A tightening market for uncoated free sheet paper forced Domtar to permanently shut down its last paper machine at its Dryden mill.
The Nov. 4 announcement by the Montreal paper giant puts 195 employees of its 530-member workforce out of jobs by mid-November.
The remaining workers will continue working in pulp production and related woodland operations. The mill has one pulp line with an annual production capacity of 319,000 air dry metric tonnes. About 450 forestry contractors will also continue working.
The No. 1 machine and its 155,000 tons of production is the last of two paper machines to be axed at the mill complex. Domtar's large workhorse No. 2 machine of 332,000 tons was discontinued in 2005.
Domtar spokeswoman Bonny Skene says the shutdown has nothing to do with the mill's operating costs, but attributes it to softening market demand in North America for uncoated paper, largely due to electronic substitution, that's forced Domtar and other papermakers to slash excess production.
"We've been working hard over the last three or four years to reduce costs, but in end if there isn't a demand for the paper we're making...."
Dryden Mayor Anne Krassilowsky called the news "absolutely gut-wrenching," much worse than the 2005 machine closure which affected 80 positions.
"I don't know what the impact of this will be," she says, but it will undoubtedly send economic shock waves throughout the northwestern Ontario community of 8,200 and impact other indirect jobs.
Krassilowsky says many Dryden residents already commute long distance to skilled jobs outside Ontario or to mining jobs in the Far North.
The cutbacks only strengthens her resolve to keep up their economic diversification projects in mineral exploration and green energy, and to lobby senior government for assistance to ensure a proposed Wabigoon Lake First Nation value-added wood plant becomes reality.
"If that value-added mill is the future of the wood industry, let's put it into action as quickly as possible."
Krassilowsky spoke with Ontario Natural Resources Minister Donna Cansfield this week and hopes to arrange a meeting between the Ministry and Domtar to find ways to sustain remaining forestry jobs.
Domtar's Dryden mill endured frequent shutdowns in 2007 because of the poor market for uncoated free sheet paper. Skene says ongoing cost reduction measures will continue if the pulp operation is to survive. "One of the keys to be successful is cost competitiveness."
She also says the company will work with the union and various levels of government to ensure laid off workers get the support they need.
The Dryden operation, acquired by Domtar from Weyerhaesuer in 2007, has a forest industry history going back to 1911 as the Dryden Power and Timber Company.