BUSINESS

Most Newfoundland mill workers accept contract offer in hopes of saving plant

06/22/2012 09:59 EDT | Updated 08/22/2012 05:12 EDT
CORNER BROOK, N.L. - Most unionized workers at Newfoundland's last paper mill have accepted a new contract in hopes that concessions will help save their livelihoods and the identity of their west coast town.

Montreal-based Kruger Inc., owner of Corner Brook Pulp and Paper, walked away from contract talks last week after making what it said was a final offer in the face of bankruptcy at the mill.

Kruger issued a statement late Friday saying "the company will continue its efforts to reduce the mill's operating costs by applying necessary cost-cutting measures."

The statement did not elaborate, and no one from Kruger was available for further comment.

In a letter this week, company CEO Joseph Kruger implored more than 300 unionized workers to accept the contract by Friday's deadline or watch their iconic mill close.

The bulk of the mill's workers, represented by the Communications, Energy and Paperworkers Union, voted Thursday and Friday before releasing the results to the public.

Gary Healey, a national representative for the union, confirmed that four out of five locals accepted the offer. He said the holdout was a small group of electricians.

"We still have to resolve the issues around the electricians," he said in an interview from Corner Brook.

Healey declined further comment and would not disclose details of the contract.

On Wednesday, a group of skilled trades workers also rejected the company's offer, saying concessions and changes to the pension were ultimately unacceptable.

The employees, members of the International Association of Machinists and Aerospace Workers, represent a minority of the mill's unionized workforce.

The restructuring of the firm's pension plan was a stumbling block in the negotiations. The company had said it needed 10 years instead of five to pay back a pension deficit.

Kruger said Friday the new contract is effective immediately and clears the way for current and retired workers to vote on changes to the pension plan. That process is expected to be completed by Aug. 22.

The company said the pension changes "are essential to the mill's competitiveness and sustainability."

Kruger has said labour costs at the mill are the highest in North America and the wage cut contained in the contract is a necessary step toward keeping the mill running.

The company has said the collective agreement is identical to labour contracts ratified by most newsprint mills in Eastern Canada.

About 400 people work at the mill, which is easily recognizable among Corner Brook's landscape with its towering smokestack and whistle.

It is the last paper mill standing in the province after two other plants in Grand Falls-Windsor and Stephenville shut down in 2009 and 2005 respectively. Global demand for newsprint has steadily fallen in recent years.

In his letter this week, Kruger told workers that a vote against the company's proposal would be a vote against keeping the mill open.

"Conversely, a favourable decision on your part will potentially benefit a lot of people in Corner Brook, starting with yourself and your family," he wrote.

But even with a new contract in place, he suggested the future of the mill remains uncertain.

He described the mill's financial situation as fragile. Despite investing more than $800 million in the operation since 1984, Kruger said the mill has not turned a profit in five years and has defaulted on loan agreements since the last quarter of 2009.

Beyond ratification of the contract, Kruger warned that the mill must also reduce its manufacturing costs, improve productivity and establish more efficient work practices while investing in equipment improvements.

A sustainability plan will also have to be presented to the operation's lenders, he said.

Premier Kathy Dunderdale was in Corner Brook for the vote Friday, saying she wanted to be with people in the community during a time of high stress and concern.

She was unavailable for comment after the results were released.

Earlier this week, Dunderdale said the government was willing to discuss help for the operation, but she ruled out propping up the mill through direct operating subsidies.

— By Melanie Patten in Halifax