September 8, 2010

Employee plan can’t save Pine Falls paper mill in Manitoba

WINNIPEG

A year after Tembec locked out workers at its Pine Falls paper mill, it now appears all but certain that the 84-year-old facility will never produce newsprint again.

An employee-led group that had spent months trying to craft a business plan to purchase the plant informed the Montreal-based forestry company says it is throwing in the towel.

“It’s a blow to the community,” said Henry Dube, a town councillor and electrical technician who had put in 21 years at the facility, 130 kilometres northeast of Winnipeg.

With no other buyers on the horizon, Tembec is likely to begin selling valuable mill equipment before the cold weather sets in. The company has vowed it will not heat an idle building again, as it did last winter at the cost of hundreds of thousands of dollars per month.

A successful employee buyout — even with the backing of the province which had offered loans equivalent to 35 per cent of the purchase price — was always a long shot, given the current economic environment.

Newsprint prices are depressed as several large North American newspapers have closed their doors over the past few years and many others have scaled back paper orders.

A high Canadian dollar has also slashed profits for Canadian suppliers selling into the United States. Many of the Pine Falls plant’s customers were located in the U.S. Midwest.

John Valley, a senior Tembec official, said that the committee’s decision was “obviously disappointing but understandable in today’s challenging economic environment.”

The Canadian forestry industry has lost 44,000 jobs since 2003.

Valley would not comment on whether there any other potential buyers for the plant or what would happen to the company’s timber cutting rights. However, the province said it has not been approached recently for help by any other would-be suitors.

Labour Minister Jennifer Howard commended the buyout group’s efforts and diligence in exploring the financial viability of buying the mill.

“There remains a very valuable natural resource in the forest and there remains a very valuable human resource in the people who worked in that mill and the people in the community,” Howard said in an interview.

“Now we need to move forward with those folks and determine what opportunities are there for a long-term sustainable economy for that area.”

One possibility, Howard said, was the development of tourism in the picturesque region.

Former mill worker Moe Bouvier said it was inevitable.

“I can’t say we weren’t expecting this,” he said of the mill’s closure. “But it’s been a whole year of disappointment.”

Canadian Press

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