Domtar deal blamed for putting 80 people out of work

The crisis in Quebec’s forest industry has hit the Waswanipi sawmill. The mill officially suspended operations for the third time in its history on September 21 due to a sagging lumber market and poor economic outlook for the year, according to Jack Blacksmith, Director General of the Mishtuk Corporation, which operates the mill.

“We knew our mill was starting to get into trouble in terms of the prices being paid for wood products,” Blacksmith told the Nation. “Our agreement with Domtar states that we decide whatever issue we face together. We haven’t had a good relationship with them and they knew that our sawmill was losing money. Towards May and June of this year we started realizing we were losing a lot more than we were getting in terms of revenue.”

Mishtuk is a 50-50 partner in the mill, which opened in the mid-1990s, with Domtar. Under this partnership, called Nabakatuk Corporation, the Quebec forestry giant has right of first refusal for Mishtuk’s forestry products.

John Kitchen, the newly elected Chief of the community, met with Domtar in early September to get their take on how they should proceed. It was agreed that they would suspend operations for six months, the maximum allowable time under Quebec labour law.

Nabakatuk’s 80 employees were forced to seek unemployment benefits. Many, said Blacksmith, didn’t seem to mind because it was moose hunting season and they wanted time off anyway.

“We met with our employees of the mill in June, 2006, under the authority of the previous Chief Robert Kitchen,” said Blacksmith. “We discussed certain elements like how the mill was going and the problems we were facing and so forth. We discussed the closure, but the employees were not very receptive.”

Blacksmith said that the main reason the sawmill had to be shut down was a lack of a real partnership with Domtar.

“I think if we were organized in the right way and if our partner Domtar would view this as a stand-alone business that has serious potential of making money, we would make money.”

The problem stemmed from a meeting in September 2005, when Mishtuk advised Domtar that they would be selling their wood chips to Fonds SKF Pate for a higher price than Domtar was paying. Domtar responded by taking Mishtuk to court.

Quebec Superior Court ruled against Mishtuk and ordered them to sell to Domtar, or at least give them a chance to refuse. Their joint agreement superceded any side deals that Mishtuk agreed to with any other forestry companies, the court ruled.

The difference between what SFK was willing to pay Mishtuk for their wood chips and what Domtar was paying was $15 per metric tonne, according to Blacksmith. The court ruling also forced Domtar to pay Mishtuk $145 per tonne, $10 more than they were paying already, a figure that was much closer to market price.

Domtar could not be reached for comment.

The court case was frustrating, said Blacksmith, because a couple of months later Domtar closed their main mill in Quévillon, coincidentally the same mill that took Nabakatuk’s wood chips. This information must have been known at the time of the September meeting between the two parties.

“Why couldn’t they agree with us as a partner?” asked Blacksmith. “Those chips represented maybe 10 per cent of their operations in Quévillon. But instead they took us to court and we both spent a lot of money to go to court,” he said. Blacksmith estimated court costs at more than $60,000.

Even when the sawmill re-opens in late March, it might only stay open for a few months, only to close again for another six months, thus skirting their responsibilities to their employees – and doing it legally.

“They receive their pay every two weeks and attain a certain lifestyle and buy things and when the job closes it’s a bad financial situation for them,” Blacksmith observed.

If it were more than a six-month closure, the joint initiative between Waswanipi and Domtar would be liable to help in their search for a job. Sadly, that is not the case and the employees are once again left to fend for themselves.