Direct subsidies ruled out for Corner Brook mill

A Newfoundland and Labrador minister said Wednesday the government will do what it can to support the struggling Kruger newsprint mill in Corner Brook, but ruled out direct subsidies.

"If a long-term plan is presented to us, to ensure the viability of the paper mill that doesn't involve subsidies, we'll certainly look at it," Natural Resources Minister Jerome Kennedy told reporters in St. John's, while Corner Brook Pulp and Paper workers were still absorbing revelations this week that layoffs may be imminent.

Kennedy said while direct subsidies are out, the government is prepared to look at other means, as it has in the past.

Since 2004, government has spent about $89 million on projects related to Corner Brook Pulp and Paper, including $47 million through a power purchase agreement that involves Kruger's 124-megawatt stake in Deer Lake Power Co.

A memo obtained by CBC News shows that Montreal-based Kruger intends to "reduce its workforce" in the coming months, and notes that mills of comparable size have about 135 fewer employees.

Kennedy said a direct outlay of public cash is off the table, although he said government could play a role.

"We're interested in the long-term viability of the plant. We're not interested in short fixes," he said.

"We feel, and we're hopeful, that if the union and the company can come to an agreement, [and] if there's a role for us to play, we'll certainly look at it."

Liberal MHA Yvonne Jones is skeptical that the government can play a meaningful role.

"The last two paper mills that Kathy Dunderdale turned her hand to ended up going belly-up in Newfoundland and Labrador," said Jones, referring to AbitibiBowater's shuttered mills in Stephenville and Grand Falls-Windsor.

Labour costs can be brought down: union

Meanwhile, a union official says he was not surprised by a revelation that Corner Brook Pulp and Paper's labour costs are 40 per cent higher than the average North American plant.

But Gary Healey, a national representation of the Communication, Energy and Paperworkers union, said the CEP has already been working with parent company Kruger Inc. to find ways to make the mill competitive.

"To think that you can wave a magic wand and you can become the lowest man-hours per tonne in North America — that may or may not be achievable here, but I'm sure that we can get close to it," Healey told CBC News.

Healey said that while CEP officials met with company managers on Tuesday, they did not discuss how many jobs will be cut in Corner Brook.

Healey said he is hoping retirement packages and retraining will help soften the blow.  

Meanwhile, Liberal MHA Eddie Joyce, who represents the western Newfoundland district of Bay of Islands, said the Newfoundland and Labrador government should demand that it be consulted about cuts at Corner Brook Pulp and Paper.

"You just can't walk in and just lay off 135 people," Joyce said.

"The investments that the province has made into this mill — they should ensure that the workers' rights and the workers' well-being are in the forefront."

Calls from CBC News to Premier Kathy Dunderdale's office were referred to Natural Resources Minister Jerome Kennedy, who did not respond Tuesday.

Liberal MP Gerry Byrne, whose Humber-St. Barbe-Baie Verte riding includes the Corner Brook area, said the mill should never have to close.

He said the mill has a lucrative power supply and access to fibre.

Byrne said the federal government needs to acknowledge that the industry is vulnerable and still needs help, and can step in with an investment in renewable energy.

"The logic that brought us stimulus in 2008, 2009, 2010 and 2011 to a certain degree is still very much there in 2012," he said.

"We do not have in this country a significant or meaningful federal incentive program to invest in sustainable renewable energy, alterative energy and I think that's something."