CORNER BROOK, N.L. – Job cuts appear to be in store at the Kruger Inc.-owned pulp and paper mill in Corner Brook, N.L., as the company moves to implement what it describes as a rationalization plan to improve competitiveness.
“To ensure the mill’s long-term viability, the company must reduce its labour costs, which are significantly higher than the Canadian industry average,” the company said in a news release Tuesday.
However, the release – and an internal memo inadvertently released to one media outlet then made available to others -gave no indication of how many jobs might be lost among the mill’s 385 workers. Nor did it say specifically whether other concessions might be sought.
Jean Majeau, Kruger’s senior vice-president, corporate affairs and communications, said no other information would be made public at this time.
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“It is really important for us to keep a direct relationship with our union and it is with them that we will (negotiate,)” Majeau said in a telephone interview from company headquarters in Montreal.
“Today was the beginning of a process and we don’t want to do it through the media. This is why I don’t want to make any other comments.”
Forestry operations would not be affected, Majeau said.
In its internal memo, the company said Corner Brook Pulp and Paper’s production costs remain “well above the North American average,” with labour costs alone at $140 per tonne compared with the average of $100 per tonne.
“CBPP’s main competitor also announced publicly that it intends to reduce its labour costs to $80 per tonne,” the memo added, noting that the best performing mills of comparable size and output operate with 250 employees.
That would be 135 fewer than the number currently working at the Corner Brook mill.
“In order for the mill to survive and be competitive, it must rank within the first quartile of the industry. To achieve this goal, the mill must reduce its workforce accordingly,” the Kruger memo said, without specifying a number.
It said the company will start implementing a “workforce rationalization plan” in the first quarter of 2012.
“The plan will cover all aspects of mill operations and will be executed in such a way as to minimize negative impact on employees,” it said.
Founded in 1904, privately held Kruger Inc. is a major producer of publication papers, tissue,lumber and other wood products, corrugated cartons from recycled fibres, green and renewable energy and wines and spirits. It has plants in Quebec, Ontario, British Columbia, Newfoundland and Labrador, and the United States.
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