Saturday, April 25, 2009

Tembec E.K. Sawmills Remain Down

Tembec resumes operations at Pulp Mill; Sawmills still down
-from the Kootenay NewsAdvertiser April 26
-by Jeff Bromley

The East Kootenay's beleaguered forest sector got a partial boost this week when Tembec's Skookumchuck Pulp Mill resumed operations and went back into production April 20, putting approximately 300 employees back to work. The company's two sawmill's at Elko and Canal Flats along with the Cranbrook Planer and Finger Joint Plant, representing a further 400+ employees, remain idled. The market for Pulp however is a tenuous one and as such the company still faces an uphill battle. "In general we're still facing challenging markets that are at challenging levels," said Tembec vice-president of forest products Dennis Rounsville. "Nothing has changed. The U.S. Housing Market is still facing a long recovery."

While the Pulp component of Tembec back in operation is good news Rounsville couldn't say how long it could stay that way. "Just the same as the forest products side of things, they'll continue to look at their market outlook and the price they get for their product."

Tembec recently approached the company's unionized workforce in an attempt to reduce costs in hopes that the two mills in Canal Flats and Elko would restart but due to a number of factors, the least of which was a lack of a commitment to open the mills according to USW Local 1-405 president Stan McMaster, representing the membership, who declined the company's offer. "USW Local 1-405, representing employees at Tembec's forest operations, were recently presented with a cost-reduction proposal by Tembec officials," McMaster said in a prepared statement. "Tembec could not give any guarantees in regards to the amount of time the mills would run. The amount of time they would run would still depend on the lumber markets, the pulp markets and the value of the Canadian dollar."

Another issue for the USW members at the mills is the fact their collective agreement expires June 30 and the two parties - Tembec as a part of the industry bargaining group and the Cranbrook local as a part of the unionized workforce covered by the Southern Interior Master Agreement along with both Kamloops and Kelowna - have already given notice to commence bargaining. "The acceptance by any local union of any proposal that changes or amends the collective agreement for a single employer outside the provincial bargaining process would effectively destroy the bargaining process," McMaster's release stated.

When asked to comment on the release Rounsville wouldn't get into specifics but did say that cost-competitiveness is the key to the mills returning to production. "Very simply put the mills with the lowest cost in the type of business we're in, a commodity business, are the mills that are going to run."

The employees at the Pulp Mill - represented the Pulp and Paper Workers of Canada (PPWC) - along with staff and logging contractors and haulers were also approached about the cost reduction proposal, pegged by numerous union members at 10% in wages and contractor costs but not confirmed by either party. The proposal was also turned down by the pulp union, though like the USW, the PPWC were also open to looking at other cost-reduction initiatives. "Some of the outcomes and responses, specifically from the suppliers and contractors, have been encouraging," offered Rounsville, who declined to give any further specifics on the offer. He also wouldn't comment whether or not the mills would run, pending the acceptance of the offer. "Our objective is to come out with an outcome for the East Kootenays that would get our mills running. That's our objective."

As for a date to get those mills back on-line, Rounsville was cautiously optimistic. "We continue to look at the market and our cost structures so that we can find an alternative or a scenario that can get the mills up and running. We don't have a date yet."

Lumber markets, due to the U.S. housing market collapse as well as the recession, have depressed the value of the softwood lumber to historic lows hitting $135 per thousand-board-feet at the time of shutdown in early February. Current demand has the price pegged at $170 a thousand, though improved but still short of the +200 range that mills need to come close to breaking even. Pulp markets, tied directly to the sawmills in terms of wood chips they produce for the Pulp mill to produce pulp, have also depressed from historic highs last year due to high volumes available and a lack of demand in both the North American and Chinese markets.

At a meeting April 20 at the Days Inn, attended by over 250 USW members, McMaster said the membership understood and supported the position taken by the local union on their behalf and also stated that the unionized employees were committed to finding other cost-saving ideas as long as it didn't involve changes or amendments to the collective agreement.

No comments: