ST. JOHN’S, N.L. – Natural Resources Minister Jerome Kennedy says Newfoundland and Labrador will consider any plan to save its last paper mill but won’t offer direct subsidies.
“There is no ask of the government at this point although … if a long-term plan is presented to us to ensure the viability of the paper mill that doesn’t involve subsidies, then we’ll certainly look at that,” Kennedy said Wednesday.
Kennedy said he was assured by the owners of the mill owned by Kruger Inc. in Corner Brook that they’re committed to its long-term viability.
“As a government we are very committed to ensuring the paper mill survives,” he added.
About 385 people work at Corner Brook Pulp and Paper and at the Deer Lake Power Plant that supplies hydroelectricity to the operation.
Kennedy said he received a memo this week that Montreal-based Kruger intends to cut its Newfoundland workforce in coming months, and he was pleasantly surprised when no layoffs were announced as the company met with union officials this week.
Kennedy’s department said the province spent $89 million on the mill since 2004, mostly to buy power and timber rights.
On Tuesday, the company said it needs to reduce its labour costs to ensure the mill’s long-term future
An internal memo that was inadvertently released to one media outlet and then made available to others gave no indication of how many jobs might be lost among the mill’s workers. Nor did it say specifically whether other concessions might be sought.
In the internal memo, the company said Corner Brook Pulp and Paper’s production costs remain “well above the North American average,” with labour costs alone at $140 per tonne compared with the average of $100 per tonne.
“CBPP’s main competitor also announced publicly that it intends to reduce its labour costs to $80 per tonne,” the memo added, noting that the best performing mills of comparable size and output operate with 250 employees.
That would be 135 fewer than the number currently working at the Corner Brook mill.
“In order for the mill to survive and be competitive, it must rank within the first quartile of the industry. To achieve this goal, the mill must reduce its workforce accordingly,” the Kruger memo said, without specifying a number.
It said the company will start implementing a “workforce rationalization plan” in the first quarter of 2012.
Founded in 1904, privately held Kruger Inc. is a major producer of publication papers, tissue,lumber and other wood products, corrugated cartons from recycled fibres, green and renewable energy and wines and spirits. It has plants in Quebec, Ontario, British Columbia, Newfoundland and Labrador, and the United States.
