Harmac mill is falling quiet, expected to enter interim receivership after a 5 p.m. deadline Friday.

The mill’s bankrupt owners, Oregon-based Pope & Talbot Inc., secured a second 48 hours of protection from its creditors Wednesday.

With 520 jobs – 420 union and 100 non-union – at the mill at risk, the city will likely have to, at least temporarily, absorb the loss of one of its largest employers and largest single property tax contributor.

All three pulp lines have been closed indefinitely. A skeleton maintenance crew is expected maintain the facility for four to six weeks in case a prospective buyer appears.

Economically, those jobs represent tens of millions of dollars for the region’s economy.

In the short term, the city might be able to absorb the impact, but the long-term effects could be serious.

“A lot of our smart young guys are taking their skills and heading toward the safety of the oil and gas sector,” said Kevin Malone, a millwright who worked at Harmac for 31 years. “Young guys, all the senior trades guys, they’ll leave and they won’t come back.”

Malone said the production sector of the mill will be hardest hit.

“A lot of people with well paying jobs, they’ll go, too,” he said.

Brian Rintala, who signed on with Harmac four years ago after 30 years with Island Phoenix, said those workers who were close to retirement will be in the toughest spot.

“What’s a 55-year-old going to do?” he said. “I see a lot of people going to pump gas or something for a couple of years until their pension kicks in.

“It’s not what they deserve after so many years of work.”

Harmac pensions will be honoured 100 per cent through the Pulp, Paper and Woodworkers Union for workers aged 60-65.

Workers over 55 who take an early pension will lose 18 per cent.

“A loss like this impacts any community and it will certainly be felt in the retail and service community with so many jobs affected,” said Donna Hais, first vice-president of the Greater Nanaimo Chamber of Commerce. “Fortunately, the economy is booming in B.C. and because over the past 10 years Nanaimo has really diversified its economy to be more than mining or forestry, we should be able to absorb this. But it still hurts.”

Harmac is also Nanaimo’s largest property tax contributor. For 2008, the mill is expected to pay a total of $3.454 million to the City of Nanaimo, $2.594 million of which goes directly to the city. The balance of $860,314 is distributed to the regional district, hospitals and schools.

The mill’s closure won’t affect Nanaimo’s 2008 budget, but it could for 2009.

“Eventually the tax will be paid,” said Shannon Graham, Nanaimo’s assistant finance manager. “There are very few instances we haven’t been paid and if that is the case, which isn’t likely, the property goes to a tax sale.”

The 2009 city budget, however, could be affected, and Graham said council will decide what to do when the time comes. With the city planning to reduce industrial property taxes in the future to match commercial rates, it could be up to residential property owners to “make up the difference.”

City finance offices anticipated difficulty in the forest sector and boosted its unpaid tax reserve from $1 million to $2 million, with the help of a $5.8 million surplus from 2007.

Sue Ghose, president of the Vancouver Island Real Estate Board, doesn’t see the mill closure affecting local housing prices.

“We continue to have a very balanced market,” she said. “The forest industry has been in difficulty for some time but it hasn’t affected the (housing) market. We continue to have low overall unemployment, interest rates are low and there is good incentive to buy. The market is very strong and compared to Victoria or Vancouver, very affordable.”

reporter2@nanaimobulletin.com