Written by GORDON HOEKSTRA
Citizen staff
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Wednesday, 08 October 2008 |
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WORTHINGTON INDUSTRIES
The Alberta-based company that bought the bankrupt Pope and Talbot pulp mill Mackenzie now says the plant will not open until next spring as global prices tumble.
It's the second time in as many weeks that Worthington Industries has put off the proposed opening of the mill, and leaves 250 workers wondering about their future.
"I'm a little stunned right now -- I've never felt so helpless," veteran worker Rick Berry said Wednesday.
After the lengthy bankruptcy proceeding, and now the delay in the hoped-for startup, Berry said he wonders whether the mill will ever restart. He said he believes he has no choice now but to leave and find another job. Mackenzie, 175 kilometre north of Prince George, has been hit particularly hard by a downturn in the forest sector led by a collapse in U.S. housing. The newsprint mill and three major sawmills are also shut down, putting more than 1,200 people off the job in the community of 4,700.
Worthington had just released, at the end of September, its plan to restart the boiler and warm the plant, with the objective of producing pulp in mid-November. Workers were then told last week that plan was put on hold for 60-days.
The latest announcement was delivered officially on Wednesday morning.
The company cited a number of reasons for the delay, including the time needed for more financial negotiations in more difficult economic conditions. Also on the list were negotiations of chip and sawdust supplies.
Forest industry analyst Kevin Mason said the decision to not re-open the mill was wise given the slumping market which looks to be the beginning of a down cycle.
Prices have fallen from a high of $900 US a tonne in North America and Europe to spot prices at the $600 level. Mason, a managing director with Equity Research Associates, expects prices to keep falling and some pulp mills not to survive the down cycle.
"In a time like this in a declining market where there is a war of attrition, (Worthington) will want to sit on the sidelines," he said.
A big question is where the pulp mill will source its chips and sawdust with the most likely source still being sawmills not expected to resume more normal operations until 2010 or 2011, noted Mason.
The pulp mill was shut down four months ago when bankrupt Pope and Talbot went into receivership. A sale of the pulp mill to Worthington Properties was completed late last month for an estimated $6.5 million.
However, a wood fibre agreement that provided chips and sawdust to the mills, ended when the receiver reached an undisclosed out-of-court deal with Canfor Corp. Canfor had been trying to have the wood fibre agreement ended during the bankruptcy proceedings.
Worthington president Dan White was not available for comment on Wednesday
In an earlier interview with The Citizen, White said the end of the fibre agreement, which provided wood chips and sawdust to feed the pulp mill, was another challenge. But he said his company was actively working on sourcing a reasonably priced chip supply agreement.
SIDE BAR
Tembec is cutting production at its pulp mills, including at its Chetwynd mill in northern B.C, a reaction to falling prices in Asia.
"Lower demand for pulp in Asia is the primary reason for the production curtailments. The shutdowns announced today will allow Tembec to manage inventories and working capital to the appropriate levels,'' said Yvon Pelletier, executive vice-president and president of the Pulp Group.
Pelletier said the company will take advantage of the shutdowns to do some maintenance work as well.
The Chetwynd mill, 300 kilometres by road north of Prince George, produces 230,000 tonnes of pulp a year.
The two other Tembec shutdowns are taking place a pulp mills in Quebec.
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Last Updated ( Wednesday, 08 October 2008 )
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