My home town's death knell

[ShadowHM]

My brother forwarded me this news release today:

Tembec to shut down indefinitely its Smooth Rock Falls, Ontario pulp mill

TEMISCAMING, Que., Apr. 24, 2006 (press release) -- Tembec today announced that its market pulp mill located in Smooth Rock Falls, Ontario will be idled indefinitely, effective July 31, 2006. The Smooth Rock Falls mill produces 200,000 tonnes of Northern Bleached Softwood Kraft (NBSK) pulp annually. The idling will affect approximately 230 employees.

A number of factors have combined to make this decision necessary. Key among these were the high value of the Canadian dollar and the high manufacturing costs at this site relative to global competition. "The combined effect of these factors created a situation that could not be sustained. While there has been some progress over the past two years relative to reducing the delivered cost of fibre, the overall financial performance of the Smooth Rock Falls mill has been unacceptable," said Terrence P. Kavanagh, Executive Vice President and Chief Operating Officer.

"Decisions of this nature are never easy to make, and Tembec regrets the impact of today's announcement on employees, their families and the Smooth Rock Falls community," concluded Mr. Kavanagh.

This decision is consistent with the recovery plan that was announced previously by Tembec President and CEO, James Lopez. Margin improvement at all manufacturing locations is central to this plan, and the Company had indicated that, where no long term solutions could be identified and implemented to achieve this goal, necessary action would be taken.

During a series of meetings held today, the Smooth Rock Falls employees and union representatives were informed of the Company's decision. The employees had the opportunity to ask questions and discuss the situation with mill management. Tembec indicated that it will monitor market, operating and financial factors to determine when or if a future resumption of operations is possible.

Tembec is a large, diversified and integrated forest products company. With operations principally located in North America and in France, the Company employs approximately 10,000 people.

And another small town bites the dust. :(

I confess, I have not been there for 12 years. None of my family lives there anymore, and my friends from there also no longer live there. And yet - it was a fine place to grow up. Now, that opportunity will not be there for another generation of young'uns. On of my brother's best friends is now the Mayor of that small town, and has been trying his level best to find a way to keep it alive - apparently to no avail.

T'is the way of things, when your livelihood depends on a commodity, I know. And, still, I mourn a bit about the loss.

[Occhidiangela]

My brother forwarded me this news release today:

Tembec to shut down indefinitely its Smooth Rock Falls, Ontario pulp mill

==
"Decisions of this nature are never easy to make, and Tembec regrets the impact of today's announcement on employees, their families and the Smooth Rock Falls community," concluded Mr. Kavanagh.

This decision is consistent with the recovery plan that was announced previously by Tembec President and CEO, James Lopez. [I]Margin improvement at all manufacturing locations is central to this plan, and the Company had indicated that, where no long term solutions could be identified and implemented to achieve this goal, necessary action would be taken.
During a series of meetings held today, the Smooth Rock Falls employees and union representatives were informed of the Company's decision. The employees had the opportunity to ask questions and discuss the situation with mill management. Tembec indicated that it will monitor market, operating and financial factors to determine when or if a future resumption of operations is possible.

Tembec is a large, diversified and integrated forest products company. With operations principally located in North America and in France, the Company employs approximately 10,000 people.[/i]
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Tembec doesn't give a flying fruit bat for anyone in your town. Globalization continues to exercise its corrosive effect on European and North American labor forces.

Alfred Thayer Mahan's remarks hit the spot, when he observed "that a government is like a corporation, in that it has no soul."

Occhi

[kandrathe]

You never know how it will turn out.

The city near me started as a mill town where grain, lumber, and livestock would be brought to be processed and then moved down the Mississippi for distribution. It has little to do with that now. Those commodities were important for early capitalization, but once there was a critical mass of population and capital the business opportunities expanded away from the agro/industrial base.

It is nice, yet risky to have a large corporate employer. Better to have a diversified handful of medium sized ones (200-500 employees) poised for growth. Most of the city planning here has to do with creating the proper climate for business growth, with the proper mix of a well educated work force, access to services, reasonable business taxes, startup incentives (like tax breaks) and promotion of new ventures via private/public partnerships with the local business colleges and universities.

It is interesting to see what makes a town thrive or even survive. There was a small town here (Chandler, 1992) a few years back where a powerful tornado destroyed almost every business and home, yet within a few years they bounced right back from the splinters. Here is another town (Comfrey, 1998) that was hit really hard and bounced back.

[ShadowHM]

Thanks for the uplifting thoughts, kandrathe, but I am not sanguine about the future of this particular town. It is a very remote location (500 miles north of Toronto); chances are dim for other industries to make use of what it has.

The writing has been writ large upon the wall for some time, in this case.

This town was started in 1927, due to the (duh) large waterfall there, which could be harnessed to power a mill.

First, costs to deliver the wood to the mill have risen considerably. When I was a child, they floated them down the river - a very inexpensive form of transportation, even when you took into consideration the logs that either got lost on the riversides or sank. (Passersby on the highway were always pulling over to take photographs; it was an impressive sight to see that huge river full of logs. :) And, in the line of reminiscences, it was also a fine and dangerous quest to see how far you could run across the logs before you ended up in the river. :unsure: To be sure, it was a proscribed activity, but that just increased the allure... ;) )

Now the wood or wood chips must be trucked in, and with the rising costs of gasoline, that is much more expensive.

There are very few skilled jobs in that mill, where the skill sets could be transferred to other industries. The electricians might be an exception, but even the millwrights, who theoretically could go elsewhere, are actually limited by the fact that their certification is only by Tembec, and not a provincial licencing board. Virtually all the rest can and is done on the strength of your basic high school diploma.

The markets for the mill's output are shrinking. Newspapers are not being purchased as much anymore - the world is moving towards reading news online. Re-tooling the mill to make other sorts of paper base would be very costly and the same transportation cost issues would just get worse. There was a brief but exciting time in the '80's when it looked like there might be a commercially extractable source of kaolin clay just north of the town (the stuff that makes National Geographic magazine paper so shiny and photograph perfect). Unfortunately, while the clay is there, the costs to extract it are prohibitive.

Now, you would think that knowledge might be a motivator for those who do work in that mill to be willing to negotiate with the company to keep their jobs on lesser wages, but that has not been the case. *

Other factors that are involved: The one still viable and useful thing the town has, the hydro-electric power from that dam, is actually much in damand, and given the costs of new electricity sources, could be sold profitably on an almost completely automated basis.


*Why is the writing on the wall so hard to read, for so many of us? Does it take distance from it to make it discernable? That writing is there for many industries, all across North America, and I don't think many people are actually reading it or, if they are, believing that it applies to them.

[gekko]

The towns all around Thunder Bay are experiencing very similar problems. The problem that's become the final nail in the coffin here is energy costs. The sad part is that North Western Ontario produces so much energy, it sometimes is run into the ground because we can't use it all. The wonderful pricing of energy in Ontario means that when everyone in Toronto turns on their air conditioners and energy prices jump, the mills here have to pay the same price as businesses in Toronto - even if, as a region, there's no reason for the increased prices. This means that frequently during the summer (and occasionally all year round) the mills here simply shut down and send everyone home until the energy prices come down. Of course the softwood lumber dispute with the US isn't helping, either.

gekko

[Guest]

Blame China.