Irving Paper lays off nearly half its employees, blames cost of electricity

J.D. Irving announced that it will permanently reduce operations at its Saint John paper plant, laying off 140 workers.

Workers at Irving Paper were informed Monday morning that the layoffs will take effect immediately, according to a release from the company, which listed the plant's total workforce at 310 employees. 

The statement did not use the term "lay offs," but J.D. Irving spokesperson Anne McInerney confirmed the affected employees are losing their jobs.

The statement blamed the province's "uncompetitive industrial electricity rates." 

"As New Brunswick manufacturers face more and more significant headwinds, it is becoming increasingly difficult to shoulder the impact of soaring electricity costs and remain competitive in an international market," said Irving Pulp and Paper vice-president Mark Mosher in the statement.

The move comes after J.D. Irving Ltd. advocated last fall at the Electricity and Utilities Board hearing against changes to the way N.B. Power calculates charges.

At the hearing, N.B. Power argued the move was a self-serving attempt by JDI to escape expenses the company wants others to pay for.

N.B. Power also increased subsidies for pulp and paper mills, including three owned by JDI, to help them cope with rate increases.

McInerney said the company would not give any interviews about the announcement, but added in an email that the decision "is no way connected to possible future tariffs." 

CBC News has reached out to Premier Susan Holt and Saint John Mayor Donna Reardon for comment.

In the statement, Mosher went on to say the company had been "working collaboratively" with the province for a solution but that there is "no viable alternative" to continuing operations in their current arrangements.

Mosher said Irving Paper would continue to work with the province to develop a plan to continue operating the remaining 50 per cent of operations.

The release said the Irving Paper plant on Bayside Drive in Saint John manufactures graphic paper for use in magazines, catalogs, newspapers and advertisement flyers. 

In an emailed statement, N.B. Power spokesperson Dominique Couture said the utility will continue working with Irving Paper and the province to "explore options."

"As a cost-of-service utility, NB Power's rates are based on the cost of providing electricity to our residential and industrial customers," Couture said in the statement.

"We are committed to doing everything we can to reduce the rate pressure on customers; at the same time we have a responsibility to maintain and invest in our system to ensure all New Brunswickers have the power they need when they need it."

Professor says move not surprising

University of New Brunswick political science professor Herb Emery said no one should be surprised at the move, given JDI's actions at the EUB hearings. 

"Big industry has been warning about the issue of these power prices for some time, and everyone decided 'let's call their bluff and see if they mean it,'" Emery said.

It's the same dynamic as in 2006, when N.B. Power raised industrial rates and several pulp and paper mills closed, he said. 

He pointed to more competitive heavy-industry rates in neighbouring Quebec, and said in other jurisdictions, utilities are used to create cheap power for large industry because the benefits spill over into the wider community.

"But in New Brunswick politically, people don't like the differential treatment of large industry, but if I go to most other provinces, you'll see that large industry gets treated much nicer than in New Brunswick," Emery said.

"There's sort of a recognition that you need these companies, you need these industries."

Coon says JDI claim 'disingenuous'

New Brunswick Green Party Leader David Coon disagrees. He said New Brunswick's rates are better than Nova Scotia, Prince Edward Island, Ontario and other provinces. 

"So to suggest it's uncompetitive is disingenuous," Coon said, adding that Canadian rates are much cheaper than those in neighbouring New England states. 

"And JDI knows this because JDI has mills in New England and they know how much money they pay there, which is a lot."

The government of New Brunswick's webpage on the "large industrial renewable energy purchase program" lists the average New Brunswick rate for this sector as $93.43 per megawatt hour. The Canadian average is $72.68. 

The listed Ontario average rate is $82.76, while Quebec's average is $52.26.

As a massive consumer of electricity, there's no doubt that JDI has large bills, Coon said.

"But in terms of the rates, they're not at all uncompetitive as they suggest, so I don't know what their agenda is, but they've got one and we'll find out soon."

In the meantime, N.B. Power and JDI can work on finding efficiencies and how to moderate demand, he said.

"But in terms of the rates, right now it is the case that household customers and small business customers are paying a little more so that they pay less, and that's certainly not fair."