750 lumber jobs in Quebec's North Shore at risk: Kruger

Company says its wood-harvest quotas would drop by 42% under chief forester's calculations

Last Updated: Wednesday, December 13, 2006 | 5:53 PM ET

CBC News

The lumber company Kruger Inc. says 750 jobs in Quebec's North Shore area are "seriously compromised" by massive reduction in wood supplies allotted by the province in its latest calculations.

The privately owned Montreal company said in a statement issued Wednesday its decision to set up on the North Shore, with $170 million in investments and 750 new jobs, "was made on the basis of a contract giving it rights to forest supplies that it believed were stable and predictable."

'We are surprised and dismayed. Getting 42 per cent of our volume amputated completely puts into question our entire presence on the North Shore.'-Kruger Inc. on provincial wood-harvest reductions

"Today, these conditions have been seriously compromised," Kruger said.

Quebec's chief forester, Pierre Levac, announced last week that wood-harvest quotas would be cut in various regions of the province between 2008 and 2013 to end overcutting of the province's woodlands.

The decree by the chief forester — a government-appointed official who decides on tree-cutting quotas for Quebec — followed a 20-per-cent reduction announcement in March 2005.

Kruger vice-president Jean Majeau said last week's announcement could be a body blow for the company's North Shore operations.

"We are surprised and dismayed. Getting 42 per cent of our volume amputated completely puts into question our entire presence on the North Shore," he said in an interview with the Canadian Press.

"We had a business plan that was based on contracts that gave us the right to forestry supply levels that we thought were stable and predictable in the long term."

Quebec urged to rethink 'drastic reduction'

The company urged the Quebec government to re-evaluate the impact of the "drastic reduction" of its timber supplies and find ways for Kruger to maintain its operations.

"This disproportionate reduction in volumes is all the more surprising as we have only been conducting forest activities on the North Shore for eight years only," Majeau said.

"This is an area where there was previously no forest activity. In addition, we have never harvested in excess of our allocation."

Wood chips produced on the North Shore supply the 620-employee Wayagamack mill in Trois-Rivières, Que., where Kruger invested $500 million to rescue and restart the mill, in partnership with the Société générale de financement du Québec (SGF).

The company also has three other mills in the area that depend on the timber supply.

Majeau said the "massive and unilateral reduction of our supplies" and other constraints will have an impact on Kruger's three North Shore sawmills in Forestville, Longue-Rive and Ragueneau, and the Wayagamack mill.

Industry plagued by problems of late

Quebec's forestry industry has been hit hard in recent years, with the permanent or temporary closure of more than 100 mills and the layoff of more than 10,000 employees.

Reduced forest quotas aren't solely to blame for the crisis. Foreign competition, obsolete sawmills and fluctuations in the Canadian dollar have also sapped the industry's competitiveness.

Kruger is a 102-year-old company that produces papers, tissue, lumber and other wood products, cardboard cartons and renewable energy. The company recently expanded in the retail sector with the acquisition of the Maison des Futailles, a winemaker, bottler and marketer of wines and spirits.

Closed mills in Ontario, Quebec in 2006

Kruger employs 10,500 people and operates mills in Quebec, Ontario, Alberta, British Columbia and Newfoundland and Labrador, as well as the United States and Britain.

Earlier in the year, the company shut down mills in Ontario and Quebec to deal with a slump in its markets.

Besides the latest timber cut, Kruger has also faced legal disputes and court injunctions sought by native groups over logging rights on the North Shore.

"These new disastrous conditions add to the uncertainty related to the many successive litigations affecting the industry that Kruger has had to face since 2004," Majeau added.