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Milling the future: Cloquet mill confident it lines up with corporate owner's vision

Mike Schultz, managing director of Sappi's Cloquet mill, watches as a large sheet of pulp rolls down the line. The pulp is derived from dissolved wood fiber from wood chips. Bob King / rking@duluthnews.com1 / 10
Mike Schultz, managing director of Sappi's Cloquet mill, gathers a handful of freshly-cut chips of aspen wood that will be turned into pulp at Sappi in Cloquet on Thursday afternoon. Bob King / rking@duluthnews.com2 / 10
Jenny Maki, roll handler, uses a hand controller to move rolls of freshly made paper from process to process at Sappi Thursday. Bob King / rking@duluthnews.com3 / 10
Dennis Roy (seated at left), woodroom operator, monitors the machines that feed the logs (lower right) into the chipper at Sappi in Cloquet. Bob King / rking@duluthnews.com4 / 10
Aspen logs go for a wild ride through the debarker at Sappi in Cloquet. After debarking, the logs are washed and then sent through the chipper. Bob King / rking@duluthnews.com5 / 10
Timber cranes load mill logs at Sappi in Cloquet on Thursday afternoon. Bob King / rking@duluthnews.com6 / 10
Bales of pulp at Sappi wait in line to be bound and packed for shipment to Indonesia, where the material will be used to make clothing. Bob King / rking@duluthnews.com7 / 10
Sappi's towering pulp and paper mill is a key part of Cloquet's skyline and economy. Bob King / rking@duluthnews.com8 / 10
This aerial photo taken this past spring shows the Sappi pulp and paper mill situated on the St. Louis River in Cloquet. Bob King / rking@duluthnews.com9 / 10
Pulp from Sappi can be converted into a soft, cotton-like fiber that can then be turned into thread to make clothing. Bob King / rking@duluthnews.com10 / 10

CLOQUET — When local jobs are in the hands of global decision makers, it's nice to be able to show more than the status quo.

"It just so happens the Cloquet mill matches up perfectly with Sappi's vision, which is unique across all their mills," said local mill manager Mike Schultz.

With continued capital investment, diversified and developing product offerings and earnings on the rise, Cloquet's pulp and paper mill is viable if not downright vibrant.

"That says we are in a growth mode while most of our competitors are looking to shrink," Schultz said.

Instead of riding high on any optimism, however, he sees the forest for the trees and knows his work is a day-to-day endeavor in 2017. Layoffs, idlings and closures have defined the industry so far this century, as paper manufacturing jobs nationwide have dropped 40 percent since 2000, according to the Bureau of Labor Statistics.

"Of course the paper industry in general has not been in its glory days of late ... so we continue to work on ways to stay relevant and working on ways to reinvent ourselves," Schultz said.

While more than 300 local jobs have been eliminated since Sappi took over the mill in 2002, output is up 50 percent since then, Schultz said. That should help the roughly 700 employees who clock in at 2201 Ave. B sleep soundly when they clock out.

Top-down

The Sappi Ltd. board of directors came to Cloquet this spring for a meeting — unusual for a group of managers who hail from Britain, The Netherlands, South Africa and elsewhere, but a great opportunity for the mill.

"They typically don't meet at mill sites, but they came here in May, and we were able to make a really good impression on them," Schultz said. "Between that and our safety record, it put us on the map."

Sappi was founded as South African Pulp and Paper Industries in 1936 and today has 14 mills across Europe, South Africa and in Cloquet and Maine.

Though the public company recently posted a neat quarterly profit of $58 million and has seen its share price rise in recent years, it is still holding more than $1.3 billion in debt. A weaker dollar or stronger euro will play a big role in that coming down.

All of this weighs on Schultz as he competes for continued investment and moves to make Cloquet stand out.

Following May's board meeting it was clear the 119-year-old mill is positioned to meet Sappi's priorities — 25 percent graphic paper, 25 percent packaging and specialty, 40 percent specialized cellulose and 10 percent new business opportunities. Sappi research is currently fueling another potential Cloquet mill product — biorefining, which can produce sugars like xylitol.

That all helps keep the vote of confidence called capital expenditures flowing from the top down to Minnesota.

"We went after money to expand our pulp mill, and that's been well-received," Schultz said. "Right now we have a new head box coming this fall for our No. 12 paper machine."

A beacon

Mini-mountains of Minnesota maple and aspen greeted the stream of trucks that added to their ranks as the cool summer sun hung in the air last week.

Soon enough, those timbers will glossily reflect the sun as magazines and pamphlets, or draw the eye as retail displays and clothing.

Some may even turn into gift cards.

"If you think about going to Walgreens or Walmart and seeing the racks and racks of gift card — we've always made the carrier, we probably have the lion's share of that business," Schultz said. "So we thought why not also make the card out of paper."

Schultz handed over a business card used as a sample — after some refinement, it can in fact survive a trip through the washing machine in a pants pocket.

"It didn't get there right away," he said with a laugh.

Before reaching any end-user, the logs stacked along the St. Louis River will go through the controlled chaos of the debarker then chipped before going through the chemicals, water and heat needed to turn it into pulp.

Some of that will be sold as dissolvable wood pulp, like the batch that was getting wrapped to head to Indonesia to turn into a textile. The mill's paper output, on the other hand, is high-grade and customizable, meant for commercial users around the world.

Walking through the massive halls that house the many machines that run all day every day, it's hard to think Schultz is serious when he calls the Cloquet mill small in comparison to many in the world.

Driving through the 200-acre site in mill manager's silver Chevy, he notes the landmark that the Sappi mill represents — as a beacon for the future of the paper industry or even just for those passing by.

"People know us best from the tower they see from the Interstate," Schultz said. "That might just be the tallest building north of the Twin Cities."

Brooks Johnson

Brooks is an investigative/enterprise reporter and business columnist at the Duluth News Tribune.

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