Minas Basin Pulp and Power Company Ltd., a producer of recycled paperboard products, said it would halt operations in December, throwing 135 workers out of work and delivering a major setback to the Annapolis Valley economy.
"It's a sad day indeed," said Scott Travers, who served as company president until Wednesday night. "It's a tough old industry and I feel for the people, the massive amount of people being affected."
A letter to employees posted on the company's website said it hoped a restructuring of operations last year and changes to pricing would make the Hantsport plant sustainable.
"However, after several years of challenge, the board (of Scotia Investments Ltd.) has concluded that it is time to recognize the mill is at the end of its cycle," said the letter. "Long-term sustainability cannot be achieved."
The company said challenges in the marketplace, competition from plants using newer and more efficient technology, and rising operating costs were too difficult to overcome.
The letter said while 135 people will lose their jobs, more than 40 employees will be moved to other companies within Scotia Investments, an investment holding company. Those companies include CKF Inc., a paper plate manufacturer also located in Hantsport, a town of 1,160.
"We will begin working immediately with the remaining employees to find alternative options and support them through this transition and mill closure," the letter said.
The letter said the company is not seeking any government assistance and would fulfil its employment obligations, including the pension plan.
Robert Patzelt, Scotia Investments' vice-president of corporate development, said pouring more money into such a small mill just wouldn't make sense.
"The reality is that ... additional money from the government (would be) inadequate to overcome those structural and economic challenges," he said in an interview.
"In this instance, you would have to build a new mill and it would have to be huge and it would have to be located somewhere else."
Premier Darrell Dexter said company officials told him there was no way the plant could be economically viable.
"They said there just is no road to sustainability for the company and so the best thing for them to do is what they are doing today," Dexter said.
He said markets are tough for much of the forestry sector, but the demise of Minas Basin doesn't necessarily mean Nova Scotia's two remaining mills — Port Hawkesbury Paper in Point Tupper and the Northern Pulp Nova Scotia in Abercombie — are in trouble.
"This is a completely different product line," Dexter said. "But all of the markets are under pressure and have been now for a period of time."
He said Labour Department programs aimed at helping laid off workers transition into new jobs will be offered.
About 100 workers at the plant are represented by Local 583 of the Communications, Energy and Paperworkers Union.
Chuck Shewfelt, the union's Atlantic vice-president, said he was disappointed to learn of the layoffs, but not entirely shocked.
"We know that much of the industry is having problems in Nova Scotia," he said in an interview from Moncton, N.B.
"We've seen NewPage (Port Hawkesbury Paper) recently reopen in a diminished capacity, we've seen the closure of the Bowater Mersey mill in Liverpool. So, yeah, there's a lot of reason to be concerned."
Shewfelt said the layoffs at Minas Basin leave the majority of workers whose skills are not easily transferable in a difficult position. He said they will have to choose between toughing it out in Hantsport, commuting to larger centres for work or moving away altogether.
The decision not to seek government assistance was ultimately the company's, he added.
"It would be great to keep the plant going, but it has to be viable."
The former NewPage Port Hawkesbury paper mill in Point Tupper, N.S., shut down in September 2011. But it resumed operations last month under the new name Port Hawkesbury Paper with roughly half the workers it once employed after the provincial government announced a $124.5-million assistance package.
In June, Montreal-based Resolute Forest Products (TSX:RFP) announced the closure of the Bowater paper mill in Brooklyn, N.S., throwing 320 people out of work. That came despite a $50-million government offer to the company, $23.75 million of which was spent to buy land.
The closure of Minas Basin will devastate the local area, said Progressive Conservative Chuck Porter, who represents the riding.
Porter said the NDP government needs to do more to stem job losses in rural Nova Scotia.
"We've lost hundreds and hundreds of jobs in the Valley and we need to get serious. What's the plan now?"
Liberal economic development critic Geoff MacLellan said the closure was symptomatic of problems with the province's economy.
"Our economy is not diversified and we've got to figure out a way to get Nova Scotians back to work," he said.
Minas Basin was founded in 1927.