BUSINESS

White Birch announces immediate closing of its Stadacona mill in Quebec City

01/12/2012 09:38 EST | Updated 03/13/2012 05:12 EDT
MONTREAL - White Birch Paper Co. says that effective immediately it is closing its idled Stadacona paper mill in Quebec City "for good."

The announcement late Thursday came a day after some 600 unionized workers at the mill overwhelmingly rejected an offer by the insolvent U.S.-based company that would have significantly lowered their salary and pension benefits.

Company president Christopher Brant said in a statement that White Birch was ''forced'' into shutting down the mill, which has been idled since last December.

''This decision was not made lightly and we did everything we could to avoid this scenario,'' he said.

''The mill's financial situation and the economic deterioration in the newsprint industry mean the end of the road for Stadacona. The union's rejection of our final offer left us with no other choice but to close the mill for good.''

Labour reaction to the news was swift and pointed..

"The union was preparing a counter-offer," said Michel Arsenault, president of the Quebec Federation of Labour, the province's largest labour group.

"These people (the company) are thugs of high finance who have no respect for people who have worked for 20, 30, 35 years.

"I feel particularly sorry for those who are already retired. It's sad to see people who have worked their entire career with one company have their retirement (pension) amputated."

Another union spokesman, Renaud Gagne, said lawyers will study the decision and he did not rule out asking Premier Jean Charest to step in.

Earlier on Thursday, workers said they were planning a counter-proposal to try to keep the mill open and prevent cuts to their pensions.

The union said workers over the age of 55 would lose 45 per cent of the value of their pensions under White Birch's final offer and younger employees would lose 65 per cent.

A union spokesman said the average age of workers at the newsprint mill is 47.

Quebec Labour Minister Lise Theriault would not comment Thursday on the conflict at the mill.

CRT Capital Group senior analyst Amer Tiwana said White Birch produces mostly newsprint, a diminishing market due to the switch to digital information.

"There is an oversupply in the industry," Tiwana said from Stamford, Conn.

"We use less and less paper for newspapers in North America," he said.

"So for them to really run a mill they have to make a cost-benefit analysis and do what they need to do to make it cost less to make the newspaper. And one way to do that is to cut . . . wages so that you can have a lower cost structure."

White Birch could have plants that have higher costs of production and can't be profitable under the current industry prices, Tiwana added.

The company was the second-largest newsprint manufacturer in North America when it filed for bankruptcy protection in February 2010.

At the time it had about 1,300 employees at three pulp and paper mills and a saw mill in Quebec and a fourth pulp and paper mill in Virginia. The company manufactures high quality newsprint, directory paper and paperboard.