Pulp and Paper Canada

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What’s New… (March 01, 2007)


March 1, 2007
By Pulp & Paper Canada

MILLS

FRASER TO BUY KATAHDIN

TORONTO, ON — Fraser Papers is buying Katahdin Paper Company. For a total of $50 million, Fraser will acquire a directory papers business located in Maine, as well as a 180,000 tons per year super-calendered paper business, also stationed in Maine.

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Fraser said the purchase was made with the intent to expand its specialty papers business, while adding two groundwood products to its repertoire.

MERGER

FORESTRY GIANTS COME TOGETHER

MONTREAL, QC — It’s being touted as a merger of equals.

The decision to join together two of the biggest North American forest products companies, Abitibi-Consolidated and Bowater, will position the joined enterprise as the third largest paper and forest products player in North America, and the eighth largest in the world. The new AbitibiBowater is expected to generate annual revenues of roughly $9.3 billion.

“It’s a tough marketplace we’re operating in, and we needed to create a more viable company,” David Paterson, incoming CEO of the new company said at a press conference held in Montreal the morning after the announcement. “But we believe there are no two companies in this industry that are as similar as our two. There are synergies there that will drive our financial improvement and flexibility.”

Together, AbitibiBowater will own a total of 32 mills, staffed by 20,000 employees. The new company’s footprint will stretch across roughly 70 countries, but the bulk of its business will be primarily North American.

Although Paterson did concede that with plans to station the head office in Montreal, there would inevitably be executive management layoffs in Greenville, SC, the merger was “not predicated on any mill closures. There will be an obvious overlap at the executive level, with redundancies there.”

Concern was expressed at the fates of several mills, in particular St. Flicien, Dolbeau, Donnacona and Mersey. Paterson offered equal assurance to all four facilities. “As Bowater, we feel good about Quebec, and we want to invest here, but we need a lower cost format to do so. We’re looking at our operations, and trying to find a more competitive structure to operate in. We’re in this together, it really isn’t a company versus employee issue. It’s really about getting these mills back to making a profit. Mersey has actually done quite well and I’m proud of that facility.” With regards to the situation at Dolbeau and Donnacona, Paterson referred to newly structured labour contracts which have allowed for a certain amount of corporate breathing room, thus improving the future of those mills.

In response to queries about potential challenges imposed by U.S. antitrust regulations, Paterson was equally confident, claiming, “we are in the process of contacting regulators now, and I feel confident that we will meet all regulations. I believe it will pass.”

“It’s an exciting and an important day,” Abitibi Consolidated CEO and future executive chairman of AbitibiBowater John Weaver said. “This transaction will enable us to move forward, to improve our product offering, our efficiency and will serve to strengthen both our companies. It truly is a merger of equals.”

MILLS

THUNDER BAY WOODLANDS WORKERS DEMONSTRATE

THUNDER BAY, ON — Anger over the way their labour dispute has been handled, woodlands workers staged a demonstration outside the Thunder Bay offices of Buchanan Forest Products on January 30, 2007.

According to a report by the Thunder Bay News Source, woodlands workers who are members of the United Steelworkers Union, comprise a group of employees formerly employed by Neenah Papers in Terrace Bay. The group was on strike when the facility was bought by Buchanan and now, more than a year later, the dispute remains unresolved.

The report confirmed that employees remain on the picket line, while Buchanan has contracted out the cutting of the Kenogami Forest, their former job site.

The complexity of the situation is compounded by a lack of legal requirement on behalf of Buchanan to initiate talks with workers. TB New Source confirmed that Buchanan is not obligated to restart negotiations with the striking local, ‘due to their termination by former employer Neenah Paper.’

MILLS

KRUGER IDLES TO BALANCE BOOKS

MONTREAL, QC — Kruger idled coated paper production at its Trois-Rivires mill from March 6 to13. During this time, the facility did continue to produce newsprint and supercalendered grades.

The decision was taken to rebalance its production with its order book, cutting coated paper production by 3,800 MT.

MILLS

KRUGER INVESTS $200M

TROIS-RIVIERES, QC — Kruger is pouring $200 million into the construction of a new de-inking plant at its Trois-Rivires, QC mill. The plant will have an annual capacity of 342,000 metric tonnes, and will permit Kruger to recycle an additional 422,000 MT/year of recovered paper, pushing the company’s total consumption of paper and board to 1,122,000 MT per year.

“Almost half of the fibre currently being used in our mills’ manufacturing processes is recycled,” noted Bernard Routhier, executive vice president and chief operating officer of Kruger. “This project, in addition to our other recent initiatives, allows us to improve our environmental balance sheet even more.”

The investment will also allow the company to reduce its energy consumption by 20%, as well as cut back on its virgin fibre consumption by 200,000 MT/year of chips and 229,000 m3/year of roundwood.

Kruger received $20 million from Investissement Qubec, and was eligible for Hydro-Qubec’s Plant Retrofit Program — Major Customers (PAMUGE), for energy efficiency, which rendered the company eligible for a $30 million contribution. An additional $50 million loan also came from Investissement Qubec.

The project will create 200 full-time jobs, with a total payroll of $50 million during construction, while purchases of goods and services are estimated to be $125 million.

SALE

IP SELLS BEVERAGE PACKAGING DIVISION

MEMPHIS, TN — International Paper has wrapped up the sale of its North American beverage packaging operations. For $413 million, IP sold off the division to Carter Holt Harvey.

The assets included in the transaction consist of converting facilities in California, Florida, Massachusetts, Michigan, North Carolina, Ontario and Quebec, as well as a manufacturing facility in Iowa, and a mill in Arkansas.

MILLS

CATALYST CUTS

VANCOUVER, BC — Catalyst Paper will cut 350 jobs by the end of the year. Looking to curtail costs, the company’s board signed off on a $12.9 million restructuring program that will allow for the layoffs. Both union and staff positions will be eliminated.

“Reductions of this nature will cause some hardship for affected employees, their families and the community, but they are part of the reality of improving our company’s ability to compete under very tough industry conditions,” said Ron Buchhorn, senior vice president of operations. “We recently met with our Powell River union locals to discuss the rationale and timeline for downsizing, and we will continue to meet with them in the coming weeks as we move through the process.”

Powell River will absorb $12.9 million of the cost-cutting measures, which translates to early retirement and severance packages for roughly 100 workers.

RESEARCH

EVALUTREE TAKES OFF

VANCOUVER, BC — The week of January 22 marked the official opening of EvaluTree. The wood and fibre quality analysis facility is a venture shared by Paprican, the University of Northern British Columbia and the University of Victoria.

Funded by the BC Knowledge Development Fund, the Canada Foundation for Innovation and P
aprican, EvaluTree will provide forest researchers with cutting-edge wood and fibre analytical tools and applied technologies.

EvaluTree’s primary role is to provide research capacity in wood and fibre analysis and it will work to extend its collaboration to researchers within Canada.

“EvaluTree has already allowed us to significantly speed up our efforts to address the issues in the pulp and paper industry caused by the mountain pine beetle infestation in BC,” David MacDonald, VP of research and education at Paprican, said of the facility’s progress to date, “and with the installation of SilviScan, allows us to work with a global network of wood quality experts, which includes Europe and Australia.”

FORESTRY

GREENPEACE CALLS FOR BOREAL PROTECTION

QUEBEC, QC — Greenpeace activists donned costumes and spread out over the province of Quebec at the end of January in an attempt to instigate a moratorium on logging in the Boreal Forest.

“There is a real urgency to protect Quebec’s Boreal Forest,” Melissa Fillion, Greenpeace forests campaigner said. “If the government does not immediately impose a moratorium, Quebec runs the risk of losing its last intact forests.”

Greenpeace is calling on Jean Charest’s government to adopt an immediate moratorium on industrial logging in areas of intact forest, or an area of 110,000 km2 of Boreal Forest and 180,000 km2 of the northern logging limit. The non-profit organization is further pushing for independent studies to determine which areas need to be protected before they are logged, for the establishment of larger and new protected areas, and to maintain the northern cut limit.

DESIGN

DOMTAR IN YOUR CORNER

MONTREAL, QC — Domtar has launched the Domtar Designer Corner.

Created by designers for designers, the medium covers industry news, events, designer profiles, eco-smart design options and tips for selecting the best paper to bring designs to life.

“Choosing the right paper is usually the first crucial step in creating an outstanding piece, which is why we’ve gathered tips from industry experts and provide designers with creative materials,” said Tewfik Atia, marketing communication manager for Domtar EarthChoice.

PAPERCLIPS

SHOULD THAT MONEY BE LAUNDERED?

With the challenges facing the pulp and paper industry, have you ever considered an alternate career in the lucrative business of drug smuggling? No? Well, you might already be contributing to the transfer of cocaine.

According to a recent report by CanWest News Service, studies have concluded that most paper money carries traces of cocaine. In fact, a study conducted in December 2006 discovered that a whopping 94% of banknotes in Spain were sporting traces of the fine white powder.

“Although some read the cocaine studies as evidence that a majority of bills have been used to snort cocaine or passed through the hands of users, others suggest sorting or counting machines and automated banking machines could easily spread traces of the drug from one bill to another,” CanWest said.

Despite its prevalence, the amounts of cocaine found on paper bills are no reason for concern, Blaise Lefebvre, spokesperson for Montreal’s public health department says. In fact, the proliferation of germs is a much greater cause for alarm.

“Cocaine is not a living organism,” CanWest reported her as saying, “while germs are, although most become inoffensive after a certain amount of time.”


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