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Troubled NS paper mills need to cut costs to survive

The ability for the troubled Bowater Mersey and Port Hawksury paper mills to cut costs will help determine whether or not they stay in operation.


November 3, 2011
by CANADIAN PRESS

HALIFAX: The ability for two troubled paper mills in Nova Scotia to cut costs will help determine whether or not they stay in operation.

Nova Scotia Premier Darrell Dexter says officials from the Bowater Mersey paper mill have told him the plant will close without help from the government and its suppliers to cut costs.

AbitibiBowater, which owns the mill in Brooklyn, NS, informed him in August of its intention to close the operation.

He says the company is open to reconsidering its decision at a board meeting in December if a plan is in place to make the mill more competitive.

AbitibiBowater is looking for major concessions from its workers and help from suppliers to cut its production costs as well as a reduction in power rates.

He says any package would also include funding help from the province, although he can’t say how much that could be.

The mill employs 300 workers, but Dexter says up to 2,000 people along the province’s South Shore would be affected if the mill closes.

In Port Hawkesbury, the court-appointed monitor overseeing the sale of an idled paper mill in Cape Breton says two of the four remaining bidders to buy the operation would sell it.

Liz Pillon, the lawyer for Ernst & Young, says the two other bidders intend to continue operating the NewPage mill in Point Tupper, NS.

Mathew Harris, a spokesman for Ernst & Young, said the paper mill needs to lower electricity rates and other costs to remain viable.

“They (the bidders) expect to see lower rates if they’re going to operate a profitable mill,” he said.

“It’s not just power rates. It’s the cost of (wood) fibre, it’s the cost of labour and it’s the cost of power. At the end of the day, there’s been a significant change in the paper industry in Canada and the cost structure has to change if the mill is going to be operated at a profit.”

Pillon says the goal is to keep as many bidders as possible at the table before finalizing a sale by Dec. 1.

About 1,000 people lost their jobs after the mill shut down in September. The company said it was struggling with soaring fuel and electricity costs, a strong Canadian dollar and declining demand.

It lost U$50 million over the last year, according to an affidavit NewPage filed with the court.

The mill has the capacity to produce 545,000 tonnes of paper a year, and was an economic mainstay in Port Hawkesbury area for the past five decades.

© 2011 The Canadian Press