How Wall Road drove the Maine paper business’s collapse
Editor’s be aware: This story was initially printed in January 2021.
In 1994, Al Dunlap took over as CEO of Scott Paper, which owned paper mills in Winslow, Skowhegan and Westbrook. Nicknamed “Chainsaw” due to his ruthless method to slicing jobs, Dunlap created $6.3 billion for the corporate’s shareholders and netted $120 million for himself in simply two years on the job.
However “success for shareholders meant devastation for staff and communities,” wrote College of Southern Maine economics professor Michael Hillard in his historical past of the Maine paper business, “Shredding Paper: The Rise and Fall of Maine’s Mighty Paper Trade.”
Below Dunlap, a 3rd of Scott Paper’s 25,000 staff misplaced their jobs. Dunlap would depart to develop into CEO of an organization referred to as Sunbeam in 1995, the place he laid off half the workforce and was finally barred from helming public firms after an accounting scandal.
Dunlap offered off Scott Paper’s Maine mills. By 1999, the Westbrook mill was considerably downsized, and the Winslow mill shut down. Over the following twenty years, many extra would observe.
“Shredding Paper,” printed by Cornell College Press, explores how Maine turned to the paper business what Detroit as soon as was to the car business, in addition to how the business fell from these heights. Greater than 32,000 paper makers and loggers labored in Maine on the business’s peak in 1967. At this time that quantity is lower than 7,000, in keeping with the Maine Division of Labor. In his e-book, Hillard argues that Wall Road greed drove that collapse. The argument has implications for at present’s political and financial second.
“There’s an curiosity on this nation in what occurred to the great manufacturing jobs,” stated Hillard in an interview. “Individuals simply blame low-wage factories in Mexico and China.”
However the lack of these jobs and the turmoil that adopted was not pushed by globalization as a lot as “the Wall Road crucial to maximise short-term revenue,” Hillard stated.
The individuals who lived and labored within the paper mill communities noticed this shift for what it was. In doing so, they developed a “critique of a brand new company greed” that contained “distinctive insights” that have been “each bit as legitimate as educational theorizing,” Hillard wrote.
The story of the Maine paper business is one in every of decline, however it’s additionally “a compelling story of resistance,” Hillard wrote.
Hillard spent twenty years interviewing greater than 100 individuals who labored within the Maine paper business, together with mill staff and loggers, mill administration and union representatives. Many have since died. Some remembered the strike in Madawaska in 1971 that pitted males, ladies and kids armed with rocks in opposition to state police. Others remembered the efforts of the Maine Woodsman Affiliation to prepare loggers within the Nineteen Seventies, pushed partly by Mainers getting back from Connecticut factories the place they have been uncovered to leftist concepts about labor and administration. Others advised Hillard in regards to the Jay mill strike in opposition to Worldwide Paper in 1987 and 1988 that galvanized staff throughout the state however finally failed.
The oldest individuals Hillard interviewed remembered the time earlier than all of that, when labor and administration have been each from and lived in paper mill communities like Millinocket and Bucksport.
“They remembered a model of capitalism that labored nicely for everyone,” Hillard stated, including that the employees understood that “jobs and locations of labor usually are not nearly backside strains and what individuals receives a commission, they’re a couple of life that individuals make collectively.”
Hillard argues that whereas competitors from international markets performed a task within the Maine paper business’s decline, it was the takeover of Maine’s mills by outdoors corporations looking for to maximise short-term income that was the driving power behind the collapse of the business.
As household mills offered to nationwide corporations within the late Nineteen Sixties and early Nineteen Seventies, Maine’s paper mills have been more and more run by managers “from away” who may need been consultants in enterprise or administration however not the craft of creating paper.
In contrast to some manufacturing staff who carried out repetitive duties on an meeting line, Maine’s paper makers have been extremely expert, Hillard stated. They needed to rigorously modify quite a lot of variables to create totally different paper merchandise. In only one eight-hour shift, a mill might make or lose $1 million relying on whether or not the paper was produced to buyer specs, Hillard stated.
However beginning within the Nineteen Seventies, shareholderism, additionally referred to as the shareholder worth motion, started to dominate company considering. First articulated by Nobel Prize-winning economist Milton Friedman, shareholderism holds that the singular obligation of any company govt is to maximise income for shareholders. As this view captured Wall Road, CEOs that didn’t maximize income over the quick time period have been rapidly ousted. Maximizing income for shareholders usually meant squeezing staff for extra productiveness. Treating staff nicely was thought of stealing from shareholders, Hillard stated.
Staff have been handled much less as companions than as an expense to be minimized. This new manner of doing enterprise was not solely “morally bankrupt” however launched a “panoply of incompetence” to an business that had lengthy prided itself on the talents of its workforce, Hillard wrote. Staff and the product suffered as labor strife turned rampant.
It didn’t need to be this fashion, Hillard stated. Whereas globalization, mechanization and even the shift from paper to digital have been inevitable, they weren’t as disruptive as Wall Road’s want for short-term income, he argued. For instance, China was not a critical competitor within the paper business till the nation entered the World Commerce Group in 2001, Hillard stated. By then CEOs like Dunlap had already slashed mill workforces to complement shareholders.
Different economically developed international locations, reminiscent of Germany and Japan, didn’t have the identical manufacturing job loss that the U.S. skilled within the late twentieth century, Hillard stated. That’s as a result of they adopted what’s referred to as “industrial coverage,” primarily a method to assist business and defend jobs. As a substitute, the U.S. left manufacturing jobs to the mercy of the free market and, within the phrases of late historian Judith Stein, “traded factories for finance.”
Enterprise and political leaders are actually rethinking that commerce and the deserves of shareholderism.
In 2019, the Enterprise Roundtable, which represents executives of practically 200 of the U.S.’s largest firms, repudiated shareholderism and referred to as for companies to contemplate the wants of consumers, staff and native communities in addition to shareholders. In July, then-presidential candidate Joe Biden stated that “the thought the one duty an organization has is with shareholders, that’s merely not true.”
Hillard hopes that the historical past of Maine’s paper business may help inform discussions in regards to the function of capital and labor. However he additionally desires to share the historical past of the employees in that business earlier than they’re gone.
“I feel that my e-book provides you a mind-set about this actually storied a part of our previous that individuals don’t know sufficient about,” he stated.
