MONTREAL – Newsprint giant AbitibiBowater is seeking support from its workers to cut costs as it considers reopening its idled mill in Gatineau, Que.
The Montreal-based company said it may reopen one of two paper machines at the mill, following a review by new chief executive Richard Garneau.
It has three conditions: a new labour agreement for a single machine mill, a stable fibre supply from government over five years and a resolution of energy issues with Hydro-Quebec.
“The objective for Gatineau is to have a mill that is one of the most competitive in costs…(and) as competitive as the rest of our mills in North America,” spokesman Pierre Choquette said in an interview.
He declined to provide details of what AbitibiBowater (TSX:ABH) is seeking from workers, but said winning their support was the first step in the process.
Workers were voting at two sessions held Thursday.
Renaud Gagne, Quebec vice-president of the Communications, Energy and Paperworkers Union, said the deal would cut labour costs by reorganizing work within the mill and cutting the number of workers per tonne of paper produced.
“There is no reduction of wages, or changes to the pension plan,” he said in an interview.
Workers would be subject to a collective agreement they already approved that saw a 10 per cent reduction in wages.
About 90 older workers would be recalled, eventually paving the way for younger laid-off workers to return to work when they retire.
“The good news is that this will allow workers to qualify for retirement with full benefits,” he added.
About 330 people were employed at the mill when it was closed in May 2010, along with another facility in Dolbeau, Que.
At its peak, the pulp and paper mill had 2,200 workers and was an economic anchor for the region.
But dwindling demand for newsprint and the high value of the Canadian dollar ate away at the competitiveness of local mills.
The Gatineau mill had produced 360,000 tonnes of paper annually, including 310,000 tonnes of newsprint.
More than half of that newsprint production would resume in the coming months for sales mainly destined for export to Latin America and Asia.
The union had accused the company last year of “cheating its workers out of their severance pay” by closing the mill while the company was under bankruptcy protection.
The recall of workers won’t affect that pay, which was resolved through the court process, said Gagne.”What people lost is lost.”
The company indicated last week that it would invest $32 million to restart a sawmill idled for five years in Ignace, Ont., if it comes to terms with union workers and the municipality.
The expenditure is contingent on reaching “an acceptable labour agreement” with the United Steelworkers union and resolving municipal tax and fire protection issues with the Township of Ignace.
Choquette declined to say if the company is considering reopening other idled mills.
“The objective is to operate the best assets at the lowest cost possible because that’s what you need to be competitive in this market so that’s the objective we’re aiming at.”
On the Toronto Stock Exchange, AbitibiBowater shares closed down nearly two per cent, losing 32 cents to $15.82 in Thursday trading.
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