The New Brunswick forestry industry is feeling a little wary over the proposed merger of two huge forest product companies.

Abitibi-Consolidated Inc. and Bowater Inc. announced on Monday they plan to merge and become the third-largest publicly traded paper and forest products company in North America. The proposal requires shareholder and regulatory approval.

Abitibi and Bowater say the move will help them compete in the pulp and paper industry by saving almost $300 million, but whether those savings will come at the cost of job losses or mill closures is still unclear.

Bowater Inc. operates a mill in Dalhousie, on the Bay of Chaleur, that employs 315 people. The merger proposal has many people wondering about the future of the mill.

Local union representative Jean-Louis Laforge says he was caught by surprise by the announcement.

"We heard the news the same as everybody else this morning," Laforge said on Monday. "I got a phone call from the rep telling me it was coming down today, that's all.

"Nobody knew. We were expecting something but we didn't know what."

Dalhousie Mayor Clem Tremblay hopes any changes will be at the top level, and that a merger will make the mill more competitive.

"It's a one-industry town," Tremblay said. "It's the bread and butter not only for Dalhousie, but for the whole area, for the whole region. When you hear about shutdowns and so on, it hurts.

"But this is not shutdown. It's better for the future of the town of Dalhousie."

Mark Arsenault, president and CEO of the New Brunswick Forest Products Association, says it's all too early to speculate.

"I think that, yeah, it's a wait and see," Arsenault said. "There are so many different factors that have to be considered that you know, we just have to wait and see where this all goes."

Company representatives did say there are no consolidations scheduled for 2007, but that will depend on market conditions. Pulp prices are down and newsprint demand is in decline, so pulp mills all over New Brunswick and Quebec are struggling.

The new company, to be based in Montréal and known as Abitibi-Bowater, would control almost half of the North American newsprint market, by some estimates.