In 1994, Al Dunlap took over as CEO of Scott Paper, which owned paper mills in Winslow, Skowhegan and Westbrook. Nicknamed “Chainsaw” because of his ruthless approach to cutting jobs, Dunlap created $6.3 billion for the company’s shareholders and netted $120 million for himself in just two years on the job.
But “success for shareholders meant devastation for workers and communities,” wrote University of Southern Maine economics professor Michael Hillard in his new history of the Maine paper industry, “Shredding Paper: The Rise and Fall of Maine’s Mighty Paper Industry.”
Under Dunlap, a third of Scott Paper’s 25,000 employees lost their jobs. Dunlap would leave to become CEO of a company called Sunbeam in 1995, where he laid off half the workforce and was eventually barred from helming public companies after an accounting scandal.
Dunlap sold off Scott Paper’s Maine mills. By 1999, the Westbrook mill was significantly downsized, and the Winslow mill shut down. Over the next two decades, many more would follow.
“Shredding Paper,” published last week by Cornell University Press, explores how Maine became to the paper industry what Detroit once was to the automobile industry, as well as how the industry fell from those heights. More than 32,000 paper makers and loggers worked in Maine at the industry’s peak in 1967. Today that number is less than 7,000, according to the Maine Department of Labor. In his book, Hillard argues that Wall Street greed drove that collapse. The argument has implications for today’s political and economic moment.
“There’s an interest in this country in what happened to the good manufacturing jobs,” said Hillard in an interview. “People just blame low-wage factories in Mexico and China.”
But the loss of those jobs and the turmoil that followed was not driven by globalization as much as “the Wall Street imperative to maximize short-term profit,” Hillard said.
The people who lived and worked in the paper mill communities saw this shift for what it was. In doing so, they developed a “critique of a new corporate greed” that contained “unique insights” that were “every bit as valid as academic theorizing,” Hillard wrote.
The story of the Maine paper industry is one of decline, but it’s also “a compelling story of resistance,” Hillard wrote.
Hillard spent two decades interviewing more than 100 people who worked in the Maine paper industry, including mill workers and loggers, mill management and union representatives. Many have since died. Some remembered the strike in Madawaska in 1971 that pitted men, women and children armed with rocks against state police. Others remembered the efforts of the Maine Woodsman Association to organize loggers in the 1970s, driven in part by Mainers returning from Connecticut factories where they were exposed to leftist ideas about labor and management. Others told Hillard about the Jay mill strike against International Paper in 1987 and 1988 that galvanized workers across the state but ultimately failed.
The oldest people Hillard interviewed remembered the time before all of that, when labor and management were both from and lived in paper mill communities like Millinocket and Bucksport.
“They remembered a version of capitalism that worked well for everybody,” Hillard said, adding that the workers understood that “jobs and places of work are not just about bottom lines and what people get paid, they’re about a life that people make together.”
Hillard argues that while competition from foreign markets played a role in the Maine paper industry’s decline, it was the takeover of Maine’s mills by outside firms seeking to maximize short-term profits that was the driving force behind the collapse of the industry.
As family mills sold to national firms in the late 1960s and early 1970s, Maine’s paper mills were increasingly run by managers “from away” who might have been experts in business or management but not the craft of making paper.
Unlike some manufacturing workers who performed repetitive tasks on an assembly line, Maine’s paper makers were highly skilled, Hillard said. They had to carefully adjust a variety of variables to create different paper products. In just one eight-hour shift, a mill could make or lose $1 million depending on whether the paper was produced to customer specifications, Hillard said.
But starting in the 1970s, shareholderism, also called the shareholder value movement, began to dominate corporate thinking. First articulated by Nobel Prize-winning economist Milton Friedman, shareholderism holds that the singular duty of any corporate executive is to maximize profits for shareholders. As this view captured Wall Street, CEOs that didn’t maximize profits over the short term were quickly ousted. Maximizing profits for shareholders often meant squeezing workers for more productivity. Treating employees well was considered stealing from shareholders, Hillard said.
Workers were treated less as partners than as an expense to be minimized. This new way of doing business was not only “morally bankrupt” but introduced a “panoply of incompetence” to an industry that had long prided itself on the skills of its workforce, Hillard wrote. Workers and the product suffered as labor strife became rampant.
It didn’t have to be this way, Hillard said. While globalization, mechanization and even the shift from paper to digital were inevitable, they weren’t as disruptive as Wall Street’s need for short-term profits, he argued. For example, China was not a serious competitor in the paper industry until the country entered the World Trade Organization in 2001, Hillard said. By then CEOs like Dunlap had already slashed mill workforces to enrich shareholders.
Other economically developed countries, such as Germany and Japan, did not have the same manufacturing job loss that the U.S. experienced in the late 20th century, Hillard said. That’s because they adopted what’s called “industrial policy,” essentially a strategy to support industry and protect jobs. Instead, the U.S. left manufacturing jobs to the mercy of the free market and, in the words of late historian Judith Stein, “traded factories for finance.”
Business and political leaders are now rethinking that trade and the merits of shareholderism.
In 2019, the Business Roundtable, which represents executives of nearly 200 of the U.S.’s largest companies, repudiated shareholderism and called for corporations to consider the needs of customers, employees and local communities as well as shareholders. In July, then-presidential candidate Joe Biden said that “the idea the only responsibility a corporation has is with shareholders, that’s simply not true.”
Hillard hopes that the history of Maine’s paper industry can help inform discussions about the role of capital and labor. But he also wants to share the history of the workers in that industry before they are gone.
“I think that my book gives you a way of thinking about this really storied part of our past that people don’t know enough about,” he said.
Do you have stories to share about lost jobs in Maine’s papermaking industry? Email us at email@example.com.