Saturday, December 20, 2008

I can scarcely believe it. A government with guts ! If there is one set of rulers that could be described by this phrase in Canada today it would be the government of the Province of Newfoundland, headed by Premier Danny Williams. The Premier is no stranger to firm stands. Because of the policy of the federal government of Sneaky Stevie Harper Williams openly campaigned for an "anything but Conservative" strategic vote in the last federal election, and his campaign paid off in spades. Unfortunately Newfoundland is hardly a heavy hitter in the federal boxing ring. The entire province has fewer people than the city of Winnipeg. But it at least showed Sneaky Stevie that people will fight back if pushed too far.
Speaking of pushed too far ,timber giant AbitibiBowwater recently announced that they were closing up shop in their Grand Falls-Windsor mills, putting 750 workers out of job. The Premier retaliated with a premptory nationalization of Abitibi's other assets in the province, assets that were granted over 100 years ago on the presumption of Abitibi's ancestor company continuing to provide employment to the people of Newfoundland. To me this seems only just. If you enter into a contract with another individual, promising certain things in return for other things, and if the other party to the contract reneges on it then you certainly don't have to continue giving the things you promised in exchange. The contract is null and void. Corporate America (Abitibi is American) thinks otherwise, but I guess they are too used to pillaging with a blank cheque.
The following is an article from the Globe and Mail on this story. You may also find other comment on this matter at Eugene Plawiuk's La Revue Gauche blog. Molly's feelings...there is no reason that the mill couldn't reopen as a producers' co-op with government loan guarantees, municipal, provincial and, by some miracle tied to public opinion, federal as well. The physical assets should be frozen so that the company cannot strip them any further in the weeks to come. The Newfoundland government has shown courage in going as far as it has. It's time to show even more and go the extra mile in defense of the workers and community concerned.

Newfoundland seizes assets of AbitibiBowater:
Government responds to impending mill closing by ordering forestry giant to surrender timber and water rights, hydro plants
With reports from Konrad Yakabuski and David Ebner
December 17, 2008
Forestry giant AbitibiBowater was stunned and warned of a possible NAFTA challenge after Newfoundland and Labrador moved yesterday to take over its hydro assets and resource rights.

Premier Danny Williams announced legislation to enforce the change four days after the company says the provincial government sent it an e-mail demanding that it "surrender forthwith entitlement to [all] resources" in the province.

Company spokesman Jean-Philippe Côté said the message from Natural Resources Minister Kathy Dunderdale arrived after hours on Friday and demanded a response by midday on Monday.

Mr. Côté said AbitibiBowater sent a reply, suggesting that a working group be created to address issues related to the pending shutdown of a money-losing mill in central Newfoundland. Then came Mr. Williams's bombshell.

"Abitibi has reneged on the bargain struck between it and the province over the industrial development of the province's timber and water resources for the benefit of the residents of the province," the Premier told the legislature yesterday.

The legislation, which was rushed through the House after the Opposition raised no objections, would give the provincial government control of AbitibiBowater's timber rights, water rights and hydroelectric plants. The company will receive unspecified compensation for physical assets taken over.

The cash-strapped company had been hoping to sell the hydro assets, along with assets in Ontario and Quebec, to help make a crucial debt repayment in March. But any legal dispute with the province would likely drag on well past then.

Mr. Côté called yesterday's legislation a "destabilizing precedent [that] opens the door to some potential Canada-U.S. trade issues."

The company is legally a U.S. entity, which could make the province's move vulnerable to a challenge from Washington under the North American free-trade agreement.(More reason to abrogate the US-Canada Free Trade Agreement-Molly)

The Premier quoted century-old documents to the legislature. He cited a 1903 letter from the president of the Anglo-Newfoundland Development Company Limited, a predecessor to AbitibiBowater, and a 1905 lease agreement to argue that the company's rights were dependent on operating a mill in the province.

He said that cabinet has the right to determine compensation.(How about NONE-Molly)

"If there's no agreement, we will in fact impose an agreement," he said, according to The Canadian Press. "Under the legislation, cabinet will have the power to say, 'Here's the formula, here's what the compensation is, here's your cheque.' "

Other companies operating in Newfoundland shrugged off the legislation, including Petro-Canada, which has stakes in the offshore oil projects Hibernia, Terra Nova and White Rose and a piece of the proposed $7-billion Hebron operation.

"[It] is a different sector ... and Petro-Canada enjoys a good relationship with the government of Newfoundland," company spokeswoman Andrea Ranson said.

Husky Energy Inc., majority owner and operator of White Rose, said the Abitibi situation has no impact on its business. It is expanding in the province, and in September committed to spend $130-million exploring and drilling off Labrador.

The paper mill in Grand Falls-Windsor is to close in March after unionized workers twice rejected restructuring plans that involved some contracting out. Hundreds of jobs will be lost as a result.

There was no indication that yesterday's legislation would prevent those losses. But Gary Healey, a Communications, Energy & Paperworkers representative at the mill, called it "an early Christmas gift."

"If Abitibi's not interested in staying in the province, at least we have something to offer," he said. "But losing the big employer in central Newfoundland is not what we want. I'm sure if Abitibi wanted to reconsider their plans, they'd be listened to."

Grand Falls-Windsor Mayor Rex Barnes had a similar reaction.

"We would hope that Abitibi would reflect on what's just happened and come to a resolution with the unions to work this out," he said.

Less than two weeks ago, Mr. Healey was thinking about a possible move to Alberta. Yesterday's announcement isn't a cure-all, he said, but at least it shows the government is on the workers' side.

Without a mill, the local market for wood will be limited, giving the timber rights little immediate value. But the government's move is still logical, said Keta Kosman, publisher of Madison's Lumber Reporter.

"In the best-case scenario, where somebody comes along and is interested in the mill, the rights will be held by the government," she said. "If nothing happens and those trees are just left, then they're more valuable when this finally turns around."
AbitibiBowater's Newfoundland assets:
Less than two weeks after AbitibiBowater Inc. announced it would close its century-old Grand Falls-Windsor newsprint mill, the Newfoundland and Labrador government has tabled legislation aiming to expropriate the company's other assets in the province.
Crown land administered by AbitibiBowater
Stephenville (Closed December 2005)
Annual capacity: 193,000 tonnes
Grand Falls-Windsor (Closing March 28, 2009)
Annual capacity: 213,000 tonnes
-Grand Falls
Capacity: 61 megawatts
-Star Lake
Capacity: 18 megawatts
-Exploits River
Capacity: 37 megawatts


NL-ExPatriate said...

It's funny I just finished reading the Book The danger tree and it goes into some detail on who what when and why Grand falls Windsor has a pulp and paper mill to begin with.

It is Obvious AB cooked the books by not investing in upgrades and tried to put the blame for the mill closure onto the workers by offering an untenable contract then turning around and closing the mill when it gets rejected.

As for a co operative run mill not unless they convert it into a clothing rayon producing plant. Wit h6.5 + people in the world this is where the future markets are in clothing people and the NL fibre would be idea for such a venture. But without the fibre an power such a venture would be impossible.

Well done Mr Williams and people of NL for backing him!

Keta said...

That's absolutely true about the North American pulp industry needing to switch to producing textiles and cloth rather than market pulp. We are never going to be able to compete with Brazilian and New Zealand euca-pulp super mills.
I'll be writing about this in the New Year, check my website for info.
Keta Kosman
Madison's Lumber Reporter
604 984-6838