Resolute Forest Products says it remains optimistic about its Northwestern Ontario lumber and paper mills, despite recording an overall loss in the first business quarter of this year, and having to permanently close one of its U.S. newsprint machines.
In a brief interview Thursday in the wake of the first-quarter results, Resolute president Richard Garneau said the company’s Thunder Bay pulp and newsprint plant and rural operations are well-positioned to remain competitive, even if the Canadian dollar rises.
“With what we have done (in terms of equipment upgrades), we will be able to compete, even if the dollar is at par (with the U.S. greenback),” Garneau said from the company’s Montreal headquarters.
While the weakness of the loonie — which slid back under 80 cents U.S. this week — has helped Canadian exporters like Resolute, Garneau said companies shouldn’t bank on it.
“You never know what (value) it’s going to be,” he said.
Resolute recorded a net loss of $18 million between January and the end of March, slightly less than what was recorded for the same period last year, a company news release said.
Sales of $877 million for the first quarter were five per cent less when compared to the same period in 2015, the release said.
Still, Garneau sounded upbeat: “Even as pricing headwinds continue, we delivered a solid performance this quarter, by maintaining our focus on costs, with improvements coming largely from increased contributions from our cogeneration assets as well as lower natural gas and power prices,” he said in the release.
The company employs more than 600 people in Thunder Bay at its pulp, newsprint, lumber and wood pellet operations.
Unifor union national rep Gary Bragnalo concurred with Garneau’s assessment of the Thunder Bay operations, and the pulp and paper mill in particular.
“Thunder Bay is their No. 1 money maker,” said Bragnalo. “And the sawmill is the most efficient in their operation.”
Bragnalo said he expected the company to continue to hire workers at the Thunder Bay pulp-and-paper operation, as many older employees retire.
Garneau credited an existing cogeneration plant at the pulp-and-paper plant with helping keep that operation profitable, as well as ongoing provincial rebates to defray Ontario’s higher than average electricity costs.
Of the closure of the company’s newsprint machine in Augusta, Ga.., the company said: “Long-term market conditions remain challenging for newsprint, particularly for our U.S. mills, which are especially vulnerable in the present U.S. dollar environment.”
The company’s new Atikokan lumber mill is on track to being in full production later this year, Garneau said.
“It’s getting very close now,” said Garneau. The plant has about 60 employees but is expected to have a total workforce of 120 when production is at its peak.
Another 45 people work at a sister lumber mill in Ignace.
“We expect that the slowly materializing recovery in the U.S. housing market will help us navigate through political uncertainty related to softwood lumber,” the company release said.
Allegations by environment group Greenpeace that Resolute is not harvesting in a sustainable manner continue to dog the company. Garneau acknowledged the group’s campaign has negatively impacted sales.
Garneau called the campaign “misinformation,” noting the company is certified for operating sustainably in Ontario by the Forest Stewardship Council.
“We continue to defend our reputation to our customers, and to keep our employee morale high,” he said.