Eurocan paper mill in Kitimat to close permanently
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Updated: October 28, 2009 4:38 PM
The Eurocan paper mill in Kitimat will close permanently as of January 31, 2010, parent company West Fraser announced today.
After many years of ongoing efforts to reduce operating costs and improve results, the company announced today that it will permanently close the unprofitable operation.
“We deeply regret the impact the mill closure will have on our 535 employees, their families and the community and we will ensure those who are affected are treated with fairness and respect,” said Hank Ketcham, West Fraser’s Chairman, President and CEO in a media release.
The 40-year-old mill, which produces linerboard and kraft paper, has historically struggled with high costs and negative returns. A contributing factor to the mill’s problems in recent years has been sawmill curtailments in the region, which have reduced the supply of lower-cost residual wood chips to Eurocan and increased the mill’s reliance on more expensive whole log chips.
In addition to these ongoing challenges, the mill’s situation took a dramatic negative turn during the past year. Since December of 2008, Eurocan has experienced a drop of approximately 40 per cent in the net selling price of its products. This decline has been driven by the global economic slowdown, the rise of the Canadian dollar and severe competition from low-cost paper producers in other countries.
“A deep and thorough review by the company looked at ways to offset the steep decline in Eurocan’s financial results,” said Ketcham. “Unfortunately, even with the most optimistic projections the business fundamentals of the operation have deteriorated to the point where permanent closure is the only reasonable alternative.”
For more coverage, see the November 4 issue of the Northern Sentinel.
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