Wednesday, July 27, 2005 Updated at 2:49 PM EDT
Canadian Press
Stephenville — The closure of the Abitibi-Consolidated Inc. paper mill in Stephenville will strip the town of its largest employer, and deal a blow to western Newfoundland's fragile economy, the town's mayor says.
Residents of this community, population 8,000, were stunned Wednesday to learn that the region will lose 300 of its highest paying jobs.
Stephenville mayor Cecil Stein said the news from the Montreal-based forestry giant was worse than expected.
“We never anticipated that they would ever close this mill,” he said in an interview. “The bottom just dropped out of our town.”
Meanwhile, the company confirmed that it will move ahead with a previously announced plan to shut down one of two paper-making machines at its Grand Falls-Windsor operation in central Newfoundland.
The cuts are part of a wider restructuring plan that also will see the closure of a mill in Kenora, Ont., and the sale of a mill and woodlands in Fort William, Ont.
In Newfoundland, the shock in Stephenville and Grand Falls-Windsor was matched by anger in St. John's, where Premier Danny Williams said he was outraged by the company's decisions.
“Our government committed a significant amount of resources over the past year and a half to working with Abitibi in an effort to ensure it would have viable operations in Newfoundland and Labrador,” Mr. Williams said in a statement.
“The decisions the company have made today are going to have severe and tremendous impacts on two significant regions of our province.”
Mr. Williams said he made it clear to John Weaver, the company's president and CEO, that his Conservative government was prepared to take legal action against the company.
“I sent a message loud and clear to Mr. Weaver that we would explore every possible option in terms of what legal authority government may have over the company's water and chartered timber rights,” Mr. Williams said.
The premier warned that if the paper machine in Grand Falls-Windsor is shut down, existing legislation would be used to strip the company of its timber licences — a threat Mr. Williams has made in recent months.
Mr. Williams said his government rejected a company proposal that called for joint development of two hydroelectric projects on the Exploits River in central Newfoundland, a project worth at least $300-million.
The proposal amounted to a ransom note because the province would have to assume most of the risks even though the company would not guarantee it would keep the two mills open, Williams said.
“We will work to the eleventh hour to see what can be done to have both of these mills remain in operation,” he said. “However, I also want to be very clear that this government will not be held ransom by the company.”
The company said it had cut costs to deal with a $43-million second-quarter loss, caused by rising energy and fibre costs.
Workers at the Stephenville plant heard of the impending closure from the local media, only to have it confirmed later by their supervisors.
“We're just sitting around here now discussing the options,” Brian Power, who's worked at the plant for 25 years, said from the plant's lunchroom.
“There's the possibility of having to move away because it's the main industry in this whole town and this whole town is going to be greatly affected.”
The mayor said the closure in October would have a huge impact the businesses that provide services for the plant.
But Mr. Stein sounded a defiant note, saying that the town would survive even though it would be losing hundreds of taxpayers.
“Most are still young enough that they will have to go away because they won't be able to take a pension package,” he said.
The mayor said the fight to save the mill wasn't over and that local and provincial officials would look for a new operator to run what he calls “a solid plant.”
Indeed, the mayor's resolve isn't without foundation for a town that has suffered a number of economic blows in the past, including the 1966 closure of a sprawling U.S. air base that once employed 1,200 civilians.
The mill, described as the backbone of the town's economy, was opened in 1973 by Labrador Linerboard Ltd., with financial backing from Joey Smallwood's Liberal government and Javelin Corp.
For the next four years, the money-losing mill made cardboard from spruce trees cut in Labrador.
It was closed in 1977, but Abitibi Consolidated purchased the mill in 1981 for newsprint production.(*)
