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Nichols Paper Converter Remains Competitive in Crowded Field

 

Businessman's vision helps Nichols Paper thrive
By Arlen Boardman
Gannett Wisconsin Newspapers March 30, 2007

NICHOLS - Nichols Paper Products' quiet, rural home in this tiny Outagamie County village belies the competitive environment in which it competes globally as a paper converter.

In this village of 254 people, six miles north of Black Creek, the converting mill employs 40, about 10 times the next largest employer's work force. It's also the only business in the village that brings in significant revenue from the outside world.
Its the big fish in the small pond and the last big employer - big by Nichols standards - among several that have come and gone since the village was founded in 1918.
Linda Hoes, a former village president and now its clerk-treasurer, and Kathy Danke, co-owner of Nichols Memory Mall and the Coffee Shop Cafe, say Nichols Paper means a lot to the community.

"Without Nichols Paper, it would cramp our style quite a bit," Hoes said. "We really depend on (company owner Bernie Dahlin) for that tax base."

It also provides jobs for Nichols residents like Hoes and Karen Kroncke, but must reach out to 20 miles beyond the village to find enough employees.

Kroncke likes the short two-block walk to work and the relative stability the mill has provided.
 
"I've heard it umpteen times that I should go down in the Valley (to the Fox Cities) and get a job," Kroncke said. "(People say) that's where the money is."

She has been laid off from time to time, but she noted the permanent layoffs and the mill closings in the Fox Cities and said, "No thanks."

Danke doesn't want to think of Nichols without the mill. Then she added, "My husband works for Fox River Paper," the Appleton-based company just acquired by Neenah Paper, which recently announced it was closing a Massachusetts mill.

A rich history

Nichols Paper has been part of the community since 1951, when Straubel Paper Co. of Green Bay opened it. However, 30 years later, it wasn't a big part of Straubel's plans.

That's when Dahlin, a Green Bay businessman, stepped in. He bought the mill in 1982 after managing it for a year. He added some paint, cut administrative overhead by two-thirds and convinced the employees to deunionize.

Now, 25 years later, Dahlin has built a competitive paper converting operation, which has acquired other small converters and often brought their equipment and product lines to Nichols. As importantly, he and his workforce have dramatically increased its productivity -that is, competitiveness - to take on a market place that has similarly grown in competitiveness.

Dahlin doesn't keep precise measures on productivity, but he estimated that the cost to produce some products was cut by two-thirds just during the first dozen or so years. That trend has continued.

"I never had a year that I didn't make money, never always going in the right direction," he said. "I had some bumps in the road, but I always made money."

Dahlin made enough money to reinvest hundreds of thousands of dollars. The only time he borrowed money at Nichols Paper was when he bought in, and that debt was retired a few years later.

Dahlin isn't satisfied with the level of profits, but given the rise in competition and the pricing squeeze, the company has been a fairly solid earner.

Nichols Paper has benefited from a trend for papermakers to outsource their converting, Dahlin said he also has seen the number of competitors grow. He said, for example, the number of paper converters in Green Bay's telephone listings has doubled the last 10 or 12 years.

The company's evolution

In the early years, Dahlin began upgrading his equipment, buying rewinders and slitters from Kimberly-Clark Corp., among others.

In 1995, he was ready to buy a company in an effort to diversify. Nichols Paper acquired The Beier Co., an Illinois maker of floral sleeves, used mostly by flower growers for the delivery of plants to retailers.

"We moved the equipment up here and then we had to train the people up here (including four new hires) to operate it," Dahlin said.

Until then, Nichols Paper did converting in wax and crepe papers, printing on paper and non-wovens, and slitting and rewinding and sheeting. About 90 percent of its customers, mostly paper distributors, were located east of the Mississippi River.


Before high productivity changed his worker needs, Dahlin once employed 63. He said competition and pricing pressures and the move to higher productivity cut that to today's 40, which is double what Nichols Paper had when he bought it.

"Basically, the people got a lot more productive, and in turn, I could pay them more and have fewer people," he said.

With higher productivity, Dahlin used retained earning capital to add inventory and warehouse space, which had been lost to manufacturing expansion. That $350,000 investment boosted plant capacity by 25 percent to the current 104,000 square feet.
That expansion set the stage for the next acquisition. In 1997, Dahlin acquired Kwik-Kover Manufacturing of Lincolnwood, Ill., a producer of name-brand paper garment covers, dress shields, and hanger capes. He moved the equipment and product lines to Nichols and added a few jobs.

The deal, worth about $750,000, did more than diversify Nichols Paper's product lines.


"It provided us a whole new set of distributors," Dahlin said, expanding Nichols Papers market to all of the United States, plus Canada, Mexico and England.

Dahlin didn't make another major purchase until 2005, but not because he wasnt looking. He found other prospects, but didn't like the deals.

"Everybody thinks they have gold when they're selling, and I didn't think the gold was there," he said.

He found a deal in 2005 when he bought Contour Inc. of Waukesha, a paper-tube maker, which produces shaped tubes for uses like small table foundations. The deal was for about $500,000 in cash.

The Company's Future

During the mid-1990s, Dahlin took a couple of other important steps. He hired his son, Bernard III - known as Chip - who supervises manufacturing and administers information technology, and later another son, Brian, who is director of sales.
Dahlin's sons have invested with their father in other businesses, including Shapes Unlimited of Little Chute, a producer of high-end displays for store fixtures and trade shows, and Hi-Tech Plastics of Kaukauna, a maker of stretch film for industrial wrapping.

Nichols Paper added products without acquiring companies. Two years ago, it was approached by a U.S. company to produce the print on a film laminated to carpet padding to facilitate installation. It now produces two variations for U.S. and British markets.

"In fact, this film is so special that some of the resin isn't even made in the United States," Dahlin said. "It's made in Europe; it's very expensive stuff, and all we do is print on it."

Nichols Paper's sales and profits have grown under Dahlin, but he said wages also have doubled.

"I don't think I could ask for a better work force overall," he said, adding that "if the people produce, I can afford to pay them more and still sell at a competitive price."
Dahlin said a big challenge is to find people who want to work and show up every day.


"I personally feel there's a shortage of good employees," he said.

Dahlin is 65, but intends to show up every day, perhaps for the next 25 years, he said. He's not happy with the price squeeze — some product prices haven't been raised for five years or more — but he feels his company can continue to be competitive.