of them — a lot of those workers are not from the area. And this goes back — and this was just laughable. (laughs) So they were doing — they are inking the Foxconn deal, and they’re saying it’s going to bring 10,000 jobs to Wisconsin, they’re going to be Wisconsin jobs. What does he do? He spends like $7 million on an advertising campaign in Chicago to get Chicagoans to come to Wisconsin and work, either at Foxconn or wherever it might be. So $7 million was spent. I mean if this was a story in some fiction book, we’d be laughing and laughing and laughing, but this was real (laughs), and we had to deal with this, and it was just not a consistent story. It was just, I mean the hits just kept coming.

CC: Also in the backdrop of this time period was the corporate tax cuts that were approved on the federal level. Talk about how you saw that play out with a different paper manufacturer, Kimberly-Clark, which has a big stake in Wisconsin.

TN: So yeah, this is the birthplace of Kimberly-Clark. In fact, the Kimberly brothers started one of the first mills locally. And they originally came here because Wisconsin was a wheat state, and so what would become the paper mills, a lot of them were flour mills. But the skill set for flour mills and paper mills were very similar, so we had this built-in workforce to do this. And the Kimberlys came to the area for that purpose, but stayed to start and run paper mills. And there was a lot of innovation that came from that company, which is still here, although they moved the headquarters to Dallas back in 1985. 

But Kimberly-Clark was a very innovative company, they were the one that developed Cellucotton, which was used for dressing during World War I. And they had decided, “We’re moving these two plants, we’re going to shut them down, and go someplace else,” which was a huge slap in the face because this is home, they were leaving their hometown. And they had said, “Don’t give us an incentive package, this is a business decision, we’re leaving.” And so Walker had to do something now. And they said, “Okay, let’s do Foxconn for Kimberly-Clark.” And so they’re digging an even deeper hole because Foxconn, at this time, people are increasingly skeptical that this is going to work out. And branding? You know, calling this another Fox-– do you really think that you’re going to get much support from the legislature? Of course not, especially since he had promised that there would not be another Foxconn-like legislation. And there they are, two months later, passing Foxconn for Kimberly-Clark, that got to the state senate, that stalled out. And again, Walker sat down and hammered out a contract, and kept it going. OK, that’s good. But there also was a state subsidy, though, that went along that was, of course, a lot smaller than Foxconn. 

And another thing too, though, is the workers made concessions, so the workers at Appleton Coated, they used their resources to object and kept it going. And in the Kimberly-Clark example, they used concessions, but the final product, the final contract, did not have those same terms. The concessions that the workers made at the beginning during Foxconn for Kimberly-Clark stayed the same, and the state commitment went down. But about the time, February of 2018, so this was like two weeks after the announcement that they were going to close the Henry Street and Cold Spring facilities, sure enough, we find out that they gave like a half billion dollars in stock buybacks to shareholders. And the only way that they were able to do that, the overall restructuring, was from the Trump tax cuts. So again, the hits just kept coming and coming. 

CC: I want to talk about Wisconsin politics. Today, Wisconsin has a split government, a Republican legislature, and a Democratic governor. It has also got a highly gerrymandered legislative map. Talk about that. That also works in tandem with the restrictive voter-ID law as well.

TN: Yes, and so that’s a great question. It really also puts this all in context with respect to the decisionmakers at the state level. And you’re right, the state is split, a purple state, but not really. Statewide elections, they get decided plus or minus 30,000 or 40,000 votes, 1 or 2 percentage points, tops. Yet in the legislature, you have almost supermajorities of Republicans. You have almost two-thirds in the state assembly, and you have almost two-thirds in the state senate. In fact, one of the biggest campaigns in 2020 was to save the veto. So they wanted to stop Republicans from getting a supermajority, and that has everything to do with gerrymandering. Wisconsin is one of the most severely gerrymandered states in the country, and the results speak for themselves. And then you have, along with that, you also had these very restrictive voting-access laws. It’s really bad in Wisconsin. 

Governor Evers has done a terrific job, considering everything he’s had to deal with. He has been able to have his vetoes sustained. He has had to — the Republican legislature has fought him at every single turn during COVID. I mean, you know, the number, the spread of the virus, deaths, that they are responsible for because they kept on challenging the governor’s orders, the health secretary’s orders. And they’re just trying to protect the health, safety, and lives of their constituents, they struck down the mask order a couple of weeks ago. Outagamie County has a mask order in place, one of a handful of counties that do so because we take COVID seriously.

CC: How do you feel as a Democrat in Wisconsin today?

TN: I feel that we are behind enemy lines, is how you feel. I mean you’re going up against a lot of political inertia from the Republican Party. I mean they have mastered legislative politics, and it’s very, very, very difficult to go up and win. It’s pretty rare that that happens. So I’m running for the U.S. Senate, and thankfully they cannot gerrymander or redistrict states. So we at least have a (laughs) shot at that. But it’s very difficult. We don’t have a lot of elected Democratic legislators, we don’t have a deep bench, so we don’t have a lot of people at the ready to run for higher office. We also don’t have a lot of staff or a lot of know-how, institutional knowledge left in the capitol because they’ve been in charge now for 10 years. So you’re going up against some pretty well-funded and well-oiled machinery.

CC: How do you stay motivated?

TN: Well, I think the way that you stay motivated is to understand that the office that you hold, what you’re trying to do for the people you represent, it’s not about you. It’s not about you. It is about, in my case, the people of Outagamie County and things that I can do to make this a safe, healthy, and productive community providing good-paying jobs, having a high quality of life. And not a day goes back where you ask yourself, you know, what is keeping me motivated, why am I staying in this position? It’s because of the people that you represent and the higher ideals and the larger goals that you set forth to accomplish when you first nabbed the seat.

CC: You’re running for Ron Johnson’s U.S. Senate seat now. What would Wisconsin look like under leadership of you and Tammy Baldwin as sitting senators? What would be some of your priorities?

TN: You know, Ron Johnson had championed a very cynical economic agenda. He championed outsourcing — I mean incredibly, he said outsourcing is a good thing. He talked about creative destruction, that that was a good thing too, people losing jobs, good-paying jobs, that that was a good thing. But I think Wisconsin is in a unique position. The senator from Wisconsin is in a unique position to help us return to our progressive roots. And one thing I am particularly interested in — not surprising — is the labor movement. And I’ve seen firsthand the potential that a revitalized labor movement has with respect not just for good-paying jobs, and as they affect union jobs, but also communities, and how you can harness the resources of the labor movement to improve the lives in all communities. And so that’s going to be a top, top priority of mine. 

I think, restructuring the tax code, which you see President Biden doing, a green new deal which I’m a very big supporter of. Wisconsin, which is home to the modern-day environmental movement, Gaylord Nelson, and also being one of the top manufacturing states, and one of, you know — still a strong union state with a good culture, with a very strong culture. I think that that is something that’s going to have a positive impact on people in Wisconsin, but also around the country. And a side benefit of that is to our reputation of being a progressive state. It would be diametrically opposite the kind of leadership you’re getting from Senator Johnson right now. 

I mean my calling card has been economics. My dad, a Lutheran pastor, always told me like, “Look, if you’ve missed the economic argument, you have missed the debate altogether.” So what I try to do — and I’ve knocked on 70,000 doors, and so I had this rolling focus group. And part of it is because Democrats don’t articulate this message well. Democrats are challenged with trying to articulate a very complex job because we’re the ones that believe, yeah, the public sector is important. And part of the policies that empower unions, that ensure that people get their fair share, is a result of progressive laws, the state law, and also at the state level, and also the federal level. 

So the Republican — by comparison, the Republican message is, you know, “Lower taxes, less government. And what are Democrats doing anyhow? They spend money, they’re obsessed with this social issue, you know, gay marriage, and you know, that’s just not my thing, and they’re going to take away my guns.” And even though I don’t see that issue as pronounced as it once was, we’ve not been able to get in there and have a coherent message, or be able to point to concrete solutions. And now we have a really good opportunity with the round of stimulus, this last — what was it, the American Families Act — that not a single Republican signed up. So if this thing works out well, they’re not going to be able to take credit, and we can say this is the Democratic difference. 

CC: That’s the end of my questions. Thank you so much for joining me, Tom.

TN: Good to be on, this was good, I enjoyed it. Thanks for your time.

CC: Thanks so much for listening to this month’s PAWcast. If you’d like to hear other episodes, please go to paw.princeton.edu or subscribe on Apple iTunes. Until next time.