Port Hawkesbury Paper pulling in profit

Nancy King nking@cbpost.com
Published on August 27, 2013

POINT TUPPER — Less than a year after resuming operations, Port Hawkesbury Paper is making a slim profit, its owner says.

This week, Ron Stern made his first visit to the Point Tupper paper mill since it resumed operations in October after being shut down for more than a year. Stern’s Pacific West Commercial Corp. purchased the mill after former owner NewPage Port Hawkesbury filed for bankruptcy protection.

“It surpassed what we expected from a standpoint of the talent that’s in the mill, it seriously has,” Stern told reporters during an open house at the mill Monday. “The numbers compared to what we projected are less than what we had hoped for but we’re still happy because of what we see in the future. You get the right people, you’ll make it succeed.

“We’re here for the long haul. …We’re committed to this place, we’re stubborn and together with the people in the mill we will move heaven and earth to make this mill succeed.”

Stern said the company has spent $120 million in Nova Scotia since resuming production and that will total $160 million by the time it reaches its first anniversary. Its order books are full.

Pacific West paid $33 million for the paper mill, and it reopened with $124.5 million in provincial assistance over 10 years.

The financial support provided by the Dexter government to assist in reopening the mill has been the source of controversy.

“What I would say standing here today, their decision looks very sound,” Stern said. “At the time the decision was made, you could ask the question, are you going to be able to break into the paper market with 400,000 tonnes (a year) … we’ve done that, and we’ve done it without trashing the market.”

He added they’ve also shown they can run the mill with fewer people — it now employs about 300, about half of the former workforce.

“A lot of things that were serious risks are largely behind us,” Stern said.

There remain many more changes to the operations to be made, he added.

Mark Farrow of Grand Anse was one of the former NewPage employees who returned home to his wife and two sons from working in Western Canada when Port Hawkesbury Paper opened its doors.

“They have a nothing-to-hide attitude, a how-can-we-become-better attitude, a let’s-do-what-makes-sense attitude, which makes all employees feel part of something big,” Farrow said.

The unionized workforce agreed to a long list of concessions in order to get the mill restarted.

“I’d be lying if (I said) it didn’t affect morale. We did make a lot of concessions, but it seems now that we’re back to work and people understand what the rules are and what the collective agreement says, they’re very happy to be back to work and we’re dealing with the new contract,” said Archie MacLachlan, first vice-president of Communications, Energy and Paperworkers Local 972.

The resumption of operations at the mill hasn’t been hiccup-free. Wood suppliers stopped delivering wood for a time, complaining that Port Hawkesbury Paper cut the rate they had been paid by NewPage. They also wanted to negotiate as a group and the mill refused to do so. The mill imported wood from New Brunswick to make up for the shortfall.

“We think we’re in good shape, we know that with the truckers we could have done a better job communicating with them, that was the problem … we think we’ve established good relations with a lot of truckers. We have long-term contracts with a lot of truckers,” Stern said.

The mill is starting up its new $10-million debarking unit and there are plans for further improvements.

“It’s really important that we figure out how to reduce our amount of energy so we have a team going to Europe looking at various technology and our aim is to reduce the amount of energy by over 20 per cent, it’s a huge amount.”

The mill won a special load-retention power rate that sees it pay for the cost of producing power for it and it also makes a contribution to Nova Scotia Power’s fixed costs. It pays $50-55 million annually for power.

Some of its competitors pay power rates that are as much as 30 per cent lower, but Stern said the Point Tupper mill has other things going in its favour.

“We’ve got better equipment, frankly, I think we’ve got better people,” Stern said.

By only restarting the mill’s supercalendered paper line and not the older newsprint machine, Port Hawkesbury Paper is not buying expensive wood from out of province, as NewPage did.

NewPage said the mill had lost $50 million the last year that it operated it.

During last winter, the mill relied highly on expensive natural gas in order to produce steam, but that is no longer the case with Nova Scotia Power’s biomass facility now in production at the Port Hawkesbury Paper site.

Since the mill went back into production it has improved efficiency and beaten production records and is now able to produce a higher grade of supercalendered paper — SCA++, with the trade name Artisan — that can compete with lightweight coated paper.

“We are now going to be selling probably 80,000 tonnes next year to customers who previously used LWC paper,” Stern said. “The fact that we’ve broadened our market that we’re going after is very important to us.”

Port Hawkesbury Paper is looking to diversifying its product line and is looking at the possibility of moving into the extraction of sugars from hardwoods. Stern said an international group has made an initial visit to the mill to see the operation and wants to move on to another level of discussions.

They are also looking at other business opportunities related to the use of its wharf and other assets.

The mill supports about 400 jobs in the harvesting and trucking of wood.