130 to lose jobs at Alberni's Catalyst paper mill

Further layoffs expected in future as company tries to boost profit
Camille Bains, The Canadian Press
Catalyst Paper support employees facing layoffs are devastated that a restructuring move to boost profits has put them out of a job, says a union representative who was at a meeting Wednesday when the company announced the cuts.

“It was very sombre,” Don Boucher, of the Communications, Energy and Paperworkers Union said about the 130 job losses.

Catalyst plans to cut costs by laying off 130 workers at its Port Alberni paper mill
Photograph by : Times Colonist

“We’re very disappointed,” Boucher said. “We know that the industry is in major problems right across the country.

“We’re just hearing it day in and day out that there’s restructuring and there’s going to be more layoffs,” he said. “Our membership’s devastated by the fact that we can sit down and talk and agree to certain issues to make this business viable and they just keep asking for more and more.”

As part of its restructuring plan, Catalyst will also move its head office from Vancouver to suburban Richmond.

The decision will bring total job cuts so far this year to 480.

On top of that, the maker of printing paper and kraft pulp said it will idle an additional 185 workers Sept. 1 as it indefinitely shuts down a paper machine at its Port Alberni division on Vancouver Island.

Lyn Brown, spokeswoman for Catalyst, says the indefinite closure of a paper machine is just that.

“Indefinite means indefinite,” she said. “It means there have been no permanent decisions made. We will continue to look for ways to run a viable business and keep our machines running.”

The layoffs mean the Port Alberni workforce will drop to about 230 employees producing lightweight paper for use in applications such as magazines.

Brown said Port Alberni’s high industrial taxes are an issue.

“It’s not the only problem,” she said. “It’s certainly a problem.”

Ken McRae, mayor of Port Alberni, said he doesn’t understand why Catalyst is citing taxes as an issue at all.

“We cut their taxes by 20 per cent so we probably did more than anybody in the Catalyst towns where they’re located,” McRae said.

“When I first met Mr. (Richard) Garneau, who’s the president of Catalyst, his first comment to me was ‘Thank you, Mr. Mayor, for doing a good job of cutting our taxes.’ So that’s all I’m going to say about taxes and as far as I’m concerned that’s not the issue.”

Based on the last tax bill, Catalyst said, it paid $22 per ton in tax compared with a North American average of below $5.

A 93-cent Canadian dollar and a soft newspaper market are other issues, the company has said.

McRae said as far as he’s concerned the high Canadian dollar is the main reason for the company’s restructuring move.

“I kind of feel just relieved that it’s over with now,” he said of the latest round of job cuts. “Every day that dollar went up I knew it was going to come.”

The job losses will have a huge impact on his community that has already weathered thousands of job losses in the forestry industry, McRae said.

“I’m concerned about the people that are being laid off,” he said, adding he hopes Catalyst will offer generous buyouts and bridge pensions for its employees.

McRae said the company has chosen to shut down its Port Alberni paper machine because it’s been there for 60 years.

“I worked in that mill for 38 years so I know the equipment very well, it’s worn out.”

Catalyst CEO Richard Garneau said in a release that reducing costs is an immediate priority, given the high Canadian dollar and the decline in North American newsprint consumption.

Catalyst expects the support staff cuts will help earnings by $16 million a year, after a one-time charge of $19 million to complete the layoffs.

Closing the Port Alberni division’s No. 4 paper machine is expected to improve annual profits by $8 million. Shutting the machine will displace 134,000 tonnes of its least profitable newsprint business and reduce high-cost fibre requirements, Catalyst said.

The company said its lightweight coated and directory capacity will be unchanged. Some Port Alberni administrative functions will be centralized in Nanaimo.

The company has said it expects total annual savings of $30 million in 2008 under the restructuring plan announced earlier this year.

Catalyst reported in April a first-quarter loss of $25.6 million on sales of $478.1 million, amid weakening paper prices and rising fibre costs, along with restructuring expenses and maintenance spending.

The results compared with a year-earlier loss of $23.6 million on sales of $456.3 million.

Catalyst shares closed up 4.35 per cent or 15 cents to $3.62 on the Toronto Stock Exchange Wednesday