Tolko Industries to shut down Manitoba kraft paper and sawmill operations

WINNIPEG (Scrap Monster): Tolko Industries has decided to close its Manitoba operations by December this year. The decision is feared to affect 332 employees. According to the company press release, all employees at the kraft paper and sawmill operations will be laid off when the operations are scheduled to come to an end Dec 2, 2016. The employees have already been informed of the decision. Meantime, a company official noted that it would fulfill its commitment to Manitoba customers until closure of the facility is complete.

According to Brad Thorlakson, President and CEO, the company had done great deal of work, both internally and externally, to improve the competitive position of the mill. However, the company found the business to be not financially sustainable, despite all its efforts to improve its cost structure. Consequently, the company has decided to close its doors effective December this year. Thorlakson termed the decision as the best in terms of the long-term interest of the company and its dedicated employees. He also thanked the community, local and provincial governments for their support to the operations over the years. The full details on termination will be made available to the employees during first week of September, he added.

Jim Baskerville, Tolko vice president stated that the company had been losing money by way of high transportation costs in shifting wood chips and logs into the mill. The high energy costs at the mill too had hit the profitability of the operations. The mill had used a combination of oil and biomass and waste oil, when its competitors had access to less-expensive natural gas. The nearest natural gas pipeline to the facility was nearly 200 kilometres away. These were several among the key reasons behind the decision to end the mill operations. As per rough estimates, the company’s power cost per tonne of paper increased by one-third between 2010 and 2014.

Meantime, the provincial government expressed shock and disappointment at the decision by the largest employer in The Pas town in the province. It stated that necessary support would be provided to the affected employees and their families. It also hoped that the company would live up to its obligations regarding severance packages. According to a senior Unifor official, efforts are already on to find a new potential buyer who could keep the mill operating.

The closure of the mill, that had supported hundreds of direct jobs and many more indirect jobs, is feared to affect many families. Further, it may impact other local businesses. The closure of the facility with an annual payroll of nearly $37 million is likely to hinder the economic growth of the region.

Tolko Industries Ltd. is a privately owned Canadian forest products company based in Vernon, British Columbia. It manufactures and markets specialty forest products to world markets. Tolko's products include lumber, plywood, veneer, oriented strand board, unbleached kraft papers, and a growing number of wood products manufactured at operations across Western Canada. The company had taken over Manitoba Kraft Paper and Sawmill Operations in The Pas in 1997. Tolko had recently been named one of BC’s Top Employers for 2016 in an annual competition organized by the editors of Canada’s Top 100 Employers.