NEWS BLOG (WSAU) The nerve of that hedge fund full of millionaires. Starboard Value LLC might as well have Gordon Gekko as its CEO. At the upcoming Wausau Paper shareholders meeting, you can almost imagine someone grabbing the microphone and telling the assembled audience that “greed is good.”

(Ironically, in Wall Street the fictional company that Gekko launched a proxy fight against was also a paper company - Teldar.)

We think of Wausau Paper as our company. We’re part of their name. Some of their mills have been operated in Central Wisconsin for a century. Some people have worked there for generations.

But time spent in a company’s employ doesn’t make you an owner. It’s not your company. It’s Starboard LLC’s company. They own a large chunk of stock... enough to make the board of directors sing their tune.

The sad but true facts are this: the Brokaw mill was a money-loser. Management said years earlier that the economics of that property were poor. Now its been closed down. The types of paper made at the mills in Rhinelander, Mosinee, and Brainerd are also less profitable and are also money losers. So stock-holders are asking a completely rational question to company management, “what are you doing to stop the losses?” The answer cannot be to keep operating low-profit or no-profit facilities just because hundreds of people work there. Tissue paper, which is the most-profitable part of Wausau Paper, needs to be focused on and expanded. Product lines that are losers need to be changed, sold off, or dropped.

People say we need a community response to save mill jobs. Wrong. We need a community response to return these mills to profitability. Without that, the jobs therein will always be at risk.

What if the community came to Wausau Paper and asked what paper products could be produced here at a profit? Why should tissue paper be made in Kentucky instead of Mosinee? Would communities be willing to forego property taxes on the mills while they’re being converted to a new product line? Would workers agree to temporary layoffs during the conversion? Would the state step up with low interest loans for modernized equipment and retooling? Is there willingness for work rules, pay, and benefits be adjusted if the margins are tighter and the market is more competitive? All of that involves sacrifice: from employees, from the communities that host these plants, from the taxpayers. I’m not sure people are willing to make those sacrifices. I’d heard management-labor relations at the mills are poor, and salaries and other expenses are bloated. That’s led us to where we are now.

Don’t be so certain that a magic buyer can be found for these mills, and that they can suddenly succeed where Wausau Paper failed. And don’t expect Starboard LLC to stand by while their investment loses money.

Chris Conley
1/16/13