UPDATE - Bowater Mersey plant spared for now

A 30-day review of all company operations ended earlier than expected.

However, other plants and about 2,600 jobs will be closed and lost, the company hopes to negotiate with unions for possible concessions and it announced more closures can be expected next year. Another, four-month long review of all company operations is also starting.

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. No local representatives for the Communications, Energy and Paperworkers Union of Canada could be reached for comment. At least one executive member was away on union business. There was no answer at the union hall.

Brooklyn company officials were referring media inquires to the Montreal office.

A message was left for spokesperson Seth Kursman, which wasn’t returned at deadline.

South Queens Chamber of Commerce Co-Chair Kerry Morash said the business community, for one, is relieved.

“It’s all due to the hard work of the employees. We have a good strong workforce.”

He added AbitibiBowater’s stated plans to expand its international markets bodes well for the Brooklyn plant because Liverpool has a year-round ice-free harbour and is close to the globally important shipping port of Halifax.

He said this should benefit the plant while the company continues to deal with the effects of a high Canadian dollar and current market conditions.

“I think we have to be positive. We have gone through this review and have been found to be globally competitive. I believe we’re in a position to be in business for a long time to come.”

However, he said he personally “feels” for the employees that will be affected by the lay-offs.

He added some chamber members have noticed a decline in sales this Christmas, especially with “big ticket items.”

“Hopefully, people will now go out and do some Christmas shopping. From the chamber’s point of view, we’re pleased the economy is moving forward.”

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. Small sections have been re-written in simpler, non-corporate language.

The company will reduce its newsprint and commercial printing papers production capacity by about 1-million metric tonnes 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.

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 tonnes.

The new company also announced it expects to eventually save $375-million 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. The proceeds will be used to support a three-year, $1-billion debt-reduction target. At present, the company has also decided to suspend its dividend to shareholders until financial targets are met.