Bowater Mersey Paper Co. in Queens survives 30-day review

However, other plants, and accompanying jobs, will be lost and the company hopes to negotiate with the union for possible concessions.

A press release states, “As part of the action plan unveiled today, AbitibiBowater is reaching out to both unionized and salaried employees to contribute to cost-reduction initiatives. The company is asking its Canadian union partners to reopen current labor agreements and explore ways to reduce overall labor costs and provide enhanced flexibility in the workplace.”

In addition, the press release states, “Given the specific pressures in Eastern Canada relative to wood availability, energy and labor, a second phase of closures could take place by mid-2008. Final decisions regarding the actions to be taken and the locations impacted will be confirmed in the second quarter of 2008.”

Negotiations are currently underway to cut 49 unionized positions at the Brooklyn mill. Neither union nor Brooklyn company officials could be reached at this evening publication time.

The press release states the Board of Directors of AbitibiBowater Inc. has reviewed management's recommendations and approved various actions following a 30-day review of all company operations.

A large portion of the following is quoted from the company’s press release.

The company will reduce its newsprint and commercial printing papers production capacity by approximately 1-million metric tons per year during the first quarter of 2008. The reductions include the permanent closure of the Belgo (Shawinigan, Quebec) and Dalhousie (New Brunswick) mills, as well as the indefinite idling of the Donnacona (Quebec) and Mackenzie (British Columbia) paper mills. The company will also indefinitely idle two Mackenzie sawmills directly supporting the Mackenzie paper operation.

In spite of these capacity reductions, AbitibiBowater expects to continue growing its international newsprint sales in line with offshore market expansions.

Additionally, the company will permanently close the previously idled Fort William (Thunder Bay, Ontario) and Lufkin (Texas) paper mills, as well as the #3 Paper Machine at the Gatineau (Quebec) facility. The previously idled operations had a total capacity of about 650,000 metric tons.

The new company also announced it is expected to incur $375-million in savings from this year’s merger of Bowater and Abitibi.

President and Chief Executive Officer David J. Paterson stated, "These were difficult decisions that were made after careful deliberation and represent the best course of action given the current economic conditions and significant challenge that lies before us. We are mindful of the impact these decisions will have on the employees and communities affected, and will be working with them to help mitigate the effects. We are confident, however, that, as a result of the actions, AbitibiBowater will become a stronger, more globally competitive organization. I believe the initiatives unveiled today underscore our determination to adapt to today's rapidly changing market realities."

Overall, the company is targeting $500 million from asset sales, including non-core facilities, U.S. timberlands and the newsprint mill at Snowflake (Arizona), which must be divested under the terms of the agreement reached with the United States Department of Justice for approval of the Abitibi-Consolidated/Bowater combination. Proceeds will be used to support a three-year, $1-billion debt-reduction target.

Given the company's focus on debt reduction, after careful deliberation, the Board of Directors has decided to suspend the dividend to shareholders. The company will revisit this decision once clear progress has been made to achieve its financial targets.

Over the next four months, the company will undertake a comprehensive review of all aspects of the business in an effort to further reduce costs, improve its manufacturing platform and better position the company in the global marketplace. The company will be reaching out to various stakeholders in an effort to address challenges, which are exacerbated by the rapid rise of the Canadian dollar.