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. ”