It’s a battle on paper — or, at least, over paper. In the past few days, Kruger and its paper mill workers in Corner Brook announced they’ve reached an agreement on paying back the shortfall in the company’s pension plan.
“These relief measures were essential to the mill’s ability to compete in the market and will enable the company to pursue its assessment of the mill’s long-term viability," the company said in a Friday news release.
“The next step will be for the company to present a sustainability plan to its lenders and to the Newfoundland and Labrador government within the coming weeks.”
Meanwhile, on Monday, the Nova Scotia provincial government announced a $124.5-million bailout to help reopen the NewPage paper mill in Port Hawkesbury, bring the total provincial commitment since the mill shut to $155.9 million. Part of the funding will help the new owners trim costs — and, as always, one of the largest costs involved is labour. Part of that money includes $40 million in the form of an operating loan. There’s also $26.5 million in forgiveable loans.
The mill is also expecting preferential electrical power rates — and is hoping for an as-yet undisclosed tax benefit from the Canada Revenue Agency.
The tradeoff for the province? Nova Scotia Premier Darrell Dexter argues the mill supports 1,400 jobs in rural Nova Scotia, and provides taxes and stumpage fees that total between $14 million and $16 million a year. The company also says it will spend $165 million annually on payroll and other costs.
The NewPage mill is a relatively new one and produces supercalendared paper used for magazines, rather than newsprint. but that doesn’t mean its example should be lost on those wondering about the future of papermaking in this province.
More and more, reductions in paper volume are winnowing out the industry’s high-cost plants. It’s not a matter of whether a mill is competitive on most fronts. Mills that last will have to be successful on all fronts, and that includes being successful in being able to wrangle concessions not only from their employees, but from province and state governments as well.
So far, Kathy Dunderdale’s government has maintained it is not interested in getting into the operation funding of the Corner Brook operation. That mill has already benefitted from more than $40 million in provincial help, but has still not been able to find sound financial footing.
And the paper field shrinks every day.
Catalyst Paper announced the permanent closure of its Snowflake, Ariz., recycled paper operation on July 30.
Verso announced the permanent closure of its Sartell, Minn., mill on Aug. 1 after a fire and explosion.
During the last two weeks, newsprint paper machines in Italy and on the Pacific Rim were shut down due to declines in newsprint sales.
There will be survivors in the paper industry.
The question is how close to the bone those operations will have to work, and how much governments are willing to put themselves on the hook to support the industrial jobs those mills represent.
The ante gets upped every day — and looking next door at the latest $156-million pot, it’s hardly a game for the faint of heart.
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Winston...that's now...now in 2012 we already have difficulty meeting demand. What will it be like in 20 years from now? I know it would be so nice if we could all shut off the lights, and turn off the heat and live like that...I'm sure to you that sounds fantastic...but to the rest of us, it does not. We will have to meet a growing need for power for industry and residential use. Vale alone will require nearly 100 megawats. We have to look down the road and see what makes most sense. What makes most sense is to build muskrat, get off oil, start paying into our own resource, and sell off the additional power on the spot market for hundreds of millions a year. Muskrat is the intelligent, well thought out answer to our future needs, and is part of a greater picture which will involve the UC and Gull Island and even Bay D'espoir. It's just a shame there are people who want to derail this project for their own personal or political gain...shameful...