Tembec Inc. has locked 250 employees out of the Pine Falls newsprint mill in Manitoba.

The employees were locked out just after midnight, said Wayne Skrypnyk, area supervisor with the United Steelworkers union.

Contract talks between the union and company began Aug. 13 but the two sides have been unable to reach a collective agreement.

A spokesperson for Montreal-based Tembec said the company needs an "immediate and significant reduction" in labour costs at the paper mill to keep it competitive in a radically changed market for newsprint.

The company had warned the union last week that there would be a lockout if a deal couldn't be reached by the end of August.

Union leaders say the lockout is a way to force workers to take a 35 per cent cut in wages and benefits.

Skrypnyk said the request for wage cuts is hypocritical, considering five top Tembec officers received huge bonuses last year.

"In 2008, these individuals enjoyed increases in their compensation packages as much as 65 per cent. They've got some nerve coming to us saying we need 35 per cent in concessions from the unionized workforce in this plant," he said.

Skrypnyk said the union recognizes the company is in a difficult spot because the demand for newsprint has gone down. But all employees of the company should share the rollback, not just unionized workers, he said, adding that management refuses to bargain with the union about other possible ways to save money.

"We understand that they are in a very serious situation. And because we understand that we made it clear to them that we are absolutely ready to sit down and talk to them about any way we can to get their costs under control so they can continue to operate in Pine Falls," he said.

The mill is about 130 kilometres northeast of Winnipeg.