Barry Adams/Wisconsin State Journal via AP
The Appleton Coated plant in Combined Locks, Wisconsin, pictured in February 2018
There is usually no reason for the campaign book. It’s a bundle of homespun biographical sketches, vague descriptions of policy platforms, and poll-tested appeals to American values, often written by a mid-level speechwriter and dashed off quickly as a peg for media appearances. The number of buyers is low and the number of readers probably in the single digits. It gives printers something to do; that’s about the best that can be said.
Tom Nelson (Tom Williams/CQ Roll Call via AP Images)
But Tom Nelson’s One Day Stronger is different. Nelson, the executive of Outagamie County in the state’s northeast corner, is running for U.S. Senate in Wisconsin, seeking the seat held by two-term Republican Ron Johnson (who may or may not run) and pursued by a handful of mostly self-funded candidates in the Democratic primary. But for my personal career prospects, I’m glad Nelson is pursuing politics and will sidestep his true calling as a journalist. One Day Stronger is a deeply reported business narrative about a paper mill in Nelson’s area, saved from closure through its union’s clever use of an obscure receivership statute. This is a riveting book about the state of corporate America today and one way out of the mess.
I knew very little about the paper business coming into the book, but the dynamics at work in the saga of Appleton Coated, a plant established in 1890 in the village of Combined Locks, are not unlike the situation throughout our economy, with financiers and monopolists all jousting for power and the little guy bearing the costs.
Paper mill revenues are volatile, and in 2014 Appleton Coated was forced into a high-interest loan with large regional bank PNC. A few years later, Verso, a producer that controls over 50 percent of the market for white-grade paper, massively underpriced its product in an overt effort to drive Appleton Coated out of the market. PNC refused to renew the line of credit to the mill, instead hand-picking a consultant with a predetermined mindset to auction off the company. It turned out that PNC had some ulterior motives; it had “hundreds of millions” of dollars invested in Verso, and Nelson uncovers in his later research that Verso pressured PNC to call the note of its chief rival. After Appleton Coated was put into receivership at PNC’s demand, Verso stock jumped fourfold.
It looked like a typical case of consolidation and financialization gutting American industry. But then Nelson was told, right after the receivership announcement, about Chapter 128 of Wisconsin’s receivership law. This allowed anyone with standing, including employees or elected officials, to object to a sale. When the receiver awarded the mill at auction to Steve Mattes, a scrap dealer who very explicitly planned to sell it off for parts, Nelson and the United Steelworkers (USW), the parent international of the plant’s union, put Chapter 128 into action. And in an amazing courtroom scene, they convinced a right-wing judge that the plant had both economic viability and value as a pillar of the community. Armed with a second bidder, the judge forced Mattes to hold off on liquidation and give the mill a grace period to succeed. And amazingly, it did, with a labor-management approach that moved the company into thriving paper sectors and eventually restored all of the plant’s machines, saving hundreds of jobs.
It’s an amazing story and an object lesson about the value of unions as a counterweight to modern, predatory capitalism. Nelson conducted over 130 hours of interviews to get the story right, and between that and his personal involvement in saving the mill, he spins a narrative that combines a short history of the paper industry and organized labor with the case study of Appleton Coated. The timing of the mill’s struggle for survival, in parallel with Wisconsin’s giveaway of billions of dollars to Foxconn for a facility that still hasn’t produced a job, offers two different paths for economic development and industrial policy. Nelson writes a compelling account in favor of his path.
I talked to Nelson this week about the book and what it signifies. An edited transcript follows.
David Dayen: I’ve read and been bored by a lot of campaign books, but this is really a work of journalism. Why did you want to present this case study in this format?
Tom Nelson: There’s no journalism left up here. No one really saw the story. I remember in the courtroom, I was sitting next to [USW international vice president] Jon Geneen. Geneen’s like, this could be a movie. There’s a point where [Judge Gregory B.] Gill said [dramatically], “Wait, there was a buyer who could run the mill?”
I started out January of 2019. I was sitting at the dining room table, and I just started typing. I typed what would become a little of the introduction and the conclusion. It was less than a year since the third machine [at the Appleton Coated plant] went on. I’d befriended Larry Tye, he wrote the book about Joe McCarthy. I said, “Hey, I want to write this book.” I thought he’d say, “You’re a politician.” But he said it was great. He said, you need an editor. I interviewed Hilary Hinzmann, I made a cold-call pitch. He said, “You’re not a writer but I see a story.”
Chapter 128 of Wisconsin’s receivership statute is the kind of obscure but critical measure available in existing law to act in the public interest. Do you think we need more creativity in finding solutions inside the statutes of the past?
Yes, and that’s the whole point of the book. I wanted to tell the story of what really happened in the Appleton Coated fight. It took me 70 interviews and two banker boxes of documents. I did it from the perspective of the participant/observer. What I think makes this book compelling or hopeful for the labor movement is that it’s a great ending.
We need to have more creativity. That’s been pretty much my signature approach as a public servant. That goes back to 2005, 2006. I was a Democrat elected in the most Republican legislative district in the state. The [Assembly] Speaker said to me, “Your bills will never go to committee, they will never get a hearing, they will never get voted on.” I had to find different ways to advance issues. I had petitions to help save senior care. I took a group to Washington to lobby the Centers for Medicare and Medicaid Services. You need to have tradecraft, stagecraft. The message of this story is that we need to find different ways than the legislative process.
You’re really telling a story about the corrosive nature of financial capitalism. You had Verso underselling the market, Kimberly NewPage [another paper mill] was taken off the market to increase the parent company’s profit margins. And then there’s PNC’s investment in Verso and incentive in forcing Appleton Coated into receivership. Is financialization the culprit here?
I think the corrosive nature of what happens in speculation, and the financialization of our economy, where you have this massive shift from a manufacturing economy out of WWII; at the peak, unionization was around 30 to 35 percent before any organizations were in the public sector. Then you hit the 1970s and ’80s, that’s part of my history chapter, the ’70s was the beginning of the end of manufacturing. Not only the nature of financialization, but the lack of a national industrial strategy. That’s how we got our ass kicked in the 1980s, because West Germany, Japan, they had a coordinated national strategy. I make the point too that supply-side economics, that happened a couple years earlier in the Carter administration. Humphrey-Hawkins was a watered-down version, the closest we got to national industrial strategy. It’s why some hope in the move for a manufacturing czar. That’s the first thing we can do to grow manufacturing in this country. We didn’t do it under Clinton. His big move was helping the bond traders on Wall Street, and passing NAFTA. You have to go back to LBJ and Truman.
The role of the consultant class also shows through, with the bank hiring people to run the company that have no experience in the paper industry. That could come into play when we have all this relief money and infrastructure money flowing into local government and nobody but consultants to manage it. You’re in local government, what can we do about that?
I’m glad you brought that up. We have been allocated $36 million for our county. There are townships of 800 people getting $100,000. In some places, it will be a grab bag, no goals and objectives. We’ve kind of fashioned a framework before the county board. We’re not doing consultants with it. You saw [at Appleton Coated] Silverman Consulting, the bank said to the owner-managers, you have a choice between 1, 2, and 3, but we like this guy. The bank set everything up. They chose a receiver, chose a consultant. The whole thing is driven by a consultant class not adding much value but making a lot of money. It’s patently unfair.
The courtroom scene is really dramatic. Why do you think the strategy you and USW cooked up was able to succeed?
I think the pieces fell into place. We were able to rally the support of the community, able to buck up the union, which had seven or eight disastrous years, defeat after defeat. We didn’t want to enable false hope. We talked about the community effects argument. We talked about 600 jobs and $300 million in economic activity. We basically created the European model for bankruptcy. We were able to do that because receivership, through case law, had evolved in such a manner that you could make the community effects argument. We looked at it, and I said, “Hey guys, I think we can do this.” Appleton Coated had orders in the wings. They just needed a few weeks. The paper industry goes up and down. What hurt is it didn’t have a pulp mill, that’s the biggest variable cost. The receivership was a truncated timetable, about a month. No one could go in there and do due diligence. So we just needed to buy time.
We went before a local judge [Gregory B. Gill] with a local court. The postscript is, he just got elected to the Court of Appeals as a hardcore right-winger. He goes on and on about being a textualist. If he were truly an originalist, Appleton Coated would be a scrap heap now. But the USW made a cogent argument. And [Judge Gill] would be up for re-election that spring, he had a reason to save the mill. Then USW, the second-largest industrial union, the international vice president lived down the road from the mill and had family work in that mill. I saw these pieces coming together. I thought it could work.
The parallel to Foxconn and the traditional means of economic development is never far here. What lessons can we draw from that experience and this alternative path to revitalize local economies?
I think this shows there’s a right way to do economic development, save jobs, grow stable communities, and there’s a wrong way. It’s very clear. When Foxconn launched in 2017, we said economically this does not make sense. But we worried that this could be the thing that gets [former Wisconsin Gov.] Scott Walker re-elected. [ed. note: It didn’t. Walker lost in a race that had a lot to do with the failures at Foxconn.] We knew it was a sketchy company that would go into countries and cities and fleeced them. It was two and a half hours away from us, and it got $4 billion. We wanted to create a Papermaker Fund, to fill in the gaps, and give Appleton Coated a bit of a boost, for one-tenth of 1 percent of Foxconn. [Former Appleton Coated CEO Doug] Osterberg said that with the Papermaker Fund, there would be no Appleton Coated receivership.
I feel like there have been a lot of economic stories lately about Wisconsin: the book about Janesville, Dan Kaufman’s work, the constant dairy farm struggles. There seems to be an “as goes Wisconsin” quality to our economic conditions. What’s important about what has happened in Wisconsin?
Well, one thing is we have to win elections. In 2010, Democrats had the most losses here of any state. We lost a Senate seat, two House seats, the governorship, and both houses of the legislature. Once Republicans got in, these guys were ruthless. If we don’t pass H.R. 1, they can do it for another decade. We have to get rid of the filibuster for this reason.
So I think that there’s an electoral angle to this. But I also think, too, we have to buck ourselves up and put on our big-boy pants and fight. This is how the labor movement was born, it had setbacks over and over. There’s a chapter in the book on why there’s no labor party in the United States; part of the reason is the amount of violence against organized labor. In the paper industry, the paper unions were almost snuffed out in the early 1920s through International Paper. We had to go through an economic crisis to reposition labor unions for success. That is the moment in time that we are in right now.
