Money not yet lost on UPM: former minister

Theformer New Brunswick business minister is defendinga subsidy of $5 million to Finnish paper giant UPM, which announced this week it plans to close its New Brunswick operation for at least nine months.

Company officials are warning that the Miramichi mills can only reopen if the market situation improves and the closure could be permanent.

Kirk MacDonald was the business minister in Bernard Lord's Conservative government, which last year gave UPM $5 million to keep the company's Miramichi magazine paper mill operating.

He said the shutdown is still considered temporary, and the government funding the company received could still help in the long run.

"At that moment in time, that investment was needed to keep that mill viable and to keep those jobs in the Miramichi," he said Wednesday. "So yes, I believe it was money well spent."

Even MacDonald's political enemies, the Liberals who are now in power, won't criticize him for not requiring that the mill stay open when he handed over the money.

They agree with MacDonald that if the paper mill reopens, the assistance will have paid off.

Natural Resources Minister Don Arsenault says the Liberals offered UPM even more money in December.

"The government is there to work in co-operation with UPM or any other forestry industry in New Brunswick," he said."It's not easy but we're there, and we're going to face these challenges head on."

UPM turned down the December offer because even with more subsidies it couldn't afford to further modernize the mill, a sign of just how dire things are in the industry.

UPM officials announced Tuesday a shutdown would begin in August, blaming Canada's strong dollar and a weak magazine paper market in the U.S.