The Incendiary End Game in Corner Brook #nlpoli

As a rule, when a cabinet minister speaks publicly about a private sector company’s significant financial problems, things are not good.

Natural resources minister Jerome Kennedy told the world on Friday and Saturday that Corner Brook Pulp and Paper Limited had a heavy bank debt and an unfunded pension liability of about $80 million.  Kennedy said the mill that hasn’t made money since at least 2006.

Things are so bad that Kennedy  that he expected Joe Kruger was coming for a meeting to tell the provincial government he was closing the west coast paper mill.

So why was Kennedy gabbing about stuff he’d known about for some time but kept to himself?

Well, we know Kennedy wasn’t alone.  Premier Kathy Dunderdale hinted at the same sort of thing on Thursday in the House of Assembly:

In this effort to try and save Corner Brook Pulp and Paper, preserve the jobs in that region, Mr. Speaker, and help contribute toward a sustainability plan, there is a role for the union, there is a role for the employer, and there is a role for government, Mr. Speaker. Everybody needs to get to their piece sooner than later because banks are waiting.

Both Dunderdale and Kennedy said last week that they were waiting until the company and the unions worked out a new collective agreement.  If the two managed to work that out, then the provincial government would see what it could do to help. 

What makes Kennedy’s comments bizarre is that he criticised federal member of parliament Gerry Byrne for holding a meeting in Corner Brook on Sunday to give people the chance to talk about the problems facing the meeting.  Kennedy poured out a can of gasoline and tossed a match on top as he accused someone else of pyromania.

As the Telegram reported,

Kennedy said holding the meeting is “irresponsible” and would just “inflame” an already precarious situation.

“I don’t feel it’s appropriate for anyone to be inflaming this present situation,” Kennedy said. “This situation affects the families, the workers, in general the members of the Corner Brook community and the forest industry in this province as a whole.”

Maybe someone in the Confederation Building thought Kennedy could scare the Corner Brook workers into caving in to Kruger’s demands.  Sure, and given the string of political successes the provincial government has been having lately, that sort of nonsense could well be what drove Kennedy to the microphones.

You see, Kennedy’s revelations fit with recent comments by Memorial University economist Michael Wernerheim.  He said that subsidies to mills like the one at Corner Brook just don’t work.   As CBC reported,  a report Wernerheim authored concluded that “the government has given Corner Brook Pulp and Paper about $42 million in direct financial assistance over the last four years, which amounts to a wage subsidy of about $12,000 per year per worker.”

The sort of things Kennedy said government is thinking about, including loans, are just another form of subsidy. Not surprisingly, Wernerheim said last week that he thought the sorts of things the government is considering are unsustainable.

Taking all those things together, it wouldn’t be too hard to imagine a situation where the workers decided against any concessions that would merely delay the inevitable, namely the mill closure. Kennedy’s comments could easily clinch that outcome, even if that isn’t what some genius somewhere inside the Confederation Building imagined.

The choices in that scenario would be good ones for the provincial government and, in the long run, for Corner Brook.  For the province, it would end a raft of subsidies that would only get bigger if the mill stayed open.  The goal for the provincial government in the case should be, as Wernerheim suggested, to secure the pensioners’ future and to give workers a decent shot at finding new work. 

The biggest bonus for taxpayers would be the death of the Muskrat Falls project as it is currently fashioned.  Without the Corner Brook mill, there’s not even an imaginary need for Muskrat Falls to feed the island. If miners in Labrador need electricity, then they can pay for the development themselves, if they can’t figure out a more economical way of powering their operations. Taxpayers in the province won;t be forced to bear billions of dollars in debt and high electricity prices to subsidize industries in their own province and consumers in Nova Scotia.

No matter what happens, it looks like the people of Newfoundland and Labrador are looking at the end game for the paper industry in the province.  Jerome Kennedy’s news of just how bad things are in Corner Brook may prove to mark the transition to that final phase for an industry that lasted about a century.

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The Precipice Looms #nlpoli

Not surprisingly, Kruger issued an ultimatum on Tuesday to workers at its Corner Brook mill. CBC quoted the message from the company to the union in an online story:

"The first step to go forward will be to obtain a firm committment [sic] from employees by achieving a satisfactory agreement that will allow CBPPL to be competitive in the market," said the Kruger statement.

"Given the critical situation of the mill, this collective agreement will have to be reached by June 15 so that we can quickly move on to the next crucial step, which will be to submit the pension plan funding relief measures to a second vote and hopefully be able to apply them before the mill’s situation deteriorates any further."

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Changes in Corner Brook #nlpoli

  1. You’ll get a very good sense of what is going on at Corner Brook Pulp and Paper Limited from Gary Kean’s piece in the Saturday edition of the Western Star.   As hard as it might seem to believe, some people thought the company was bluffing about the financial state of the mill.
  2. Meanwhile, political bums are very tight.  Would a mill closure – if it came – hasten Tom Marshall’s exit from politics or delay it?
  3. While all that is going on, Imperial Oil’s terminal at Corner brook is up for sale as a result of the company’s announced plans to shut its Dartmouth refinery.
  4. Update:  CBC has posted the raw video of natural resources minister Jerome Kennedy’s scrum on Friday about CBPPL. Find it here:  http://www.cbc.ca/video/#/News/Canada/NL/Featured/2169456094/ID=2236615293

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Death watch in Corner Brook for province’s last paper mill #nlpoli

Kruger, the owners of Corner Brook Pulp and Paper, are reassessing the viability of the mill in the west coast city on Friday after unions at the mill rejected a company proposal to restructure the company’s pension plans.

In a statement issued Friday, natural resources minister Jerome Kennedy said:

We are facing a grave situation, one which could potentially lead to the closure of Corner Brook Pulp and Paper Limited. Kruger is now reassessing the viability of its operations in Corner Brook. This obviously could have very serious ramifications for the employees and the entire Corner Brook area.

The provincial government wants the company and the unions to negotiate a settlement to the dispute.

Built in 1923, the mill at Corner Brook was the second paper making operation in Newfoundland after the Anglo-Newfoundland Development Corporation mill at Grand Falls.  AbitibiBowater announced that it would close the mill at Grand Falls in 2008.  The provincial government expropriated the mill and all of AbitibiBowater’s assets in the province before they could shut the mill.  Ab closed its Stephenville operation in 2005.

The Corner Brook mill is heavily subsidised by the provincial government.  It is the largest private sector employer on the west coast of the island.

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How bad is it?

You just know things are pretty tense in Corner Brook.

You can tell because the provincial government has been pouring on the happy-talk while over at the city’s major employer, the company operating the paper mill is looking for a 10% wage roll-back from employees.

The latest happy-talk is a hope-drenched a study on the oil and gas potential for the west coast.

According to the official news release, the study was commissioned based on an election commitment from 2003. 

That’s okay. 

We can wait while you go and check your calendars again.

Yes, it was indeed seven years ago.

The work on this particular report, though, was only done in 2008.  Check the dates on some of the consultation sessions;  that’s the only way to figure out the timelines for sure since most of the document has been scrubbed of dates. You can hunt around and eventually find the news release that kicked it off, from December 2007. 

That would make it a bit more than two years for this study to see the light of day.

After all that time and all that work, the recommendations are stunning: 

  • Ensure a regulatory and administrative environment to maximize investment in onshore and offshore exploration and attract industry operators and businesses to the region;
  • Ensure the protection of key natural resource areas, including Gros Morne National Park, the Humber Valley and the Bay of Islands;
  • Establish a clear environmental regime between the provincial and federal governments;
  • Continue to improve infrastructure in the region through investments in education, health-care facilities, transportation and commercial land availability;
  • Encourage the planning, regeneration and use of existing infrastructure, including that in Port aux Basques, Stephenville, Corner Brook, Deer Lake, Port Saunders and St. Anthony, to ensure it continues to support existing economic sectors;
  • Maintain and upgrade infrastructure specific to the needs of potential hydrocarbon projects, including wharves and air facilities at Corner Brook and Stephenville;
  • Facilitate the training of local residents to help them meet the demand for skills in this emerging sector;
  • Continue to invest in public education, health care, cultural and recreational opportunities to serves the needs of the region; and,
  • Continue to promote the western region as a place of opportunity for business investment and families.
  • In a nutshell:  fix the roads, spend money on things like education and health care, protect the ecologically sensitive and important bits (like Gros Morne)  and “promote” the potential in the area.

    They are about as surprising as the recommendations made by the task force that spent 18 months trying to figure out how to keep more young people from leaving the province.  Its major conclusion:  create work for them so they can find jobs and stay here.

    All standard. 

    All patently obvious.

    Nothing concrete and measurable.

    Like explaining what is meant by “[e]nsure a regulatory and administrative environment to maximize investment in onshore and offshore exploration and attract industry operators and businesses to the region.” 

    Maybe there is a tax issue here or problems with issuing permits. You won’t find anything in the report to explain what this means.

    And the stuff that appears to be specific  – like the suggestion to “twin” selected portions of the Trans-Canada between Port aux Basques and St. John’s as needed – is actually just a confirmation of what has been government policy since 1988.  Under the roads for rails agreement, the provincial government used federal cash to do exactly that.  And yes, for those who need reminding that would be from the last time the Conservatives formed the provincial government.

    So what are these study guys talking about 20 years later?

    Not a heckuva lot, apparently, given that any administration at any time can claim:

    • to have either already done that or,
    • to be doing exactly what was recommended as it carries out the existing maintenance of the existing road.

    Look in vain and you will not find a single thing in this 71 pages of pure bumpf is tied to  drilling more holes, finding oil and getting it into production.

    Things seem to be pretty tense in Corner Brook these days.  That’s just as they have been in other towns in this province since 2003 when the major employer found itself in hard financial straits.

    What’s most interesting since 2003, though, has not been the problems themselves but how the provincial government has reacted to each development.

    The oil and gas study released on Monday seems to be very much par for the course, very much a sign of the times.

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