Background on Southwest Paper USA

From the city of Redding (click here for news on Southwest’s plans to join Stillwater Business Park):

Background of Southwest Paper USA: Southwest Paper USA is a start-up company formed by Len Sugarman to satisfy the growing need for through-air-dry (TAD) premium quality, corporate branded tissue products similar to Proctor & Gamble’s “Bounty” and “Charmin” for the consumer market. Sugarman has had a long career in the consumer product tissue segment of the paper business, becoming President of Statler Industries in 1968. At that time, Statler was a tissue converter and a distributor of paper products with a tissue products sales volume of approximately $4,000,000.

Under Mr. Sugarman’s leadership, Statler, in 1969, acquired an aging Augusta Maine paper mill formerly owned by Hudson Pulp & Paper Corp., now part of Georgia Pacific. Environmental regulations threatening Statler’s historic source of raw materials via the logging river-drive down Maine’s Kennebec River, resulted in Statler’s creating an innovative high-grade recycled paper program for the U.S. consumer market.

From 1970 through 1975, under Sugarman’s direction, Statler also acquired the eastern United States assets of the Doeskin Company from a Canadian company, Consolidated-Bathurst Ltd. (later part of Smurfit-Stone). Doeskin’s assets included several mills in New York and Delaware and a large converting facility in Vermont. Profitable operations were consolidated into the Augusta, Maine mill location. Some of the machinery and equipment was utilized to joint-venture with Mexican partners a new paper mill and consolidate it with a Mexico City-based converting company in San Luis Potosi, Mexico. The fledging Mexican mill grew from a zero base into a $20,000,000 company with much future potential. The remaining Consolidated Bathurst facilities were sold.

The company, with the Augusta, Maine, mill prospered during the 30-year period from 1964 through 1994, receiving the coveted award for “emitting the lowest amount of toxins per ton of any integrated mill in the country” from the head of the United States Environmental Protection Agency in 1992, and increasing sales volume from $4,000,000 to over $63,000,000.

Increasing competition in the mid-1990s from newer, more efficient southern mills, especially Georgia-Pacific’s modern high-speed Palatka, Florida, mill, made the higher operating cost facility in Maine unprofitable. Unable to replace two unconventional old paper machines which produced limited single-ply tissue products for a 31-year period, together with the capital intensive, necessary modernization costs, Statler filed for Chapter 11 reorganization. Sugarman continued on with the company completing the reorganization by effecting full 100% payment of all secured debt, and completing the sale of the business in 1996. Sugarman stayed with the new company during a transitional period, leaving the business a short time afterwards. The new company, a year after Sugarman’s departure, was dissolved.

In early 1997, Sugarman began investigating the feasibility of establishing a new technology tissue facility paper mill utilizing specialized, state-of-the-art, cost efficient, through-air-dry (TAD) technology. Further study of the manufacturing processes persuaded Sugarman that the TAD technology process similar to that used by Procter & Gamble produced the best quality consumer tissue and towels that most consumers preferred but were unavailable in corporate brands.

In 2000 Sugarman sought and began discussions with a several engineers familiar with the TAD process to identify and customize the best machinery, equipment, raw materials and other processes required, such as water and energy resources necessary for the establishing and conducting an energy sustainable TAD paper manufacturing and converting facility. One engineer in particular, Tom Cook, indicated his willingness to be an integral part of the start-up of the facility and the business. Mr. Cook has over 30 years of experience in engineering and management in the paper business. From 1969 to 2000, he served in various engineer and technical roles at a major supplier, including Section Head Engineering – Paper Division where he led paper making engineering to support new product introductions and increase capacity and profitability. He is joined by a team of experienced successful consumer paper managers and engineers whose responsibilities will include the full training and incorporating of new employees, from the general Redding area, into the Southwest Paper technical work force.

Sugarman, working in tandem with Cook, proceeded to outline a strategy that included finding a location that would allow electrical energy to be produced from a high percentage of natural renewable resources. After searching the country for several years, in 2005 Sugarman and Cook finally found a site and a city that was willing to try to accommodate a manufacturing facility that truly emphasized sustainability for its energy requirements.

By this time, others in the tissue business confirmed Sugarman’s conclusion that there was a unique need for national chain store grocery companies with their own corporate brands to partner with low-cost contract manufacturers to produce a lower-cost competitive store-branded product to compete in the marketplace. Leading branded corporate giants were looking for available independent, unaffiliated, premium brand TAD tissue producers. Discussions with leading marketing entities indicated the entities’ strong interest in the company’s TAD products and the pricing required to sell the contemplated output of the facility.

-from press release

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-from press release
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2 Responses

  1. Avatar Gus says:

    Article from Redding.

    Tom

  2. Avatar Gus says:

    Gus,

    Article from Redding.

    Tom