SPPILMC Examines Labor-Management, Industry Issues
Usually, news coverage of labor-management relations focuses mainly on strikes or lengthy contract negotiations. However, more positive interaction between labor and management exists, as seen at the Conference on Industry Best Practices held this past May in Biloxi, Miss., by the Southern Pulp and Paper Industry Labor- Management Council (SPPILMC).
"When was the last time you read an article where a positive report on unions was presented?" asked Mel Horton, international vice president, fifth district, of the International Brotherhood of Electrical Workers (IBEW) during closing conference remarks. "Most often, the media only finds it newsworthy when the collective bargaining process doesn't reach a satisfactory conclusion. The fact is that more than 99% of collective bargaining agreements negotiated in this country are negotiated without a strike."
Established in 1995 by a grant from the Federal Mediation and Conciliation Service (FMCS), SPPILMC's purpose is to examine issues and practices in the paper industry that show potential mutual gain for labor and management. The council relies on labor and management's experience and knowledge of such practices and their willingness to explore areas of mutual interest through conferences, workshops, and electronic brainstorming sessions. Though SPPILMC analyzes various practices, noting the advantages and disadvantages of each, the council does not recommend any particular one.
"You have to adapt and adopt practices that fit the need at your particular job site," said vice president and Region V director Don Langham of the Paper, Allied-Industrial, Chemical, and Energy Worker's International Union (PACE) during opening conference remarks. "There's no one right way to accomplish a goal."
In addition to Langham's opening comments, conference participants heard from Georgia-Pacific (G-P) CEO A.D. "Pete" Correll, G-P corporate director of industrial relations Joe Theissen, and Credit Suisse First Boston senior industry analyst Mark Connelly, among others. It is estimated that the North American paper industry has lost almost 10,000 jobs in the current downturn, while the industry continues to perform poorly on Wall Street, despite attempts at consolidation. Reflecting these conditions, many conference comments addressed the future of the North American industry and that of its workers, as well as the role labor relations would play in this future.
"The paper industry as we once knew it does not exist," said Langham. "Downsiz-ing, rightsizing, the closure of mills so as not to invest money on environmental compliance, energy costs, and, yes, even driving up the price of paper and profits have taken their toll on our members."
In further comments, Langham rejected the idea that only a weak union would cooperate with management in the Southern pulp and paper industry, noting that "only a strong union will survive the present cycle we're in today." He also described the importance of "empowering and involving" the union as a means to industry survival, observing that "no one person or group has a monopoly on brains and ideas." In addition, with globalization and foreign competition, Langham called for the need to "work harder and smarter."
Correll echoed the necessity for the industry to work harder and do a better job of embracing new technologies, as well as the need for "continued strong relationships between labor and management." However, although he stated that he was "not pessimistic" over the North American industry, he indicated the need for the industry to "individually and collectively" find the courage to close mills that are losing money and to take advantage of the "synergies" from consolidation.
"After an acquisition, we often have too many people doing the same thing," described Correll. "For an under-performing industry like ours, we have to keep the best of the best and move forward. We have to prove to Wall Street and our share-holders that we can earn decent returns."
Connelly was also positive about consolidation trends, citing the newsprint industry as an example of progress toward a less volatile industry structure. "In containerboard, there are more than 50 North American producers of a low value-added commodity product that hasn't made money in 10 years, so you've got a structure that may be good for one company, but are not good for the whole group," explained Connelly. "But,with newsprint, the top five producers have 48% market share and operate on multiple continents. So, they can influence import/export flows into North America, meaning we can keeping tonnage where it belongs—in local markets."
Although opinions sometimes differed on how to solve the pulp and paper industry's ills, one area of agreement remains solid–that continued collaborative efforts between labor and management is necessary to the future of the Southern, and North American, paper industry. "We simply cannot expect to survive in the future unless we continue to try and understand each other," said Theissen. "Labor and management will not always agree, but, in these competitive times, our survival depends on keeping an open mind, listening to each other, and sharing our experiences."
In addition to opening and closing remarks, conference participants, who came from all over the U.S. and Canada, attended workshops on topics ranging from persuasive communication, stress, and workplace violence to high-performance work systems in a unionized setting, collective bargaining, variable pay plans, and grievance mediation. Pulp and Paperworkers Resource Council (PPRC) members also shared lessons from their involvement in the PPRC—a self-directed, grass-roots coalition of hourly workers who lobby for natural resource and environmental issues affecting pulp and paper industry jobs.
In keeping with the SPPILMC charter, workshop topics were discussed from an advantage/disadvantage standpoint. Speakers at the various workshops included academics, consultants, and union leaders. Audience participation was highly encouraged, and though viewpoints often differed, workshops saw lively, productive discussions. Currently, SPPILMC is funded by financial contributions from companies and unions, along with in-kind contributions from FMCS and the Center for Labor Education and Research at the University of Alabama at Birmingham School of Business. The council consists of an equal number of labor and management participants representing the paper industry in the Southern U.S. Financial sponsors include 16 paper companies and three unions.
by Monica Shaw, Editor
North American spending down in 1Q
A four-quarter rolling total of North American capital expenditures through first quarter 2001 has dropped 3.0% to $7.87 billion, after spending increases in 2000 and weakening market demand for most paper products since fourth quarter 2000. Based on current company spending estimates, expenditures in calendar year 2001 will total $6.9 billion, a decrease of $1.1 billion or 14.6% compared to spending in 2000. The estimate is larger than the expected decrease of 11.5% in capital spending tallied for fiscal year 2001. However, actual spending totals for many companies are typically less than initial estimates. The actual decrease could be even greater with 2001 North American spending likely falling below $6.9 billion total North American expenditures in the January-March 2001 period were $1.40 billion, a decrease of almost 15% compared to 2000. Spending by U.S. companies was down 15.0%, totaling about $1.1 billion, while spending by Canadian-based companies fell 10.2% to $262 million. International Paper Co. (IP) recently shaved $200 million from its initial $1.2 billion spending program for 2001.
Alliance okays $770 million Bowater deal
Bowater Inc. and Alliance Forest Products Inc. moved closer to becoming one company after 99.97% of Alliance shareholders at an annual meeting approved Bowater's bid in a deal worth about $770 million (C$1.2 billion). The two companies may have a major hurdle, because there are reports that the U.S. Department of Justice (DOJ) is investigating the deal for possible anti-trust issues. If Bowater purchases Alliance, Bowater and Abitibi-Consolidated combined would manage almost 54% of North American newsprint capacity.
Pacifica clears Norske acquisition
The hotly-debated acquisition of Pacifica Papers Inc. by Norske Skog Canada Ltd. was approved by 74% of Pacifica Paper's shareholders at the company's annual and special meeting. According to Pacifica Paper's v.p. of finance and CFO, David Gandossi, excluding the votes cast by two dissident shareholders, 95% of the shares and options that voted at the meeting were in favor of the C$960 million ($624 million) deal.
Abitibi shareholder sells 11% stake
The world's largest commercial printer, Quebecor World Inc., sold its remaining 11% stake in the world's largest newsprint producer, Abitibi-Consolidated Inc. The sale was arranged through TD Securities for C$604 million ($397 million). Also, in addition to the 11% stake, TD Securities will buy four million common shares of Abitibi at C$12.38 each from Quebecor.
Kruger invests in Bromptonville mill
Kruger Inc. will invest C$78 million at its recycled newsprint mill in Brompton-ville, Que., for improving the facility's deinking system and increasing newsprint capacity by about 12%. Plans call for completing the work by first quarter 2002. The project calls for improved equipment in the deinking plant, allowing the mill to use various types of recovered paper and increase deinked pulp capacity by 32%. The project includes the speed-up of machine Nos. 1 and 3, resulting in an increase in capacity at the mill from 250,000 mtpy to 280,000 mtpy.
Bowater plans more newsprint downtime
Bowater Inc. shut down the 360-mtpd No. 1 newsprint machine at its Calhoun, Tenn., newsprint and uncoated specialties mill. This occured in late June for at least two months for market-related reasons. The two-month shutdown will remove approximately 22,000 mtons of newsprint from the North American market.
Bowater locates second Nuway plant
Bowater Inc. has begun construction on a $40-$50 million Nuway coating facility in Covington, Tenn. The converting plant uses the Nuway process to convert uncoated groundwood papers to coated groundwood grades. The Covington plant will be Bowater's second Nuway plant, with the first in Benton Harbor, Mich. A third is planned for the U.S. mid-Atlantic region. When the Covington plant starts up in 2002, capacity will be approximately 75,000 tpy eventually ramping up to 95,000 tpy.
IP lays off 10% of salaried workforce
International Paper Co. (IP) said it would fire 3,000 salaried employees continuing an aggressive campaign to reduce costs and streamline its resources a year after acquiring Champion International Corp. IP's plan includes selling off about $5 billion in non-core assets. IP's layoffs came shortly after CEO John T. Dillon lobbied the Bush Administration to abandon its strong dollar policy. IP said the move would help to reduce costs and better align resources with the company's core businesses of paper, packaging, and forest products. The permanent staff reduction will be implemented over the next year across various divisions.
IP to sell decorative products unit
International Paper Co. (IP) has found a buyer for its Decorative Products Div., which manufactures high pressure laminates (HPL) used to make decorative surfacing products. IP has agreed to a letter of intent to sell the unit to Panolam Industries International Inc., based in Shelton, Conn., for an undisclosed amount.
Domtar reaches final pact to buy G-P mills
Domtar Inc. reached a definitive agreement to acquire four Georgia-Pacific Corp. uncoated free-sheet mills in the U.S. for $1.65 billion, including $200 million for working capital. The deal will more than double Domtar's fine paper capacity to 2.8 million tons, lifting it to the rank of No. 2 producer in North America and the world's third largest. Domtar said that the acquisition, which includes mills located in Ashdown, Ark., Nekoosa and Port Edwards, Wis., and Woodland, Maine, would provide certain synergies for the "new Domtar." The company will own two of the lowest-cost uncoated free-sheet mills in North America: Ashdown, Ark., and Windsor, Que. Together these two mills will produce half of Domtar's fine paper. The Ashdown facility is the largest of its kind in North America, producing 825,000 tpy of primarily reprographic and offset papers
Tembec buys Crown Vantage mill
Tembec Inc. announced it was buying Crown Vantage Inc.'s last remaining pulp and paper mill for $185 million in cash and stock. The 428,000 mtpy mill in St. Francisville, La., fits into Tembec's portfolio by diversifying its product line while representing a bargain acquisition, said a company source. With St. Francisville, Tembec will have total paper and paperboard capacity of more than 1.1 million mtons. The mill can produce up to 188,000 mtpy of integrated bleached softwood kraft pulp (SBSK).
ATC picks up GE Capital mill
American Tissue Inc. recently added another production facility to its system and is considering two others, a top official said. American Tissue signed a long-term agreement with GE Capital to operate its Memphis, Tenn., mill. The Memphis mill is American Tissue's sixth such addition this year. American Tissue already signed an agreement for the attached Ponderosa Fibres deinked pulp mill and operates a nearby Global Tissue LLC mill.
Norampac purchases Polyfab business
Norampac Inc. entered into an agreement to purchase the Ontario-based PolyFab business of Magnifoam Technology Inc. PolyFab engineers and designs protective and antistatic packaging, and polyethylene foam. PolyFab's workers were transferred to Norampac's North York, Ont., division. Norampac also plans to open similar "electronic component packaging" plants in Quebec and western Canada.
G-P closing three gypsum plants
Georgia-Pacific Corp. (GP) is closing three gypsum wallboard plants and cutting production at other wallboard manufacturing facilities due to excessive industry capacity. The reductions will cut gypsum wallboard production by about 45% in the near term, said the company. In addition, G-P said it would try to sell its 60,000-tpy paper mill in Delair, N.J., due to decreased demand for the mill's gypsum facing paper products. G-P said it will close wallboard plants in Savannah, Ga.; Long Beach, Calif.; and Winnipeg, Man. The company will also indefinitely idle commodity wallboard production lines at Acme, Texas; Sigurd, Utah; and Blue Rapids, Kans. Manufacturing operations at its remaining 13 wallboard production facilities will be reduced to a maximum five-day work schedule for as long as current market conditions exist. About 500 employees will be affected by the cutbacks.
Abitibi expanding hydroelectric plant
Abitibi-Consolidated Inc. has entered into an agreement with Fortis Inc., a utility holding company, to develop additional capacity at Abitibi-Consolidated's hydroelectric plant at Grand Falls-Windsor, Que., and to redevelop the hydroelectric plant at Bishop Falls, Nfld. The $65 million project will increase annual production from the two plants by about 30% to 600 GWh. Under the agreement, Fortis' subsidiary, Central Newfoundland Energy Inc., will hold a 51% interest and Abitibi-Consolidated will hold the remaining 49% interest.
Lyons Falls paper mill sale collapses
The sale of the Lyons Falls Pulp & Paper Inc. mill to Adirondack Paper Co. (APC) of New Hampshire collapsed after APC walked away from the possible deal for various reasons, according to local officials. Adirondack Paper signed a letter of intent to buy the mill in April, about three months after the mill was closed in January and its 186 workers were laid off. Lyons Falls Pulp & Paper is a wholly owned subsidiary of WICOR Americas Inc., which is affiliated with the Switzerland-based investment firm WICOR Holdings AG. The 106-year-old paper mill primarily produced uncoated book offset papers, with daily production of 200 tpd on two fourdrinier small machines. APC planned to modify the mill to make recycled paper products, which would have employed about 60 workers. In about four years APC planned to install a tissue machine that would have added another 71 jobs.
Workers at Kruger mill strike
Kruger Inc.'s Corner Brook Pulp and Paper Ltd. (CBPP), mill in Newfoundland shut down temporarily in late June due to a strike by members of Local 64 of the Communications, Energy, and Paper-workers (CEP) Union. Approximately 3,000 mtons of newsprint production was lost. According to a company official, the dispute was between members of workers represented by two CEP locals. Workers disagreed over which local had jurisdiction over an automated paper testing system.
Strike slows paper production at Finch
About 600 union workers at Finch, Pruyn & Co. Inc.'s 236,000-tpy Glens Falls, N.Y., printing papers mill went on strike June 16, following their rejection of a five-year contract proposal. Just after the strike began, the company expected to have two machines running with non-union workers. The four-machine mill produces fine uncoated papers, including text and cover paper, opaque publishing papers, and laser opaque and xerographic paper.
Weyerhaeuser idles 3 PMs, lays off 235
After a prolonged strike at four mills in Oregon and Washington, Weyerhaeuser Co. has started up or will soon be running three of the six shut paper machines. The company said the layoffs of 235 workers were necessary because of weak market conditions, but that the length of the layoffs was indefinite. The announcement of the layoffs came after the narrow ratification of a six-year contract by striking Assoc. of Western Pulp and Paper Workers' union (AWPPW) members on May 31. According to Weyerhaeuser, its remaining employees returned to work at the 154,000-tpy Cosmopolis, Wash., pulp mill the weekend of June 2, and the 265,000-tpy North Bend medium machine reopened June 11. Longview resumed production solely on its 160,000-tpy uncoated free-sheet machine No. 1, and the mill's 240,000-tpy bleached board machines remained idle. Springfield has limited production on the 500,000-tpy No. 2 linerboard machine, leaving the 223,000-tpy No. 1 linerboard machine idle indefinitely.
Cellu Tissue workers sign 3-year contracts
About 220 employees of Cellu Tissue's Menominee, Mich., and Gouverneur, N.Y., mills ratified three-year contracts on Apr. 18, and May 25, respectively. Both agreements prevent the company from sub-contracting non-union employees.
Boise Cascade wins in Oregon legislature
Boise Cascade Corp. won a victory in the Oregon legislature that, if made law, will decrease the company's electrical rates at its 360,000-tpy uncoated free-sheet mill in St. Helens, Ore. The House passed HB 3788 that would fix the company's rate at around $0.04/kW hr. according to a Public Utility Commission spokesman. Fearing a fourth quarter surge in electricity prices, Boise amended HB 3788 for industrial rates on Oct. 1. The PUC opposed this, citing an added strain on other ratepayers. Now the company is negotiating a new contract with Portland General Electric (PGE).
Smurfit-Stone closes boxboard machine
Smurfit-Stone Container Corp. plans to permanently shut down the No. 1 boxboard paper machine at its Los Angeles, Calif., mill. The eight-cylinder, 94 in.-wide paper machine has been idle since January. It has capacity to produce 50,000 tpy of uncoated recycled paperboard for consumer packaging. The shutdown will cut 46 jobs.
Cluster Rule may cost $1.59 billion
The largest 22 U.S. public pulp and paper companies expect to spend a combined $1.59 billion or more over the next few years for federal Cluster Rule compliance.
The total projected spending is down at least 14% from last year's total, likely because many companies have addressed some maximum achievable control technology (MACT) II air regulation issues while attaining compliance for the first phase of the Cluster Rule legislation. The deadline for Phase I compliance of the Cluster Rule, which applied to MACT I and MACT III air regulations, passed in April. But regulations for MACT II air regulations give companies a new set of regulations and another three-year window to reach compliance. The MACT II air regulations, which pertain to combustion sources, were proposed in 1998 when Phase I MACT regulations were promulgated. This year's tally of estimated spending in 2001 and beyond at U.S. mills totals $1.59 billion to $1.68 billion and does not include spending completed in 2000 or earlier. Last year's tally of estimated spending totaled $1.75 billion to $2.60 billion for 28 public companies. Phase II includes new standards for MACT to regulate hazardous air pollutants (HAP) emissions from kraft pulp mill recovery boilers, lime kilns, and smelt dissolving tanks.
Appleton, NCR near interim agreement
Appleton Papers Inc. and NCR Corp. will announce shortly an interim agreement with the Lower Fox River Intergovern-mental Partners (IGP) which could make available $40 million dollars over the next four years to fund cleanup and restoration projects, as well as help pay for the U.S. Fish and Wildlife Service's (FWS) Natural Resources Damage Assessment (NRDA), which outlines a strategy to restore the PCB damaged areas of the Lower Fox River. The two companies represent two of seven Wisconsin paper mills named as potentially re-sponsible parties (PRP) in the decade-long endeavor to reach an agreement to clean up a 39-mile stretch of the river.
Nine Dragons moving ahead on new PM 3
An official with American Chung Nam (ACN), the U.S.-based company that owns a majority stake of the mill and supplies the mill with U.S. recovered paper, said Nine Dragons doesn't have plans to ship linerboard or medium from the mill to the U.S., however, the possibility hasn't been ruled out. The official said the mill will sell almost all of its output in China and Asia.
Asian containerboard expansion planned
In Asia, four containerboard projects are planned with 625,000 mtpy of capacity over the next two years, according to PPI Asia News. Hebei Jiteng Paper will start up a new 100,000-mtpy testliner machine this fall. Pascorp Industries of Malaysia delayed startup of a 75,000-mtpy containerboard machine until later this month. Metso Paper will supply Wanlida Paper in Zengcheng, Guangdong, China, with a 150,000-mtpy testliner machine for a 2002 startup. However, Cheng Loong of Taiwan said plans for building a 300,000-mtpy containerboard mill and box plant in Pudong, Shanghai, were delayed by China's State Planning Committee.
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