Mill's fate known by year's end

Terry Roberts
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Frustrated Dunderdale calling for answers

The future of the troubled paper mill in Grand Falls-Windsor will be decided by the end of the year, officials with AbitibiBowater said Tuesday during a discussion with Natural Resources Minister Kathy Dunderdale.

The company also informed the minister it has withdrawn its plan to implement an in-bush chipping operation, and will continue to depend on a rickety woods room at the paper mill to ensure a steady supply of fibre for the paper-making process.

Natural Resources Minister Kathy Dunderdale speaks to reporters Tuesday about the fate of the AbitibiBowater paper mill in Grand Falls-Windsor. - Photo by Keith Gosse/The Telegram

The future of the troubled paper mill in Grand Falls-Windsor will be decided by the end of the year, officials with AbitibiBowater said Tuesday during a discussion with Natural Resources Minister Kathy Dunderdale.

The company also informed the minister it has withdrawn its plan to implement an in-bush chipping operation, and will continue to depend on a rickety woods room at the paper mill to ensure a steady supply of fibre for the paper-making process.

What's more, AbitibiBowater has halted discussions with the provincial government on the repatriation of Charter lands. The province was willing to purchase the surface rights, which were granted to the mill owners when it opened a century ago, for millions of dollars.

The money was to be invested back into the mill.

Dunderdale expressed frustration at the turn of events, and called upon the company to make its plans known as soon as possible.

She said more questions are raised each time she speaks with the company.

The company, meanwhile, is weighing its options now that the union representing most of its employees in the region - the Communications, Energy and Paperworkers' union - has twice rejected restructuring plans.

The plan included the elimination of roughly 170 positions and the establishment of a so-called full-tree harvesting system, which included in-bush chipping and the closure of the woods room.

The union complained that the plan shredded union rights and would lead to widespread contracting-out.

The company has said it will continue with business as usual for the time-being.

"All those components were part of the restructuring plan. The plan has been rejected (by the union)," AbitibiBowater spokesman Jean-Philippe Cote said Tuesday.

Dunderdale and union head Gary Healey expressed concern about whether the woods room, which is in desperate need of improvements, can hold up throughout the winter.

"The woods room is wore out," said Healey.

The company has been hit hard by softening markets for newsprint, and is struggling to recover from stinging quarterly losses.

Officials have said the company will close or idle operations that are not competitive, and have repeatedly described the Grand Falls-Windsor mill as the highest-cost operation of its kind in North America.

Unless the company decides to invest in the mill, Healey doesn't believe the operation is sustainable.

He said the union is ready to resume negotiations at any time, and has signalled a willingness to accept many of the components in the company's renewal plans.

"It's not a question of not being sensitive to the company's needs. But they have to be sensitive, at the same time, to our needs," Healey said.

troberts@thetelegram.com


Geographic location: Grand Falls-Windsor, North America

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Recent comments

  • Jim Smith
    July 02, 2010 - 13:30

    Well Dave, that's a right pretty speech, but it hinges on a major flaw. The only way Abitibi is going to get money to refinance debt is by closing money losing operations. That means you GFW.

    Newsprint prices may increase and may drop, but consumption is going in the other direction in most markets, and there are more than enough better run mills that will take over the few vibrant markets that might exist in the lean years ahead. Abitibi was losing money before this current crisis - have fun rationalizing how they will survive in the worst economic downturn in 100 years.

  • jack
    July 02, 2010 - 13:19

    The Can $ is down & price may be up but I doubt that's enough to offset the problems. Some overseas markets are profitable but many are only machine fillers. Exploits power is not a cash cow, it is about enough for the mill, & without that there is no mill. The Nfld. Govt has spent money on silviculture, roads & spraying for many yrs for both companys. The lax environmental rules is nonsense. The $25 mil for the chartered lands is the same deal Clyde Wells did with Kruger when they were struggling in 1994. That's about one tenth(at most) of what is needed to upgrade G.F. At that time the employees gave Kruger a rain check on a raise increase & this was repaid with interest when the crisis was over. Bowater's big problem is to find the money needed to bring that mill up to an average standard. It needs to double output & still reduce payroll to get in line with other mills. The contract changes Bow. wants sound a lot like the changes that were almost a deal breaker when Kruger bought C.B. They had no effect on wages which are national.

  • Don
    July 02, 2010 - 13:18

    In Cathy Dunderdale....we are NOT in good hands. God help us!!!

  • R
    July 02, 2010 - 13:17

    Dave from NL sure seems to have a good handle on the GFW mill operations and I think his reasons are valid. I don't think AbiBow has the money to pay severance, and they don't need yet another money-losing quarter. However, I won't be surprised if they shut PM7 and re-try the in-woods chipping again. This is definitely a tough situation for the company and the employees. It's a sad case, your honour.

  • SANDY
    July 02, 2010 - 13:11

    This is going to be a bad news story because Danny is nowhere to be found on this issue. Dunderdale is out front as bad news bearer on this one.

  • Dave
    July 02, 2010 - 13:11

    AbitibiBowater will not close the Grand Falls Paper Mill. There have been improvements at the macro level in the newsprint industry. The company has been able to increase the price of newsprint to a a 12-year high of more than $700 a tonne. At this price and the recent drop in the Canadian dollar to $0.8076 versus the US$, the corporation will see an improvement in the bottom line. A major negative factor for AbitibiBowater is the relatively large debt of $5.8-billion. It has about $600-million (U.S.) worth of this debt coming due in 2009. Half of this amount is due in March of 2009 which will be very tough to refinance in this economic environment. But, for a few extra percentage points, it should be able to refinance the debt. It can sell the banks on improvements in the overseas market where demand for newsprint is actually growing. All of the output from the Grand Falls Mill is shipped to foreign markets from the port of Botwood. AbitibiBowater wants to see improvements in the port facility so it can increase shipments to the profitable overseas market. So, why is AbitibiBowater threating to close the Grand Falls Mill? When, (1) It is making money on shipments of the newsprint to the overseas market, (2) It has a cash-cow from hydroelectricity generated on the Exploits River, (3) The Newfoundland Government spent millions of dollars helping the company with silviculture, (4) The Newfoundland Government spent millions of dollars helping the company construct forest access roads and (5) It owns huge tracts of forested lands that can be harvested under fairly lax environmental rules. The only way AbitibiBowater can break the union and extract wage concessions to to threaten closure of the mill. Rest easy, they need the positive cash flow from Grand Falls to help finance their debt due in March, 2009.

  • Jim Smith
    July 01, 2010 - 20:18

    Well Dave, that's a right pretty speech, but it hinges on a major flaw. The only way Abitibi is going to get money to refinance debt is by closing money losing operations. That means you GFW.

    Newsprint prices may increase and may drop, but consumption is going in the other direction in most markets, and there are more than enough better run mills that will take over the few vibrant markets that might exist in the lean years ahead. Abitibi was losing money before this current crisis - have fun rationalizing how they will survive in the worst economic downturn in 100 years.

  • jack
    July 01, 2010 - 20:01

    The Can $ is down & price may be up but I doubt that's enough to offset the problems. Some overseas markets are profitable but many are only machine fillers. Exploits power is not a cash cow, it is about enough for the mill, & without that there is no mill. The Nfld. Govt has spent money on silviculture, roads & spraying for many yrs for both companys. The lax environmental rules is nonsense. The $25 mil for the chartered lands is the same deal Clyde Wells did with Kruger when they were struggling in 1994. That's about one tenth(at most) of what is needed to upgrade G.F. At that time the employees gave Kruger a rain check on a raise increase & this was repaid with interest when the crisis was over. Bowater's big problem is to find the money needed to bring that mill up to an average standard. It needs to double output & still reduce payroll to get in line with other mills. The contract changes Bow. wants sound a lot like the changes that were almost a deal breaker when Kruger bought C.B. They had no effect on wages which are national.

  • Don
    July 01, 2010 - 19:59

    In Cathy Dunderdale....we are NOT in good hands. God help us!!!

  • R
    July 01, 2010 - 19:57

    Dave from NL sure seems to have a good handle on the GFW mill operations and I think his reasons are valid. I don't think AbiBow has the money to pay severance, and they don't need yet another money-losing quarter. However, I won't be surprised if they shut PM7 and re-try the in-woods chipping again. This is definitely a tough situation for the company and the employees. It's a sad case, your honour.

  • SANDY
    July 01, 2010 - 19:47

    This is going to be a bad news story because Danny is nowhere to be found on this issue. Dunderdale is out front as bad news bearer on this one.

  • Dave
    July 01, 2010 - 19:47

    AbitibiBowater will not close the Grand Falls Paper Mill. There have been improvements at the macro level in the newsprint industry. The company has been able to increase the price of newsprint to a a 12-year high of more than $700 a tonne. At this price and the recent drop in the Canadian dollar to $0.8076 versus the US$, the corporation will see an improvement in the bottom line. A major negative factor for AbitibiBowater is the relatively large debt of $5.8-billion. It has about $600-million (U.S.) worth of this debt coming due in 2009. Half of this amount is due in March of 2009 which will be very tough to refinance in this economic environment. But, for a few extra percentage points, it should be able to refinance the debt. It can sell the banks on improvements in the overseas market where demand for newsprint is actually growing. All of the output from the Grand Falls Mill is shipped to foreign markets from the port of Botwood. AbitibiBowater wants to see improvements in the port facility so it can increase shipments to the profitable overseas market. So, why is AbitibiBowater threating to close the Grand Falls Mill? When, (1) It is making money on shipments of the newsprint to the overseas market, (2) It has a cash-cow from hydroelectricity generated on the Exploits River, (3) The Newfoundland Government spent millions of dollars helping the company with silviculture, (4) The Newfoundland Government spent millions of dollars helping the company construct forest access roads and (5) It owns huge tracts of forested lands that can be harvested under fairly lax environmental rules. The only way AbitibiBowater can break the union and extract wage concessions to to threaten closure of the mill. Rest easy, they need the positive cash flow from Grand Falls to help finance their debt due in March, 2009.