Monday, September 1, 2014

Resolute closes mill permanently

The other shoe has dropped.
One week short of the town celebrating 100 years of paper-making, Resolute Forest Products Inc. announced yesterday it is permanently closing its previously-idled pulp and paper mill here.

“We tried hard to find a way to reposition these assets, particularly the pulp mill,” Resolute president and CEO Richard Garneau said in a press release yesterday.
“But unfortunately, due to end product markets, the mill’s operational configuration, and its cost position, we’ve concluded that there was no economically-viable option for the pulp and paper operations at Fort Frances,” he noted.
The permanent closure comes after a series of operational changes and significant staff cuts over the past 18 months.
Resolute announced an extended period of market-related outage on its remaining paper machine in January.
The kraft pulp mill and another paper machine have been idled since November, 2012.
Xavier Van Chau, director of Communications and Corporate Social Responsibility for Resolute, noted the operating cost for the company to keep the facility open yet idle was “significant.”
In fact, Resolute reported last week it had to spend about $9 million in the first quarter doing so.
“We heated the mill,” Van Chau said. “We kept the assets in asset protection mode because we were looking for a viable solution and because we wanted to keep the assets in good order.
“But at this point, we determined the best course of action was permanent closure.”
Van Chau stressed Resolute currently is exploring opportunities to continue to operate the biomass boiler and electricity-producing steam turbine here.
“We are hopeful for that,” he remarked. “The announcement today [Tuesday] really deals with the pulp and paper assets of the mill.”
Meanwhile, Van Chau said what will happen with the actual pulp and paper mill is “a more long-term decision” at this point.
“But given that we’re trying to continue to operate the biomass boiler and the steam turbine, we very much consider the assets as ours,” he noted.
Van Chau said 20 of the roughly 50 remaining local Resolute staff were provided notice yesterday.
“There are a number of employees that are still part of the team,” he said. “Today’s decision doesn’t have any impact on the woodland employees and other positions, as well.”
Those affected were staff who were retained to manage the idled facility.
In its press release, Resolute said it will work with affected employees, all levels of government, and other local authorities on programs to lessen the impact of this permanent closure.
Van Chau said the company also hopes to “keep the skills in-house and look for opportunities to redirect some of our employees to our Atikokan sawmill, our Ignace sawmill, and the expansion going on at our Thunder Bay sawmill.”
Uncertainty gone
“Over the last while, there’s been inklings, there’s been a lot of street talk, but there was nothing concrete,” Fort Frances Mayor Roy Avis said yesterday.
“But today [Tuesday] we got the message—that it is going to be closed.
“I look at that, in one way, as a positive to us because we know the direction that we have to take the community in now,” he added.
“We can’t be hoping or thinking that maybe someday it’s going to re-open,” Mayor Avis remarked.
“The uncertainty is gone and we have to move on.”
Mayor Avis said he believes Resolute did everything it could to try to reposition the local pulp and paper mill, but was unsuccessful due to market conditions and a global decrease in demand for paper as electronic media like iPads become the norm.
“If you would have asked this same question 25 years ago, I would have said, ‘This mill will never close,’” the mayor said.
“But with today’s world, the way technology has changed, it’s become a reality.
“The only thing that makes it a little hard is that next week we’re to be celebrating our 100 years in the paper industry in town,” he added.
“We’re about one week short.”
Looking ahead, the town also will have to deal with further loss of assessment of the mill property and, therefore, less tax revenue.
“It’s definitely going to affect mill assessment, which will definitely affect the taxpayers in our community,” Mayor Avis conceded.
“All we can hope for is maybe we can find some other industry, or maybe a few smaller, or as we call them ‘incubator,’ industries that will offset that tax loss,” he added.
Meanwhile, Unifor was it was very disappointed with Resolute’s decision to permanently close the mill here.
“The decision by Resolute today [Tuesday] to permanently close the Fort Frances mill is a final major blow to the community of Fort Frances and to our members and their families there,” said Unifor national rep Stephen Boon.
“In 2010, Unifor members in Fort Frances agreed to a number of significant sacrifices related to wages, benefits, and future pension service in order to help Resolute successfully restructure itself,” he noted.
“We all hoped these difficult employee sacrifices, the abundance of quality wood fibre, and this mill’s ability to produce most of its own power would encourage Resolute to finally step up and make the necessary capital investment to re-position the Fort Frances site specifically related to the kraft mill,” added Boon.
“Most of the mill workforce was terminated on March 12 and we have been preparing for this potential outcome by ensuring all affected members are provided with their contractual severance rights, pension grow-in enhancements, and local labour market retraining and job search services through Northern Community Development Services,” Boon continued.
“With this decision to now permanently close the Fort Frances mill, we will now work to ensure Resolute follows through on its commitment to provide new job opportunities for affected Fort Frances employees in Thunder Bay or at the soon-to-be opened sawmills in Atikokan and Ignace,” he said.

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