09/27/2013 04:35 EDT | Updated 11/27/2013 05:12 EST

Resolute to lay off workers, cut costs at Baie Comeau newsprint mill

MONTREAL - Resolute Forest Products is looking to cut at least a quarter of the workforce at its newsprint mill in Baie Comeau, Que., as it seeks to trim costs due to falling demand from overseas customers.

The Montreal-based company met with employees Friday to present two scenarios — either cut 90 workers and lengthen the work day to 12 hours from eight, or close one of the mill's three machines and shed 150 jobs.

A company spokesman said unionized workers have a week to approve one of the options.

"We're really trying to be the most competitive with all of our mills," Pierre Choquette said in an interview.

The mill on the northern shore of Quebec is one of three Resolute facilities that make newsprint for the export market, which has experienced a five to seven per cent decline in the last seven months.

The mill in Clermont, Que., downsized earlier in the year by changing the way employees work, increasing subcontracting and reducing to two machines. A single machine reopened in Gatineau after more than three years in May at lower operating costs.

Resolute (TSX:RFP) is the largest newsprint supplier in North America with some 3.1 million tonnes of capacity, nearly half of which is exported to Latin America, Europe and Asia.

Choquette said Latin America has been the strongest market of late but it has also been experiencing lower demand.

He said the next few days are important as the company seeks to restructure the plant to cut costs.

"We'll be working with our employees, we'll be looking at how we can reach those objectives and ideally run on three machines going forward at the mill," he said.

A union official called the proposals "ultimatums."

"Employees expected they would ask for 12 hours but not the major changes that they are asking because nobody foresaw such a large cut in the number of jobs," said Vital Ross, vice-president of Unifor's Local 352.

He said the union will likely meet with the company next Tuesday to get more details of the proposals before consulting with members.

Resolute wants to maintain Baie Comeau's 462,000 tonnes of annual capacity from three machines. But the number of workers would be reduced from 360 to about 270. Cutting one machine would mean laying off more than 40 per cent of the mill's workforce.

Some of the layoffs under either scenario could be reduced because 70 employees are eligible for retirement.

Resolute is also having discussions with the provincial government about wood fibre costs, which have increased by 10 to 20 per cent because Quebec cut the availability of wood by more than 30 per cent earlier this year.

It's not the first time that Resolute or its predecessor company AbibitiBowater has cut jobs in Baie Comeau. The mill used to have nearly 500 workers before a fourth paper machine was eliminated more than two years ago.