Da Legal Stuff...

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Wednesday, October 26, 2005

What has Newfoundland and Labrador Offered to Abitibi-Consolidated?

Today Abitibi-Consolidated announced through the VOCM open line program that it will “idle” its Stephenville, NL mill operation rather than closing it out entirely, which had been expected to happen at the end of this month. A spokesperson for the company said that there was a potential break on the operation’s high energy costs and they would continue to look for concessions from the union representing workers in an effort to re-start the operation rather than shut it down completely.

On the surface this announcement sounds somewhat encouraging, but does anyone besides me have a very bad feeling about this?

Like the old saying goes: If it looks like crap, feels like crap and smells like crap, it probably is crap.

So far the entire provincial / Abitibi negotiation process and the concession demands on union members, smells like something I wouldn’t want to step in on my way to work.

During the past summer, Abitibi informed government of plans to shut down the mill in Stephenville along with one of two paper machines in Grand Falls-Windsor. The shutdowns would result in hundreds of people losing their jobs and the virtual devastation of a dozen or more communities that depend on the mill for employment.

According to Abitibi, the only thing the government had to do to avoid such a catastrophe was to build power generating plants on the Exploits River at an estimated tax payer expense of $300+ million and give those plants to the company. Not sell them power mind you, but give them the generating capacity outright, thus putting Abitibi in a position to compete directly with NL Hydro.

In addition to generating capacity, Abitibi wanted government to give the company (free of charge of course) first logging rights to every single stick of wood in both Labrador and the island of Newfoundland.

What a bargain.It’s hard to understand why government wouldn’t jump at the offer. After all, it would only cost our financially strapped province $300 million, give Abitibi control of the second largest power source on the island and in essence mean that Abitibi would have control of every birch, spruce, fir, pine, apple and cherry tree in the province, evenif they shut down both mills in the future and put every single worker on the street.

Since this information reached the public in late July, on-again, off-again negotiations between the provincial government and Abitibi-Consolidated have been conducted behind closed doors. Nobody, other than key officials from both sides, know exactly what is being discussed or what is being offered. In that light, when I hear a company spokesperson use phrases like, “a potential break on the operation’s high energy costs”, it really rattles me.

Add to this the fact that while negotiations have been ongoing between government and abitibi, the company took it upon itself to begin negotiating a side deal on union concessions. Apparently this began without government knowledge and as the spokesperson stated today, work on those concessions continues.

These concessions are being pushed on the union separately from any deal that government may be offering and they are by no means minor. Abitibi-consolidated has said it wants wage freezes (Ok, this speaks to operating costs) and the union has agreed to a 5% rollback in response.

What about some of the other concessions?

On top of money saving wage freezes or rollbacks the company has said it wants the right to bring in outside contractors when ever it chooses and it wants the union to disband its ability to file a grievance, for any reason what so ever, over the next year.

In other words it is trying to bust the union and it wants the membership to agree to it. Not only that, it expects them to agree without even knowing what government may already have on the table.

This whole scenario stinks in so many ways it’s hard to even breathe in this province anymore. It just stinks all over the place.

Obviously the Union at the mill in Stephenville will stand up for what it believes is right. After all the members are the ones who will be directly affected, but what about the negotiations with government? What about, “a potential break on the operation’s high energy costs”? Just what does that mean exactly?

Has the government really managed to work out some sort of deal that is livable for everyone or have they, as so many NL governments have done in the past, “given away the shop once again”, so to speak?

Unfortunately nobody knows because nobody who is in the know is saying anything about what they know, you know. (Sorry I couldn’t resist it, but now you have a taste of just how confusing this whole thing is.)

I just hope that before any deal is signed between government and Abitibi, John Q Taxpayer gets a chance to read the fine print and have a say in the final offer. After all, he’s the one who’s going to foot the bill right?


Patriot said...


Since this commentary was written, government has announced some information around the tentative deal with Abitibi.

According to Premier Williams, the province has agreed to provide the company with $10 million a year to help offset their costs. Williams said this is a reasonable cost since the company brings $110 million into the economy in the Stephenviille area.

Over the next few days we may hear more on this. It strikes me as a little odd that Abitibi would ask for so much going in and settle for so little. I guess we will have to wait and see.

Anonymous said...

I donno. 10 million a year and potentially 150 Million cash total to keep a dieing industry alive sounds like crap to me, John Q Taxpayer. Then along comes, say, the mill in Corner Brook and Come By Chance Refinery with their hands out as well.

WJM said...

and settle for so little.

There are no shortage of mill towns that would gladly "settle" for just a "little" $150-million provincial government subsidy right now.

Danny's protest that this doesn't set a precedent is pretty thin. Now that he's given away $150-million to one company town, how can he say no to others without losing face (and on both of his faces)?

Patriot said...


Welcome back, we havn't seen you for a while.

This time I actually agree with you. $150 million is nothing to sneeze at, but when I said "so little" I was referring to it in the context of what Abitibi had originally wanted which would have cost over 300 Million and all timber rights in both areas of the province.

In that context, 150 million over more than a decade in return for maintaining a return to the economy of over 1.5 billion is not as bad. Add to this the fact that not keeping the mill alive would have meant a major cost to the province to help support the folks in the area in the short term.

I agree with you as well that we may see others lining up. If I were running Kruger I would certainly be a more than peeved that a competitor in the industry was recieving subsidies when I wasn't.

I also question (in the context of what they had originally asked for) if more was not done for Abitibi than we are all being told.

WJM said...

I imagine the folks at Wabush Mines and IOC are pretty interested in this arrangement.

BNB said...

The positive of course is that The Mill has brought a very fine life to very many people in Central Newfoundland. The other side of that is that we have given up nearly complete control of our timber resources. ABITIBI uses primarily black spruce and although they are not supposed to cut birch, pine, etc. these trees are often left exposed and die. That coupled with the fact that ABITIBI likes to spray herbicides to kill birch, aspen, cherry etc. in favour of spruce... Well it amounts to little more that flattening our environment and artificially changing our ecosystem.

Now before I come across as a tree hugger I will present the alternative. A well managed forest is cleaned up and replanted after a cut. In the early years Anglo-Nfld Developement, then Price Brothers then ABITIBI-Price and finally ABITIBI did very minimal Silviculture. Now-a-days it has gotten better but far from perfect. And given the long term growth of a spruce forest the damage of old is still blatantly obvious. I hate to compare us to the mainland but I have seen the difference in Alberta forest management and that of NL. We have allowed too much misuse.

So there's my rant. What's the answer? I think offering up timber rights, and the potential for Hydro power of the Exploits to the open market might very well attract a wiser and more profitable corporate citizen.