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2013-04-25 at 17:19

Resolute CEO sees future for Thunder Bay mill, but must become more competitive

By Leith Dunick,
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The president of Resolute Forest Products says he thinks the company’s Thunder Bay mill has a future in the pulp and paper business.

But, added Richard Garneau, it won’t come easy.

Facing a 10 per cent decline in demand over the first quarter of 2013 compared to a year ago, Garneau said the company had no choice but to temporarily shut down the plant this month, correcting a potential oversupply had the decision not been made. More than 100 people were affected.

With demand dropping in North America, Garneau said it will take some creativity to open new markets in other parts of the world.
It can be accomplished, he said.

“When you look at Asia, when you look at Latin America, they don’t have the softwood trees that we have in the North here. I think these markets are still growing and we’re very confident that we’re going to be able to basically offset some of the decline and demand in North America by the increased demand in the export market,” Garneau said.

Finding efficiencies is the only way the company can survive in Thunder Bay, he said.

“We have to be very mindful that the mills have to be very competitive to survive in this environment.”

He did say it’s unlikely the shutdown will stretch beyond the announced two-week limit.

“No, the plan now is to take a couple of weeks of down time. We’re going to come back, but we’re going to monitor how the situation is going to evolve. What is important here is really to look at the operation and make sure the operation in Thunder Bay is truly competitive,” Garneau said.

While housing starts have topped a million in the U.S., giving him hope that segment of the $57-billion forest industry is primed for a rebound  – good news for a proposed Resolute sawmill in Atikokan – the pulp and paper tailspin is quite concerning, Garneau said.

“I think it’s probably an indication that the economy is not recovering as quickly as thought,” he said Thursday, after giving a half-hour overview of the future of the forest industry to delegates attending the Northwestern Ontario Municipal Association’s annual general meeting.

“It’s the mills that are going to have the lowest costs that are going to survive in this difficult environment.”

Garneau also said Thunder Bay’s location could hurt the company’s ability to deliver cost-efficient product to the marketplace.
As for progress in Atikokan, Garneau said a location has all but been chosen.

“We’re in the last stretch. When you look at the weather, there is no urgency yet, but we’re working on the plant and the design itself. It is going to start sometime in the spring or early summer. ”


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moi says:'s the old, "hate to break it to ya but," speech, I can only imagine what's in store (next) for the workers.
When management starts to use words like "creativity" and "surviving", you know you're in trouble. It's just starting...can't wait to hear what will be announced in the coming weeks.
..."Thanks, but no thanks, unless you've been with us for 30+ years,and have lots of seniority, it's been nice knowin ya,don't let the door hit ya on the way out." Start sendin' out those resumes boys and girls, 'cause I've got a pretty good idea where this is headed...nothing like fattening-up a turkey before the slaughter.I don't make these comments lightly..."been there,done that". I wish all the workers at Resolute good luck--it's pretty obvious that the company is setting you workers up for some nasty news in the not too distant future.If I'm wrong, I'll be the first to say "my bad", but I wouldn't hold my breath waiting for positive news.
4/25/2013 7:03:17 PM
tbay99 says:
Well I agree this looks bad I will give a not so doom-and-gloom stance. Companies often do this to put pressure on unions. Right now Resolute is looking to contract out work that was previously done in-house by union workers and in turn the union is filing a grievance. Lay-offs such as this puts the company in a position of power over the union and paints an ugly picture moving forward giving the impression that contracting out is "the only way". Its an ugly tactic but it works.
4/25/2013 9:43:16 PM
realistic1 says:
Unions eventually drive every company into a non competitive situation. When you're out of a job, you'll be happy you even had one and you'll be happy to work for 20% less. Just ask the former employees of the Kenora mill. They didn't know what they had 'til it was gone.
4/26/2013 7:42:24 AM
SomeGuy says:
Move away from producing newsprint then. If no one is buying your product, change the product.
4/26/2013 7:50:39 AM
CM Punk says:
What TBay99 does not know is that those who are doing those jobs outside of the union are being more then they would have to pay a unionized worker to do the same job.
So if its about saving money, you are more wrong then a 3 dollar bill.
4/26/2013 9:30:55 AM
tbay99 says:
You are clearly clueless on the subject. A unionized worker often gets paid holidays, overtime pay, set hours and benefits where as a contracted worker often gets a flat rate, no set hours and no benefits. Sure, the pay may be higher per hour but if you factor in the rest of the benefits a union worker costs a company much more. Its all about the bottom line and companies know contracting is always cheaper then union work.

If you try to argue that you are more wrong then a 3 dollar bill my friend.

4/26/2013 4:38:38 PM
slp800 says:
realistic1... wages are a small piece of the pie in the pulp and paper industrty, maybe 7-10% electricity,fibre costs are HUGE ... so 20% of 7% means absolutely nothing, just the company wanting to get everything out of employees they can and push them around a little bit. Unions dont put any company to a disadvantage unless there on the edge of failure anyways. That 20% rollback would probably just pay for more full page color adds in local newspapers and put more fuel in Garneau's private jet anyways.
4/26/2013 9:32:53 AM
tiredofit says:
This nothing more than a dog and pony show to justify the pending reduction in property values. Face, we're dammed if we do or dammed if we don't. Don't want to reduce our taxes? No problem, we can pack it up and ship it to Asia, they'll do it for a fraction. It's all about money, nothing more.
4/26/2013 12:57:14 PM
cleantech101 says:
Thunder Bay should be looking to the future and considering using wood fiber for the production of ethanol. Here's an excerpt from a recent article

"Ethanol's time has come, and wood fibre is expected to be the primary feedstock that will eventually provide the raw material that will fill growing demand for this primarily gasoline additive. Energy and ethanol production will eventually leapfrog over pulp and paper as the main commodities produced from bio refineries, formally known as pulp mills. And since the pulp and paper industry alread needs to invest in new products and new markets, ethanol production seems like an obvious choice."

Wouldn't it be great if our community leaders and economic development people started approaching companies that want to invest in ethanol production to come to Thunder Bay. Seems like a no brainer to me.
4/26/2013 1:27:56 PM
The Badger Mountain Hermit says:
The government controls the cost of living. Go whine to them because people can't afford to work for you grinders.
4/26/2013 2:34:21 PM
ibrando says:
B.S. Garneau, maybe Resolute should start at the top in looking for savings and becoming more competative.But that will never happen would it?
From Resolute's own financial statement in 2011 Garneau made $1,465,821 and in 2012 $1,787,210. Without the hard working men and women at the mill you would have no salary!
4/26/2013 3:20:10 PM
gremlin says:
CM Punk:

You couldn't be more wrong than a 3 dollar bill. Union labour costs far more than non-union labour if you factor in ALL the costs (labour rate per hour, holiday pay, sick benefits, pension costs, less productivity, etc). Also need to factor in the "high absenteeizm rate" in a unionized work place.
4/28/2013 10:19:02 AM
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