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AV Nackawic (September 01, 2006)


September 1, 2006
By Pulp & Paper Canada

This month we travel east to the Maritimes to the town of Nackawic, which is located 65 km west of the city of Fredericton on the north shore of the Saint John River in New Brunswick. The mill in Nack…

This month we travel east to the Maritimes to the town of Nackawic, which is located 65 km west of the city of Fredericton on the north shore of the Saint John River in New Brunswick. The mill in Nackawic has been the subject of numerous headlines in the past two years, most prominently with its re-opening in January of this year [see page 14]. We explore this revitalization through the eyes of the president and CEO of the AV Group, Peter Vinall. On January 16, 2006, Vinall, along with approximately 270 employees, opened the doors to the AV Nackawic mill, a facility that had been dormant for almost 15 months.

The analogy that trees are to New Brunswick as oil is to Alberta, rings strongly throughout the province, since forestry is the most important part of New Brunswick’s economy. The industry directly contributes $1.7 billion to the provincial economy and accounts for approximately 30-40% of exports. Forestry and logging, wood product production, and the pulp and paper industry represent more than 17,000 direct jobs and 6,000 indirect jobs. The past few years have been particularly difficult with the closure of several facilities including the UPM Kymmene kraft mill in Miramichi, Smurfit-Stone’s closure of its Bathurst mill and Fraser Paper’s closing of its recycling mill. The industry in New Brunswick was at a crossroads.

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On September 14, 2004, the town of Nackawic was hit with a sudden blow when the largest employer in the area shut down the St. Anne Nackawic Pulp and Paper Mill and filed for bankruptcy. At the time, 400 workers went home shocked, not knowing what the future was to bring. “This was a mill that many felt initially did not put up a fight for survival,” said Peter Vinall, president and CEO, AV Group. For almost 15 months, the doors of the mill remained closed, but behind-the-scenes negotiations to revive the operation never faded. This is a positive story of success, based not just on determination, but on both government and the private sector believing in the future of the pulp and paper industry in New Brunswick.

NEW START

On November 9, 2005, New Brunswick Premier Bernard Lord handed over the keys and ownership of the Nackawic mill to the newly formed AV Nackawic, a joint venture between Aditya Birla Group of India (75%) and Tembec (25%). “This community has faced a challenging year and, every step of the way, it has demonstrated patience and a willingness to do what was necessary to see the mill operate once again,” Lord told the press on that day.

“I am delighted that this deal has reached an end,” said Shailendra Jain (Group Director, Pulp & Fibre Business, Aditya Birla Group). “Its conclusion symbolizes the spirit of co-operation between the provincial government, the workers, the Birla-Tembec partnership and many others.”

It is this spirit of being offered a second chance that rallied the mill employees. “Only one word could describe the mood of that day and it is euphoria,” described Vinall. “In initiating this joint venture, Tembec and Birla were looking to build on their prior success at AV Cell in Atholville, NB.” Tembec and Birla had formed a similar partnership in 1998 and converted the former REPAP mill to dissolving pulp production.

Frank Dottori, recently retired as the CEO of Tembec, was also instrumental in the creation of AV Nackawic (AVN) and now serves as the chairman of its Board of Directors. On the subject of the reopening, Dottori said, “In today’s tough forestry sector marked by intense global competition, the high Canadian dollar, high wood costs and soaring energy rates, I am extremely pleased to witness the successful start-up of AVN mill and its conversion to dissolving pulp to manufacture rayon. To survive long-term we must continue to address the fundamental issues of high wood and energy costs.”

The government of New Brunswick provided AVN with a $20 million loan for the purchase of the facility, and an additional $26.75 million to assist with the retrofit and expansion projects. A loan guarantee of $20 million was also offered. The successful re-opening of the facility has bought new life to the entire upper St. John River valley.

THE MILL’S HOME

To truly understand the employees, one must look at their environment. Nackawic can well be described as a naturalist’s paradise, as it sits in the valley where the Nackawic stream meets the Saint John River. It is located 65 km west of the capital city of Fredericton and, although it has a population of only 1042 people, its economic influence over approximately 8000 people in the surrounding communities is strong. The town got its name from the Maliseet-First Nations word meaning “not straight” or “not in the direction it seems to be” since it is at the town that the Saint John River turns sharply southeast and flows lazily to Fredericton.

The importance of the forestry industry is reinforced by the presence of a statue that is called the World’s Largest Axe, which sits on the banks of the river and cannot be missed. The town was designated as the Forestry Capital of Canada in 1991, a title that locals still comment on proudly. Two major events changed the landscape of Nackawic in the past 40 years: the construction of the Mactaquac Dam and the establishment of a pulp mill. In 1966 the provincial government built the Mactaquac Dam across the Saint John River, a facility that still provides the majority of power to southern New Brunswick residents. Nackawic was developed to provide a home for people displaced by the flood waters. In 1970 New Brunswick’s first industrial community was created with the opening of the St. Anne Nackawic Pulp and Paper Mill. According to the latest Canada Census, while the population of the town might be small, they enjoy one of Canada’s highest gross family incomes at $65,900.

Senior operations manager, Alan Danroth, is a native of British Columbia and admitted never being further east than Montreal before taking the position in Nackawic. Seventeen years of experience gained out west brought him to the New Brunswick mill which he describes as the most beautiful location for a mill in Canada.

MANAGING THE MILL

Commenting on the challenges to the revitalized mill, Peter Vinall said, “We are committed to finding innovative ways of remaining competitive. By taking a collaborative approach with our employees and key stakeholders, and embracing emerging technologies, we’ll succeed. With a flexible work force and a plant that will be able to readily change product from dissolving pulp to kraft pulp and back, we are well-placed for success.”

On working with a large, India-based conglomerate, Vinall said, “They offer us reasonable liberty in managing our affairs, while at the same time providing broad technical support. They stand for value chain optimization corporately, and they view us as a long-term investment.” The Aditya Birla Group regards itself as India’s first global corporation, being a player in 72 manufacturing units and sectoral services in India, Thailand, Philippines, Egypt, Australia, China and Canada. Viscose staple fibre, non-ferrous metals, cements, viscose filament yarn, branded apparel, carbon black, chemicals, fertilizers, and sponge iron are just some of its products.

“We, as managers, are open, straightforward and transparent,” said Vinall. It seems to be an effective formula, as the mill recently posted a new daily production record of 969 ADMT.

“The new ownership style at the mill is based on a high degree of accountability,” added Danroth, “and that is what motivates the best.”

A native of Australia, Vinall has over 25 years of experience in the industry with career stops in the USA, New Zealand, Canada, Norway and his homeland Australia, where he started as an electrical engineer with Australian Paper in 1981.

Peter Vinall regards his years in the pulp and paper industry as a worldly voyage of experience. He left Australia in 1987 and headed to the United States for seven years, before m
oving back down-under to New Zealand to take up a restructuring role for Fletcher Challenge Group. It was while working for Fletcher that he was initially transferred to Canada, where he worked extensively on the West Coast. At age 48, he is father to three children and expecting a fourth soon. In addition, he has three stepchildren to keep his life full. “My career has given my older children the opportunity to become very worldly and I am very proud of that fact,” admitted Vinall. One senses that it is Vinall’s own worldly experience which makes him the right man to lead this mill to the future.


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