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Domtar mill closure announced; Espanola town looking at options

The mayor of Espanola says the town will be looking to senior levels of government for support as it attempts to deal with the fact its major employer intends to shut down operations for at least a year, if not longer.

“The town will be advocating to all levels of government in support of our community,” Mayor Douglas Gervais said in a release. “As we learn more over the coming days and weeks, the town will do everything it can to help the workers and families impacted and the community at large.”

On Sept. 6, Domtar announced it will “indefinitely idle” its pulp and paper operations in Espanola, Ont., this fall.

The move, expected to be “greater than one year,” affects about 450 workers.

“The Espanola mill has been challenged for some time now,” said paper and packaging president Steve Henry in a release. “We have worked diligently to find a viable path forward for the operation including offering it for sale.”

Domtar says the decision follows “years of ongoing operating losses and high costs associated with maintaining and operating the facility.”

The company’s pulp mill will close in early October. The paper machines follow in early November.

Domtar bought the mill from EB Eddy Forest Products in 1998. Domtar workers in Espanola produced about 280,000 air-dried metric tons of northern bleached softwood kraft pulp and 69,000 tons of specialty paper annually.

Decision was a surprise

Gervais said Domtar’s decision caught him by surprise. “I was in a parking lot in Sudbury when I found out … It was the minister of natural resources who informed me and stated that they would be there to support us …

“Quite a few (cabinet) ministers have contacted us. We will work in conjunction with the federal and provincial governments … it is all very early. We’ve had contact with top officials at Domtar. They were very apologetic about the situation. We will keep in close contact with them.”

Gervais said he and the town’s six councillors have spoken by phone and will meet to discuss ways to turn this around.

“I’ve talked to them each personally.”

He noted “there are a couple of prospects (to buy the mill) but they could not work out an arrangement.”

Gervais said the loss of jobs will affect just about every family in this town of 5,200, located about 71 km west of Sudbury.

“The workers and their families are the lifeblood of this community … Quite a few family members will be affected. Most of my family, children and siblings, are here.”

Gervais said he has a grandson, a nephew and quite a few relatives who work at the mill.

Economic impact will be deep

The pulp and paper industry in Espanola dates back to 1899 and the loss of 450 jobs will have a huge economic impact on the community, said Sudbury economist David Robinson.

“We can probably figure 15 per cent of those people move fairly quickly to other forestry and mining jobs in Northern Ontario,” he said.

Another exodus will come later — if the mill doesn’t reopen in the interim— as EI benefits and severance packages can only keep someone afloat for so long.

“The example I have is Elliot Lake (which lost its mines in the early 1990s),” said Robinson. “That was a slightly different situation, but they got a sudden announcement that everything was closing down. At first, it was a trickle but, as the support wore out, an increasing number of people moved out of the community.”

There will also be a ripple effect in Espanola, as jobs at the mill generate other jobs in the community.

“Multipliers are really hard, but you could go 1.2 as a plausible guess,” said Robinson. “It could be 1.15, because smaller communities have lower multipliers, but Espanola is fairly well located and developed, so with 450 jobs you are probably talking about 520 altogether in terms of the employment impact.”

The community could rebound, however, as Elliot Lake did by rebranding itself as a retirement community, or if a new player emerges to revive the Domtar mill, as occurred in White River.

“Their mill shut down and came back,” pointed out Robinson. “Frank Dottori (a former Tembec executive) was key in saving it — he put together a coalition, including local First Nations, and got that plant going again.”

The White River operation is a sawmill, however, whereas the Espanola operation produces pulp and paper, and that side of the forestry industry faces different challenges.

“Pulp mills are a different story,” said Robinson. “Demand for quality paper and newsprint is probably down. Iroquois Falls was producing specialty papers and had recently upgraded its plant, but nonetheless, they just shut it down and sold off the water rights, because the hydro power was worth more than the return.”

While some families will likely leave Espanola and others will be panicking about their future — homeowners in particular will be worried about what their house might go for if they have to sell — Robinson said there are others who could be drawn to the community.

“Espanola is actually well-placed if it started to market its housing,” he said. “It would be a smart move to do, because there will be families wanting to leave, and anything that pumps up the demand for housing even a little bit will be good for those families.”

He said Espanola could be appealing to pensioners, as well as to younger folks looking for starter homes.

Elliot Lake was successful in attracting retirees — in large part because “it was such a well-planned community,” said Robinson — but Espanola also has a lot to offer to the aging demographic, including its proximity to health care in Sudbury. “You’re closer to a major hospital,” the economist noted.

Meanwhile, the relatively cheap housing could be a lure for southern Ontarians craving a quieter place to live, with a mortgage they can manage.

“They can’t afford a house down south and some of those people can work remotely,” said Robinson. “So that would be your other big marketing opportunity, if you were trying to add 20 per cent to the demand for housing at a time when people are eager to sell.”

Province offers support

Graydon Smith, Ontario’s minister of Natural Resources and Forestry, said in a statement that “the Ontario government is extremely disappointed with Domtar’s decision to idle their Espanola pulp and paper mill, which has been a foundational employer and economic engine for the region since the early 1900s,” he said. “Our thoughts are with the workers, their families and the communities who will be affected by this decision.

“Workers impacted in communities like Espanola, which include loggers, truckers, equipment, suppliers and maintenance contractors, depend on a strong forestry sector. That is exactly why our government has continuously offered support and will continue to try to work with Domtar.

“Ontario will be exhausting every option to return workers to the Espanola mill in collaboration with local mayors, local MPPs and Unifor. In the meantime, Ontario will be there to support the workers, their families and the communities impacted by this mill idling.”

Carol Hughes, MP for Algoma-Manitoulin-Kapuskasing, said she was saddened by the news. Hughes, an NDP MP, said she reached out to Domtar to see if any government assistance could help in averting the closure. She was told no.

“This is a sombre day for workers, their families, the Town of Espanola and surrounding communities,” said Hughes. “Once you lay off workers, the chance of being able to rehire them becomes more challenging as those experienced professionals move on with their careers elsewhere.

“There’s always hope for communities dealing with company closures,” said Hughes. “White River experienced this a few years ago when the lumber mill ceased operations. They were able to eventually bounce back, but it was an exceptionally difficult process to rebuild their workforce.

“I am disheartened by what these workers and their families will be going through, and I encourage them to reach out to my office should they require assistance with benefits they may need to access,” said Hughes.

Union hopes for restart

Officials for Unifor, the union representing workers at the Espanola mill, said they are optimistic it will reopen.

“There were hopes this mill would find a buyer and find a way to continue its legacy as a vital part of the Ontario forestry sector, but with today’s news, workers are devastated,” said Lana Payne, Unifor national president. “We fully expect workers to be protected in the event of corporate mergers that have occurred recently in the forestry sector and our union believes that jobs should be protected through the regulatory process surrounding such mergers.”

Members were notified on Wednesday that the mill will stop production on Nov. 30, for a period of at least a year, with an intention to restart, the union said. Some workers will be required on site to keep the mill in an idling state so the facility is kept in good working order, but this will be a fraction of the current workforce.

“Losing this many jobs for a year or more will impact the whole community so we are of course hoping the shutdown will end as soon as possible,” said Chris Presley, president of Local 74 at the mill. “Right now, we’re focused on supporting the workers through this transition.”

The union and the company have meetings arranged over the coming days to discuss specifics and members will receive updates through local union representatives.

“I think many of us are trying to keep our hopes up and help each other out,” said Dean Houle, president of Local 156. “Forestry workers are used to ups and downs, but the longer we’re down, the harder it will be to get up and running again.”

Unifor Local 74 represents 250 members at the paper mill and Local 156 represents another 91 workers.

Hugh Kruzel is a Local Journalism Initiative reporter for The Sudbury Star. With files from Harold Carmichael and Jim Moodie.