Town struggles with loss of mill

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This article was published 24/08/2010 (5893 days ago), so information in it may no longer be current.

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.

On Sunday, an employee-led group that had spent months trying to craft a business plan to purchase the plant informed the Montreal-based forestry company that it was throwing in the towel.

"It’s a blow to the community," said Henry Dubé, 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.

Dubé, who chaired the buyout committee, said the group couldn’t overcome those hurdles in putting together a viable business plan. The plant also required expensive equipment upgrades to keep pace with competitors in Thunder Bay and Alberta, he said.

Former plant workers — some whose families had laboured there since the mill opened in 1926 — were informed of the committee’s decision on Sunday afternoon. The buyout group abandoned its purchase plans after meeting with its Thunder Bay-based consultant, Bruce Hanson, late last week. "We had investors out there based on (us) achieving certain goals. We couldn’t achieve those goals," Dubé said.

Nearly 300 people lost their jobs at the time of the lockout.

John Valley, a senior Tembec official, said Monday 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.

With its major employer shut down, Powerview/Pine Falls, a community of 1,300, faces a huge economic headache. Last December, the province committed $1 million to help the area adjust to the mill’s closure and explore new opportunities. Since then, it has also helped 58 former plant employees get new work or enrol in job training. According to one estimate, about half of the laid-off workers have found employment — many outside the community.

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, is the development of tourism.

Gerald Hawranik, the Conservative MLA for the area, said the NDP has mishandled the Pine Falls situation. Six months before the lockout, he said, the province paid Tembec more than $2 million to quit logging in provincial parks without extracting employment guarantees in return.

Hawranik also complained that it took Howard and Premier Greg Selinger three months, following the employee lockout last summer, to pay a visit to the community. The province’s $1-million economic aid offer now seems like "a pittance" given the tremendous challenge the community faces, he said.

larry.kusch@freepress.mb.ca