Cascades to Close Thunder Bay Division Plant
Cascades announces a rationalization plan for its fine papers sector
KINGSEY FALLS, QC--November 22-- Cascades announced today that it will cease the operations of its Cascades Fine Papers Group Inc., Thunder Bay Division (Ontario) plant which specializes in the manufacturing of coated papers. Approximately 375 employees will be affected by this closing which will occur on Jan. 21, 2006 at the latest.
The current economic situation within the pulp and paper industry, along with the recent sales price decrease in the fine papers sector and the unfavorable short and long term perspectives compel Cascades to close the plant. Moreover, the reduced demand and increased price of raw material and energy, combined with an increase of the Canadian dollar compared to the U.S. dollar strongly affected the plant's economic performance.
Despite sustained efforts during the past years to make the plant profitable, the Thunder Bay Division continues to suffer considerable monthly financial losses. As a result of this rationalization, Cascades expects to disburse, over the course of the next few quarters, an approximate pre-tax amount of $20 million in the form of severance payments, pension fund contributions and other closing costs. The current book value of the fixed assets and inventories is evaluated at approximately $47 million and the company is currently assessing their net realizable value which may eventually offset expected disbursements.
Mario Plourde and Gino Levesque, respectively president and chief executive officer and vice president of manufacturing for the Cascades Fine Papers Group Inc., met with the unions and employees this morning in order to announce the closing. Discussions will be held shortly regarding departure procedures and measures that will be implemented to assist employees in finding new employment.
"After careful review of the potential of the Thunder Bay plant and despite the important efforts made by all employees over the past months, this closing has become inevitable. We sincerely regret the negative impact that this decision will have on the employees as well as the Thunder Bay area," stated Alain Lemaire, president and chief executive officer of Cascades Inc.