Duane Hicks
With news last week that AbitibiBowater was granted court orders for creditor protection in Canada and the United States in order to restructure in the face of a $6 billion (U.S.) debt, many have been left wondering what this will mean for the Fort Frances mill and the community?
“I really do have a concern,” Fort Frances Mayor Roy Avis said yesterday. “We have a concern because it interrupts the vibrant community we’ve had in the past, and all of a sudden our major employer is seeking protect under the CCAA [Companies’ Creditors Arrangement Act].
“I do have a tremendous concern because there are so many unknowns we’ll be walking through.
“I have had no meetings with Abitibi at this time, so I can’t speak officially, but I hope we can walk through this in a co-operative manner with Abitibi, with people in the community, and try to develop a path on which we can help everybody get through these difficult economic times,” the mayor added.
Mayor Avis said since the town has not officially met with the company since last week’s announcement, it’s premature to talk about what the restructuring may mean for those the company owes money to—like whether Abitibi will be able to pay its municipal taxes.
Fort Frances Chamber of Commerce president Cathy Emes said Monday afternoon the community seems “anxious, and a little afraid because they don’t know what’s going to come next, particularly the workers, who have had some downtime, and wonder will they have more downtime down the road and will all of those that have been working there be called back to work.”
“I haven’t heard too much from the business community,” Emes added, though noting she expects to soon hear more.
“I do know that in the last recession in the early ’80s, the retailers were affected by the recession,” she said, adding that in any recession, the first people to feel the pinch are retailers and this time around should be no different.
“The last recession, the mill didn’t even go down and the retailers [still] were feeling the pinch because the people were holding onto their money and not spending it because of the uncertainty,” she recalled.
Still, in her opinion, Emes said AbitibiBowater going into bankruptcy protection “is a good thing for our mill right now because it gives the company time to reorganize and strategize and figure things out.”
“By being in bankruptcy protection, what it means is that the courts have said to everybody, ‘You have to ease off and give the company the opportunity to reorganize itself’ so that none of the creditors can force them into bankruptcy,” she explained.
“So right at this point, they could pay their bills or they could choose not to pay their bills, but they still owe those bills,” she stressed.
Emes added, however, that she suspects this may make some businesses reluctant to sell their products to AbitibiBowater.
AbitibiBowater stated last week it had to pursue overall restructuring under court supervision once it became clear all other viable options to recapitalize its long-term debt were exhausted.
The company added it “plans to use this process to deal decisively with its debt burden for the benefit of all stakeholders. The company’s normal day-to-day operations will continue during the restructuring process.”
Seth Kursman, AbitibiBowater’s vice-president of communication, said yesterday that’s still the case.
“There’s nothing to announce regarding specific operations at this time,” he remarked. “That may change based on market conditions or economic circumstances.
“There’s a lot of work to be done on a plan that ultimately will be approved by our creditors, by the courts, but at this juncture, there’s nothing to announce in terms of shutdowns, downtimes, or anything,” Kursman noted, stressing it would “entirely inappropriate” to speculate what may come down the road.
As far as concerns about employee pensions go, Kursman was quoted in an April 16 article in the Globe and Mail that the pension question is complex—with some pensions secured, some not, and others inherited from predecessor companies.
“We have over 40 different plans just in Canada. A quick and easy answer is virtually impossible because each situation is different,” he told the Globe and Mail.
“We have our human resources people looking closely at this.”
In a press release issued Thursday, Communications, Energy and Paperworkers Union of Canada president Dave Coles stressed workers have done all they can to help mills survive, and it’s now time for employers and governments to do their part.
“The Communications, Energy and Paperworkers Union of Canada has explored every angle to save jobs and mills,” Coles remarked. “Workers have already done more than their fair share.
“Since 2004, pulp and paper workers in almost every mill have been in constant negotiations and restructuring to assist companies and mills to survive,” he noted. “They have negotiated efficiency and productivity measures worth hundreds of millions of dollars in savings for the companies.
“We believe firmly that jobs and mills cannot be saved by attacking workers’ wages and pensions or by breaking the common industry standards that have been established by our pattern bargaining system,” Coles argued.
“We now want assurances that the pensions of workers and retirees will be protected.”
As for plans for pattern bargaining with AbitibiBowater, which was to begin this summer, Coles said he is awaiting news on the company’s restructuring plans.
“We cannot go to the bargaining table without knowing who is sitting across from us,” he reasoned.
Coles also had some harsh words for the federal government in its treatment of the industry.
“While the world’s largest forestry company teetered on the edge of bankruptcy, with 12,000 jobs in jeopardy, the prime minister maintained that Canada’s economy was doing fine,” he said.
“Newspapers and airwaves are filled with stories of government plans to aid the auto sector, yet our requests for public aid for debt re-financing for forestry companies were ignored,” Coles added, noting that “forestry employs twice the number of workers as the auto sector.”
“Instead, the federal government recycles old announcements to create the appearance of action such as at [last] Tuesday’s news conference by the natural resources minister.
Coles said Canada’s forest industry is facing a further challenge as American forest companies stand to gain billions of dollars in unfair subsidies by manipulating a tax credit that was designed to promote bio-fuels.
“This could sound the death knell for the already-beleaguered industry,” he warned.
