10/12/2011 03:48 EDT | Updated 12/12/2011 05:12 EST

Wood contractors unhappy with rates contained in $14-million Nova Scotia program

PORT HAWKESBURY, N.S. - Some former contractors to the NewPage mill likely won't be going back to work next week under a $14-million Nova Scotia government program, says a spokesman for the harvesters.

A group of 18 contractors who cut wood from Crown lands met in Port Hawkesbury on Wednesday to discuss the harvesting program meant to keep the industry alive until a buyer is found for the mill that shut down in Point Tupper last month.

Paul Delaney, a spokesman for the group, said the majority are dissatisfied with pay rates and harvesting areas contained in the package funded by the province.

Delaney said most of the contractors are being asked to work at 50 per cent capacity and with a 15 to 20 per cent cut in pay.

"This government funding project is all good stuff but it still has to be feasible and we still have to make a profit because all of us contractors are owed hundreds of thousands of dollars by NewPage," said Delaney.

He said some contractors can't afford to go back to work and lose more money, while others would find it difficult to operate in wood stands that required different equipment than they currently operate with.

Delaney, owner of a small business that harvests wood from the Cape Breton highlands region, said he is still owed $300,000 by NewPage.

"We definitely want to go back to work, but not at the rate they gave us," he said in a telephone interview.

Delaney said it's hoped the outstanding issues could be solved through further talks with the woodlands working group that administers the harvesting program for the province.

Allan Eddy, an official with the Natural Resources Department, said there was room to discuss some of the problems raised by contractors.

Eddy said the program had to change the focus from providing pulp wood to the mill to harvesting products such as smaller saw logs, fuel wood and biomass.

He said it also had to be designed as a commercial venture so as not to run afoul of international trade rules on subsidies.

"This is not a make-work project, this is not a subsidy project. That wouldn't do the industry any good in the long run."

As a result, Eddy conceded that some contractors likely wouldn't be able to participate because of the commercial hardships brought on by the mill's closure.

Meanwhile, bids for the mill which is under creditor protection, are to be finalized by Friday.

Last week, court-appointed monitor Ernst & Young said the list of qualified bidders had been whittled down to 14.

The mill was shut down after struggling with fuel and electricity costs, a strong Canadian dollar and declining demand.

— Story by Keith Doucette in Halifax