Manufacturing: Money's Paper Chase

Three years ago, Appleton Paper Co. decided to make money. An excellent pursuit for a company, you would think. But as with all businesses, not so easy as it sounds. The money in question is U.S. currency, more specifically the very high-tech paper used to print it. The Appleton, Wis., papermaker planned an expensive makeover to compete for the $400 million contract to supply the government with currency paper when the contract went up for bid this spring. Appleton, an employee-owned company, figured to spend more than $70 million upgrading one of its three paper mills, enabling it to produce watermarks, machine-readable micropatterns and embedded threads and metal fibers--the gold standard in anticounterfeiting technology. "We see it as a way to serve our country at the same time we expand our business," says spokesman Bill Van Den Brandt.

But history is not on Appleton's side. Since 1879, one company, the family-run papermaker Crane & Co., has produced virtually all U.S. currency paper, an intricate blend of cotton, linen and ever evolving security features, at two facilities in Dalton, Mass. "Ours is an intimate, long working relationship with the Treasury Department," says Lansing Crane, CEO and great-great-great-grandson of the company's founder. That relationship appears as secure as ever, despite challenges from competitors and lawmakers that have been mounting since 2001. Having one firm control the currency supply isn't just anticompetitive, it's a security risk, they argue. That may not be enough to break one of the last monopolies in American business.

The Bureau of Engraving and Printing, an arm of the U.S. Treasury, produces 35 million notes a day with a face value of approximately $635 million at its two printing facilities--in Washington and Fort Worth, Texas--and all those greenbacks are printed on paper supplied by Crane and shipped by truck from Massachusetts. Any interruption in that production could be "devastating to the U.S. economy," Van Den Brandt says.

The Government Accountability Office (GAO), the auditing arm of Congress, agrees. "A second supplier could be greater assurance of a steady supply of goods, even if one site were disrupted by a strike, natural disaster, bankruptcy or terrorist attack," GAO investigators wrote in 2005.

Crane replies that its 127-year knowledge of the currency supply enhances security. Although the company is best known among consumers for its fine stationery and other paper products, about 60% of the company's 1,200 employees are involved in the day-to-day production of currency paper. "The majority of our employees' time and effort goes toward making a single product that we can sell to a single customer," Lansing Crane says. "We're going to do everything we can to keep doing that for as long as possible."