Economist forecasts mill closure

Cory
Cory Hurley
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Corner Brook Pulp and Paper.— File photo by The Western Star

A local economist says Corner Brook has to mobilize now, prepare for its future, and not wait until its mill shuts down.

Gabriela Sabau, an economics professor at Grenfell Campus of Memorial University, said the industry this city was primarily built on will end. She said the 46 job losses announced this week, with indications of more job losses to come, is a phasing out of Corner Brook Pulp and Paper by Kruger.

"I saw this coming," Sabau said. "I think it is just the beginning, and I think it is going to end with the mill closing down. It is a good thing they are phasing it out like this, and they didn't just shut it all down at once and have 600 people without jobs."

There were approximately 440-450 positions directly inside Corner Brook Pulp and Paper, according to a union representative. Prior to the recent job cuts, 385 of those were unionized.

Although Sabau said she previously encouraged mill representatives to diversify its operation, she does not place all the blame on Kruger. She said the pulp and paper industry worldwide is in trouble because of the tension between the lessening demand and the escalating cost of supply.

However, after reading the newsrelease issued by Kruger pertaining to the job cuts, she concluded the company wants to slowly rid itself of the Corner Brook mill.

"This is nonsense, because they don't say how they want to reduce the labour costs," she said. "You don't just reduce the labour costs by firing people. They should have in place something else to do with these people, not just reduce labour costs like this."

While doubting the cost-saving impacts of job reductions for the company, Sabau said the loss of 46 positions from the local economy will certainly have a negative effect - as will the constant threat of further job losses.

"The best thing to solve this problem is to provide for these people, not just a severance package or some money for getting laid off, but give them some ideas or perspectives of what they can do," she said.

The economist suggested training programs for the younger workers and providing business opportunities for the older workers.

It can all be a part of the diversification of the city, according to Sabau, but there must be a common vision developed of where Corner Brook's future is. Right now it is thriving on a dying pulp and paper industry, she said, and two main service industries - health care and education.

She said Corner Brook must attract business and major industrial or manufacturing industries. In preparation for the time she says the mill will close, it is vital the city has a plan in place, possibly even already acting upon it.

"I would love to see some manufacturing being done in this place, because that is what makes an economy really healthy."

 

Geographic location: Corner Brook

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  • All part of the bigger picture
    February 06, 2012 - 12:36

    Has this been considered in the Muskrat Falls deliberations? The information on demand that I've seen assumethat the mill will remain in production. I think that it would be prudent for our government to seek guarantees of that prior to sanctioning a 6.2 billion dollar project that has it's economic viability largely dependent on the demand forecasts.

  • Charles
    February 06, 2012 - 09:32

    At no time did i say to give anymore money to the company, What i did say if we are paying four MHA,Don't you think that they should be earning it?Reguard of too many workers at the mill.Is wrong for you to say that.Unless you understand the paper industry.Behind those walls,With all that space that going to waste,Can be use for manufactureing,And by doing this , you will need those worker and more, to keep up with the work.

  • DD
    February 05, 2012 - 18:42

    The trouble with Corner Brook is there are too many people working at the mill already. The economist's vision is what will happen. MHA's got nothing to do with the forecasted situation there other than give Kruger everything free. They'd probably take something like that for awhile take off when it suits them. But she's right, it'll happen sooner than later.

  • Charles
    February 05, 2012 - 11:38

    DD, This is the kind of thinking that keep us behind. Do you understand,If we only had some leadership in our MHA'S,The province wouldn't be on a decline.There would be more people working,while at the same time making a good living right here at home. WE JUST NEED SOMEONE WITH VISION,SO FAR WE GOT NO ONE.

  • DD
    February 05, 2012 - 10:29

    Another segment of Newfoundland's history appears headed for the chopping block. Not surprising with today's technology. OCI in Marystown is a prime example. Towns survived the Yanks departure from St. John's, Argentia, Stephenville and Goose Bay. Air Canada and EPA closed up shop in Gander long after Pan Am and other translantic carriers left town. Major airlines went into bankruptcy or merged. CN is long gone from Newfoundland. People bit the bullet and moved on or elsewhere. Corner Brook will do the same. Time Marystown got the message.

  • Scott
    February 04, 2012 - 13:33

    First of all the the mill is going,there no and or butt about it. Now is the time for one of ours MHA, To come up with a plan. To create jobs for the displace workers. Or are they going to sit back,and say this will work it way out.Like everything else. This is the good time for the two Liberal MHA, Mr Ball and Mr Joyce to shine. Let the people know that the Liberal are alive and well.

  • lonenewfwolf
    February 04, 2012 - 10:37

    kruger is negotiating with province and nalcor on how to remain on energy resources. check out kruger energy and look at their asset list. they are now an energy company driven by divesting milling assets and holding onto current energy assets as much as possible. no profit left in pulp, hasn't been for a good while. ask the tough questions and they'll brush them aside but its quite obvious what they're doing. wood chips 4 pulp/energy will soon be pure energy. they will also move on wind projects once the emera line is linked up. perhaps deer lake power will expand to include upper humber etc.

  • Beginning of end
    February 04, 2012 - 10:07

    The beginning of the end didn't start with these job losses. The "end" started years and years ago. Everyone has known since the closure of Stephenville that all the mills were lost.

  • I DISAGREE.......NOTHING WRONG WITH REDUCING LABOUR COSTS BY FIRING PEOPLE
    February 04, 2012 - 09:26

    The author said: "This is nonsense, because they don't say how they want to reduce the labour costs," she said. "You don't just reduce the labour costs by firing people. They should have in place something else to do with these people, not just reduce labour costs like this."..........................acutally, I disagree. There is nothing wrong with firing people to reduce labour costs...there is nothing wrong with a profitable company sheding workers simply to make the balance sheet look better. At the end of the day, SOME employees are simply not important to the company....it doesn't matter who actually does the work, as long as the work gets done. Of course, you cannot apply this logic to skilled educated workers such as lawyers, engineers, IT people, and so on.....so I don't because it would not be smart because THOSE workers are important. But I also have unskilled uneducated workers.....their most important job function is reading, which is a skill that nearly everyone has. Because nearly everyone has, there is clearly a surplus of the supply of that skill, so there is no harm in firing a worker to get profit up....If it turns out you need another worker, you just hire one off the street.....no big beal........I don't say this to be mean, but businesses exist to earn money and value for owners and shareholders, period. I have fired workers just to reduce costs, and fired workers just to re-hire new workers at a cheaper cost. That is called flexibility and flexibility is necessary for all busineeses to maximize efficiency. Unions have a history of opposing this type of flexibility, and that is why I have created jobs and made investments in right to work states...that is why I close canandian offices and move the jobs to the right to work states. Just look at EMD in London....union didn't support company restructuring, so compnay said bye. I have done the same, and I applaud EMD for showing the workers who is boss. And lastly, the company certainly has no obligation to find something for workers to do......why would a company take on that obligation, why would a company want an obligation for workers they have no use for....it just does not make sense. A company has a obligation to pay workers to do work, and if there is no work, the company has an obligation, to shareholders to shed jobs. THAT IS IT.