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There are some things you just can’t do on a computer.
That’s an important thing to remember when you’re a pulp producer looking to diversify demand for your product to new markets like toilet paper, paper towels and other non-fine paper products.
Domtar’s Ontario public affairs manager Bonnie Skene delivered a business update to the company’s public advisory group, Aug. 18. — highlighting the challenges facing local operations within the international forest product corporation and a competitive global market.
Delivered the day after operations were suspended indefinitely at the Domtar’s Ear Falls sawmill, Skene reiterated the company’s reasoning behind the closure, citing a collapse in demand in the U.S. housing market exacerbated by high Canadian/U.S. currency exchange rates and high cost structure (transportation, electricity, fibre costs)
Skene says labour negotiations played no role in the indefinite shutdown and holds hope that improving market conditions and efforts to streamline costs could lead to the resumption of operations in Ear Falls.
On the pulp side of things, Skene says the company is walking a fine line in relation to a black liquor subsidy in the U.S. While the controversial alternative fuel incentive program, set to expire Dec. 31, is damaging to the industry in Canada, Skene says Domtar’s U.S. operations have qualified for a massive windfall of up to $137 million in tax credits.
In an effort to level the playing field in Canada, the federal government has emerged with its own environmental incentive program aimed at better positioning the industry for the future.
In Dryden, cost structure remains such a challenge that overseas pulp producers are getting their product to North American mills in the midwest and eastern seaboard for less.
Skene says cost reduction is key — finding closer customers to reduce transportation costs and achieving proportionate reductions in fixed costs to reflect the scope of local operations.