Eurocan Grim Reminder of Intensely Competitive Environment
By 250 News
Tuesday, November 03, 2009 03:40 PM
Prince George,. B.C.- Hank Ketcham, the President and CEO of West Fraser calls the closure of the Eurocan mill in Kitimat a “Grim reminder that in an intensely competitive global environment, all stakeholders must be cognizant of the fact that higher cost producers in our industry will not survive the long run.”
West Fraser announced last week that the Eurocan mill will be shut down permanently by the end of January 2010. The closure will impact 568 direct employees, and as many as 2,000 more indirect jobs.
In a conference call to discuss the 3rd quarter results, Ketcham offered an apology to the workers, their families, the community of Kitimat and the northwest region of the province for the negative impact this closure will have. He says although the workers tried very hard over the years to make this mill successful, it continued to lose money, and West Fraser has no other option.
West Fraser is picking up more than $88 million dollars worth of credits for black liquor produced at its pulp mills. While a portion of those dollars are a result of the black liquor produced at Eurocan, West Fraser has not said where those dollars will go. Under the “Green Transformation” agreement with the Federal Government, those dollars can be put to use in any of the company’s holdings to create clean energy. Ketcham says the company is “working hard to identify projects that will improve our competitiveness.”
M.P for Skeena- Bulkley Valley, Nathan Cullen says there is something wrong with the Federal Government’s black liquor program when it hands out tax payers dollars to a company which then shuts down the very mill from which those dollars were earned. “In this unprecedented crisis in the forestry industry, we were told this very program and subsidy would keep our mills open and our forestry towns alive, but the program is deeply flawed.”
West Fraser estimates it will cost about $70 million dollars to close the plant, that estimate includes severance packages, contract cancellations, and costs to shut down the mill and the site. That expenditure will be offset by a reduction in the working capital needed to operate that site.
On the lumber side of the company’s operations, Ketcham noted the labour contract negotiations continue, but have been "slow with very little progress to date", the last contract expired in June. “We hope the parties will be able to reach an agreement on a new contract that recognizes the need to improve efficiency and reduce costs in order to preserve existing jobs and create new jobs through further investment and diversification.”
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Posted by: Harbinger on November 3 2009 8:55 PM
Yea the NDP is full of good ideas! Like bailing out Skeena-Cellulose! That worked out didnt it?