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Industry News (January 01, 2006)


January 1, 2006
By Pulp & Paper Canada

MILLS

MILLS

DOMTAR MAKES MAJOR CUTS

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MONTREAL, QC — Domtar is initiating an exhaustive series of closures and sales in an aim to return to profitability.

The Cornwall, ON, mill will be shut down permanently. The facility was partially, though indefinitely, closed in 2004. A total of 910 jobs will be cut by this closure, however, 390 of those positions were eliminated when the pulp mill, PM 6 and one sheeter were idled last December.

The Ottawa, ON, mill will lose its PM 10 and PM 11 at the end of March of this year, at which point 185 positions will be eliminated. The papermachine in Hull, which makes up part of the Hull/Ottawa complex, will remain in operation.

The sawmills at Grand Remous and Malartic, QC, will both be closed, and the company will be selling its mill in Vancouver, BC.

An additional 100 corporate and divisional jobs will be cut, on top of another 200 operational positions at the mill level. In all, the company will be reducing its workforce by 1,800 people.

Domtar also recently stopped production at its Quebec Lebel-sur-Quvillon mill, and won’t restart it until economic conditions improve.

“The strengthening of the Canadian dollar has pushed some of our Canadian mills to negative cash flow generation, and we must focus on our most efficient mills in order to return to profitability,” said Richard Garneau, executive vice president of operations.

President and CEO Raymond Royer said of the decision, “mill closures are very difficult decisions to make, since they impact our employees, their families and the communities where we operate.”

MILLS

POTENTIAL PORT ALICE BUYER PACKS IT IN

PORT ALICE, BC — A rejected offer has sent Richard Bassett walking, the CBC reported. By 57%, members of the Communications, Energy and Paperworkers Union voted against the offer that would have reinstated their jobs. This in turn prompted Bassett, the businessman behind the proposal to reopen the Port Alice pulp mill, to turn away from the project.

According to the CBC, Neucel Specialty Cellulose, a group of U.S.-based investors, had been trying to purchase the mill, and appeared to be making headway. The company recently secured the commitment of the provincial government to foot the bill for the cleaning up of pollution at the site. However, the company failed to persuade millworkers to accept the new contract, which involved rollbacks on pensions and seniority. The CBC reported CEP union officials as saying that accepting the contract would have frozen their existing pension plan, discarded seniority and cut back on the amount the company proffers for health and welfare benefits.

The CBC further reported the 57% rejection vote is causing tension in the Port Alice community. No other buyer has indicated an interest in the mill.

HEALTH AND SAFETY

FINNISH PAPER MILLS ADOPT NEW SHIFT SYSTEM

HELSINKI, FINLAND — Research on health and sick-related work absences has prompted the Finnish Forest Industries Federation and the Finnish Paperworkes’ Union to allow mills to adopt a short shift rotation system in three-shift work. According to the latest research in the field, the switch is expected to reduce sick absences while promoting occupational health. Shift workers will work two morning shifts, two day shifts, two evening shifts and will then have four days off. Paper mills will be able to agree at the local level whether or not to adopt the new system. Currently, there are roughly 13,000 workers doing continuous three-shift work in Finnish pulp and paper mills.

MILLS

CASCADES CLOSES THUNDER BAY PLANT, ONE MACHINE AT ST. JEROME

KINGSEY FALLS, QC — Cascades is closing its Thunder Bay plant, a move that will see 375 people lose their jobs.

Citing weak market conditions, the mill will officially cease operations on January 21st 2006, at the latest.

“This closing has become inevitable,” said Alain Lemaire, president and CEO of Cascades. “We sincerely regret the negative impact that this decision will have on the employees as well was the Thunder Bay area.”

Despite efforts it made over the past years to prop up the mill and make it profitable, pressures from anemic fine paper prices, a strong Canadian dollar, compounded by high energy and raw material prices have counteracted these attempts, the company has said.

Cascades is also closing part of its St. Jrme plant, by shutting down one of its four papermachines. Roughly 100 jobs will be lost as a result.

ENVIRONMENT

SKOOKUMCHUCK RECEIVES ECOLOGO CERTIFICATION

SKOOKUMCHUCK, BC — Tembec Skookumchuck is producing green electrical energy. On September 19th, the facility’s operations became a licensed user for the EcoLogo label for its electrical generation under the Environmental Choice Program, the official eco-labeling program administered by Environment Canada.

To obtain certification, the plant underwent an extensive audit of its operations covering air emissions, fuels consumed, quality assurance and environmental management, as well as electrical on data. The mill also had to demonstrate that its forestry practices were conducted with similar quality and environmental programs in place.

Tembec Skookumchuck is the first pulp mill to receive certification in BC. “Although others may follow,” acknowledged Chris Lague, project engineer and energy coordinator at Skookumchuk, “I am not aware of any others who have been audited yet. The last hurdle to be accepted is very tall as a relatively large amount of electrical energy must be generated to offset the higher emissions associated with the operation of a recovery boiler and the requirements of servicing steam loads in the plant in a co-generation setting such as ours.”

Lague also explained that the BC government has mandated BC Hydro to obtain at least 50% of its new generation capacity from ‘green’ or ‘clean’ sources. The new certification is expected to eventually help the mill secure a better price for the energy it sells.

MILLS

MIRAMICHI SHUTS FOR THREE MONTHS

NEW YORK, NY — February 1st will mark the start of a three-month hiatus for UPM Miramichi. UPM Kymmene said that high operating costs and a strong Canadian dollar have rendered exports to the United States unprofitable.

Roughly 540 union employees at the paper mills and groundwood mill will be laid off. An additional 125 staff positions at these sites may also be cut, but no official announcement on this front has yet been made.

PRICES

EXPECT NEWSPRINT PRICE HIKE, SAYS ABITIBI CEO

MONTREAL, QC — A price hike announced in October will be set in motion in the next few weeks, the CEO of Abitibi-Consolidated has said. John Weaver confirmed that another newsprint price increase is to be expected in the new year, as the industry begins to benefit from better supply and demand, the Canadian Press has reported.

According to CP, Weaver said that Abitibi’s position in the industry is such that it can influence overall prices through the reduction of its own capacity. He also said that after seven consecutive newsprint price hikes, prices are now approaching what is referred to as ‘trendline’ pricing.

“North American inventories are significantly lower for newsprint,” CP reported Weaver as saying. “We’ve seen some rebound in October and November, [after a third quarter drop in lumber prices] the fourth quarter should be somewhat better than the third, especially in terms of pricing.”

CAPITAL EXPENDITURES

KRUGER INVESTS $1.9M

MONTREAL, QC — Kruger is investing $1.9 million to modernize the corrugator at its Lasalle, QC plant. The upgrade will involve the replacing of a single facer and installing a new quality control system on the corrugator. The company is e
xpecting that efficiency, product quality, uniformity and capacity of the corrugator and of the downstream converting equipment will all be improved.

The expenditure is part of a five-year investment program. To date, the company has doled out $15 million in upgrades at its packaging plants in Ontario and Quebec.

The Lasalle, QC facility, which produces 1.2 billion square feet of corrugated containers per year, is part of the company’s containerboard division.

PAPERCLIPS

WHEN YOU SHOULDN’T BELIEVE YOUR EYES

W hen the magic trick involves money, it could land the magician in jail.

A Minnesota man is facing charges after allegedly claiming he was in possession of a potion that could transform plain white paper into cold hard cash.

According to the Associated Press, the defendant, 22 year-old Franklin T. Forlemu used fancy finger work to give the illusion that he was turning paper into US $20 bills. Forlemu managed to swindle a grocery storeowner, who willingly handed over more than $70,000 in bills, hoping to multiply the amount. When he discovered he had exchanged his money for paper, he called the police, who then found the money in Forlemu’s apartment.

The ‘potion’ was water.

The Associated Press further reported that Forlemu, an illegal immigrant from Africa, has no prior felony convictions and was released on personal recognizance. No counterfeiting charges were filed by the US Secret Service, but officials are watching the case, according to the AP report.Source: The Associated Press

ENVIRONMENT

CANADA GONE GREEN

OTTAWA, ON — In the past 15 years, Canada has managed to cut down its greenhouse gas emissions (GHG) by 44%, the Forest Products Association of Canada has reported. Since 1990, the pulp and paper sector has reduced its GHG by 28%, while increasing production by over 30% and improving intensity, surpassing is Kyoto targets by more than four times.

“The forest products industry, more than any other industry in Canada, has a unique perspective on climate change mainly because forests and the products derived from them literally embody carbon,” said Avrim Lazar, president and CEO of FPAC.

Canada’s pulp and paper industry currently meets 57% of its energy demands with biomass, and is now the largest industrial source of cogeneration or combined heat and power capacity in Canada.

MILLS

PAPIER MASSON SOLD TO WHITE BIRCH PAPER

GATINEAU, QC — Ownership of Papier Masson now rests in the hands of White Birch Paper Company. The two corporations recently announced the reaching of an agreement for the acquisition of all the outstanding shares of Papier Masson by an affiliate of White Birch Paper Company. The deal is expected to wrap up in the first quarter of this year.

BMO Nesbiit Burns acted as a financial advisor to Papier Masson, while TD Securities and Credit Suisse First Boston provided financial advisory services to White Birch Paper.

“This is the right acquisition at the right time,” Peter Brant, CEO and chairman of White Birch said of the purchase. The transaction positions White Birch as the third largest producer of newsprint in North America.


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