
Pulp and paper companies dependent on the coastal forest industry for their supply of wood chips are beginning to shut down fibre-starved operations, threatening to spread the economic impact of the four-week-old woodworker's strike beyond sawmilling and logging operations.
Two companies, Howe Sound Pulp and Paper and Pope & Talbot, have announced shutdowns and lay-offs affecting over 250 workers as a result of fibre shortages.
And the coast's largest pulp and paper company, Catalyst Paper, says it is closely monitoring its own chip inventories that supply four mills employing 3,000 workers in coastal resource towns.
"As the summer moves on, we will eventually get to a point where we are having to curtail operations, but we are not at that point yet," said Catalyst's Graham Kissack. "The picture will become more clear as we move towards the end of August."
Seven thousand coastal sawmillers and loggers walked off the job during the weekend of July 21, shutting down 34 coastal logging and sawmilling companies in a bitter dispute over working conditions. The strike began a count-down for the economically more significant pulp and paper sector, which had been stockpiling chips since spring in preparation for the strike.
Companies are trucking in chips from the Interior to augment their supplies, but even that won't save them from the day of reckoning.
Catalyst chief executive officer Richard Garneau told financial analysts recently that the company has enough fibre inventory to run normal operations for August.
"Absent a coastal labour agreement, production cuts would have to be made in September," said Paul Quinn, analyst with Salman Partners.
Quinn said in a research report that he believes the collateral damage being done to the pulp and paper sector may spark the involvement of the B.C. government if requested by both parties.
A spokesperson for Labour and Citizens Services Minister Olga Ilich said Catalyst has already approached the government expressing its concerns over a prolonged strike.
"We do understand that they want to see the dispute resolved and so do we," said ministry communications manager Linda O'Connor.
"However, our position is that it's up to the parties to find a resolution. Government continues to monitor the situation, and we urge the parties to continue talking to reach a negotiated agreement."
The United Steelworkers, which represents 7,000 coastal workers, and Forest Industrial Relations, which represents most of the struck companies, are both dug into their respective positions and have no talks scheduled.
"We are in the same place as we were on July 5 when we tabled our final offer," said FIR's Ron Shewchuk. "We have gone as far as we are willing to go."
At Howe Sound Pulp and Paper's Port Mellon mill, the deadlock means the company's newsprint line employing 150 to 200 people is no longer running, and lay-offs are to begin Friday.
"The newsprint machine has been shut down. We are performing maintenance in preparation of a quick start-up in case there is a quick resolution.
"But if nothing changes, we will be forced to start laying off people on the 17th," said mill general manager Fred Fominoff.
He said that the strike by loggers and sawmill workers has virtually stopped the flow of wood on the coast and the amount available is not adequate to maintain full operations.
"We are very concerned about the impact of the strike on our employees, our business and our customers," said Fominoff. "However, given the current wood supply and economic conditions, we have limited options. It is our hope that there will be a resolution soon to this dispute to avoid long-term consequences to the industry."
The spread of the strike's impact beyond sawmills and logging operations into the pulp and paper sector is troubling for the coast's regional economies, but it is easy to overlook the provincial impact because the overall economy is strong, said Ken Peacock, director of economic research at the B.C. Business Council.
"Any time you take out an important sector of the economy it is always a concern," Peacock said. "And for some of those operations, the longer the strike goes on, there are so many other employment opportunities, workers can go elsewhere.
"That has to be a bit of a concern. The more protracted the strike is, the more people may look elsewhere for employment."
(canada.com)