Update: No subsidy for mill, but government open to role in restructuring plan: Kennedy

Gary Kean
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Paper mill union warns not to read too much into job cuts mentioned in internal memo

Natural Resources Minister Jerome Kennedy says that if a restructuring plan at the paper mill in Corner Brook calls for provincial government involvement, government is open to being involved in some way.

He said a direct subsidy is not an option, but government will consider a role in the plan.

Kennedy, who was speaking to reporters outside the House of Assembly in St. John’s today, said he has spoken with Kruger Inc., the parent company of Corner Brook Pulp and Paper, and that the company indicated it is committed to keeping the mill open, but there are issues that have to be addressed with the union.


(Earlier story)

An internal memo from Corner Brook Pulp and Paper’s (CBPP) parent company in Montreal may indicate some dire measures coming down the pipe, but one local union official says it’s nothing he hasn’t already heard from the company.

Just hours after Tuesday morning’s meeting at the mill between union representatives, local mill management personnel and officials from Kruger Inc., the office of Kruger’s public relations department emailed what was labelled as a confidential internal memo to The Western Star and CBC Corner Brook.

The company had intended to send out a news release about the meeting, at which it informed the unions it was implementing a review of operations and further details would be provided in the coming months.

The memo stated Corner Brook Pulp and Paper’s labour costs per tonne of newsprint is $40 higher than the North American average of $100 and its main competitor — Resolute Forest Products, formerly known as AbitibiBowater Inc. — had recently announced its intentions to reduce its labour costs per tonne to $80 from $97. The document said Kruger wants to find solutions and protect as many jobs at the Corner Brook mill as possible, but it “must reduce its workforce accordingly” if it is to achieve its goal of ranking in the first quartile of the industry.

The Western Star broke the story of the cuts Saturday, with initial reports indicating the mill was planning measures that would affect as many as 90 jobs. The memo sent Tuesday indicates as many as 135 could be involved.

“Best performing mills of comparable size and output operate with 250 employees on average, whereas the CBPP mill operates with 385,” the memo stated.

Bruce Randell, president of Communications, Energy and Paperworkers (CEP), Local 242, said labour costs are just one component of the overall cost of producing a tonne of newsprint.

He said efficiencies can still be found elsewhere in the operation and the job numbers reflected in the memo are inflated.

“It’s not comparing apples to apples,” he said. “It’s comparing apples to oranges.”

Immediately following Tuesday’s meeting, CEP national representative Gary Healey spoke with the media and said the unions were given no details of the company’s plan other than there would be a “manning reorganization and rationalization” plan developed in the first quarter of 2012. Healey said there was no indication of numbers of jobs that might be affected by the operational review or if there would be layoffs.

Randell said the information contained in the memo is something the union has been dealing with for years. He said employees will continue to work with the company to make the Corner Brook mill more viable, but it takes more than cutting jobs to reduce costs.

“This doesn’t change what we’ve been trying to do every week that we go into the mill. We try to reduce costs,” Randell said.

“The most important issue is efficiency of the paper machines and we’re losing direction. We’re concentrating so much on manpower costs that we’re losing our focus on the efficiency of the paper machines.”

In the news release Kruger issued Tuesday, the company said the rationalization plan would cover all sectors of the mill and the company “must reduce its labour costs which are significantly higher than the Canadian industry average.”

Healey told reporters he didn’t think anything odd about having officials from Montreal fly to western Newfoundland for a meeting at which little detail was divulged.

“They probably have their reasons why they articulated this announcement today, but they didn’t share that with us,” he said. “They just said it was appropriate to give us this level of detail and that later on in the first quarter they would provide us with more information.”

Healey said he was hopeful the union will get to have some input on the operational review, but that remains to be seen.

“I guess there will be an opportunity for the union to sit down with management and discuss the options,” he said.

“They didn’t articulate that in a very clear manner, but we anticipate we would be given that option.”

Labour contracts between the unions and Corner Brook Pulp and Paper expired about three years ago and, in 2010, employees agreed to a 10 per cent wage deferral for 12 months which they still hope will be repaid to them. Healey said neither subject came up in Tuesday’s discussions.

The deferred wages won’t be paid back until the mill can return to profitability. With a dedicated workforce, close proximity to wood supply and deep-water port and its own power plant, Healey said he is optimistic that can happen.

“It’s a tough time to be in the newsprint business, but this mill could easily be a keeper for the long term,” said Healey.


The Western Star

Organizations: Kruger Inc., North American, AbitibiBowater Inc.

Geographic location: Montreal, Western Star, Corner Brook Newfoundland

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Recent comments

  • Bob
    January 25, 2012 - 08:57

    It's "coming down the pike".