Industry Committee on Sept. 10th, 2010

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Ménard and Ms. Hughes.

Mr. Scarpaleggia, please.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you, Mr. Chairman.

I would like to thank you for your testimony. It is important testimony, in my opinion, because you have shown us just how much more complex the issue is than Mr. Paterson's comments suggested. His description of the situation was quite simplistic.

We now know, however, that there are two companies rather than one, that you had access to the best equipment, and that you worked hard and creatively to bring down costs. In other words, you did what you were asked to do as good unionists and workers. Yet you seem to be taking the rap for the bad decisions made by the company over the years and for its lack of judgment. It didn't invest enough and, if I understood correctly, gave you no mandate with respect to the products which had a better future. So, what you told us today is very important.

Just to complete the discussion on pension plans, if I understood you correctly, no current retiree will be receiving less money than expected as a result of the restructuring. Current pensioners are therefore well protected. Is that correct?

[Gaétan Ménard]

Yes, exactly. In this particular case, the strategy adopted by AbitibiBowater's creditors was to say they didn't want to touch retirees' pensions. Of course, as a result of pressure from us and our demands in that regard, they decided they wouldn't touch either those pensions or any amounts accumulated thus far by active workers.

On the other hand, the deficit is $1.3 billion. What can be done about that? The company was unable to pay back that amount in the five-year period allowed under the rules. As a result, they went to see the Quebec Pension Plan people. There were also discussions with government authorities in Ontario, where there are also registered retirement plans, to see whether it would be possible to spread the payments over a longer period. An announcement will soon be made in that regard. The idea is to protect retirees.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Will current employees receive this pension benefit as current retirees? Will the conditions be the same?

[Gaétan Ménard]

What is being discussed now is emergence, meaning that the company would no longer be under the protection of the CCAA and would re-emerge, as mentioned earlier by Mr. Simard. A new pension plan, which we are very proud of, has been implemented. We negotiated it together. It's a good plan.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

It's clear that the current Conservative government, for reasons which are primarily ideological, in my opinion, does not believe in taking a comprehensive, visionary approach. That is not part of its vocabulary. This government is wary of comprehensive, strategic approaches for industry in general. They claim it's a centralizing, socialist approach. We've heard that one before.

The company, municipal officials and you all agree that there is a need to hold a summit on the forest industry. I imagine the governments of Quebec and Ontario would agree. Would you be able to organize such a summit? Once it was organized, you could ask the federal government why it is the only one not to be participating. Would you be prepared to do that? Is it achievable?

[David Coles]

Your question is very timely.

I can say this because he gave me authority to say it. I met several days ago with Mr. J.D. Irving, the owner of Irving Paper. He urged me to continue the work our union has been doing.

I've met with every CEO in Canada with regard to holding such a high-level summit, and we will. We are hoping that the sitting government will participate, but we will go ahead and do it, one way or the other.

The one point that I think has to be made here is about the severity of this crisis. I personally am not in favour of any kind of a covenant that says you can't sell a mill, but I can't give some of these mills away when the employers say take them. In some of these situations I have travelled the world trying to find someone to operate a mill. In fact in some cases government has offered to pay people to take a mill. This crisis in Canada is very, very serious.

We have a number of companies still in CCAA; we have some on the verge of going in CCAA. If there are not radical changes to the way we treat our forests, we will have hardly any paper mills or solid wood mills running in Canada and Quebec. That's not idle talk, it's reality. We need somebody to step up.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Coles. Thank you, Mr. Scarpaleggia.

Monsieur Blaney.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Thank you very much, Mr. Chairman.

I would like to thank the witnesses for meeting with us today, and particularly Mr. Simard, whose community has a single industry, in a way, as well as Mr. Carrière and Mr. Lamontagne, who are making a heartfelt appeal. Mr. Ménard pointed out that there is no lack of culprits in terms of all that has occurred. Many people are to blame for these closures, but the victims never change: they are the workers and their communities. That came through in your presentations, gentlemen, and particularly the comments made by Mr. Carrière.

I am from Lévis. We have a shipyard there which has had its share of problems. As you say, these are situations that families and workers have trouble coping with. Jacques also referred to that.

I would like to come back to one point. As politicians, we have a role to play. My father is a scaler, from the Sainte-Croix school near Quebec City, in the riding of Lotbinière. He knew how to handle 2 X 4s. He still has his little piece of land in Saint-Elzéar. His land is a real garden. For Quebec and for the entire country, the forest is also an asset. As a politician, I believe in the importance of the forest industry. As Mr. Simard said, it is not only there to produce 2 X 4s, although 2 X 4s are already very good products. Some people say it's a carbon sink. That's the sort of thing we could focus on to emphasize the environmental side of it. The fact is that it stores carbon dioxide. We can tell our friends at Greenpeace that a 2 X 4 is truly environmental.

That said, I would like to return to the industrial side of this. We talked about the automobile industry, where there is competition. Companies did receive help from the government and began to pay back that money. This week, I was with Ministers Paradis et Lebel. Minister Lebel fought to secure $1 billion for the communities. We want to be sure that this money is well invested. I want to underscore that, because it's easy to talk about what can be done, but personally, I believe we were able to accomplish something with that $1 billion in terms of greening business. Can we do more? I think so, and I agree with Mr. Ménard on that score.

However, I can tell you that in recent weeks and months, I have supported measures aimed at helping industry, to the extent we are able, under international agreements. I also supported measures for workers. I hope they will yield the expected results.

My first question is for Mr. Simard, but before I ask it, I would like to invite Mr. Carrière and Mr. Lamontagne to comment on what my colleague, Mr. Gourde, said. He referred to the fact that you have profitable plants in which investments were made, and yet they are shutting down. There is some background to that. A number of players are involved. Perhaps you could comment.

[Gaston Carrière]

I'd like to talk about the Gatineau plant. This is a problem that affects Quebec and Gatineau. I will continue to be conservative. Here I'm not referring to the Conservative Party.

Construction of the Gatineau plant began in 1926, and the plant became operational in 1929. The first collective agreement was signed in 1933. At certain points, the plant had 3,000 or 4,000 workers. And there wasn't only the CIP plant. There was one Masonite plant, then International Plywood and Commercial Alcool began operations there; after that, there was a Ten Test plant. In the 1990s, there were still 1,500 workers. A first machine was shut down, then a second, and then another in 2007. There were investments, automation and new technologies introduced.

We have the best plant as well as a recovery plan. As Mr. Paterson said, there is a need to look to convergence and move into other market niches. This has become a national issue. My people from Ottawa are here. My Vice-President for Quebec, Mr. Gagné, is not here. He is the one who has given us the greatest support on these issues. I am not saying these people didn't do their jobs They did and they are still doing a lot. That's their job. This has become a national issue.

Why did we not appear before the Senate Committee on Industry, Science and Technology before now? Why are two plants with enormous potential being shut down? I can't speak for the Dolbeau plant, because I never went there. But I do know it has recent infrastructure. That plant was worth a great deal of money, but its value was depreciated: it's now worth $3 million. Tell me that the Thurso plant in the Outaouais is worth $3 million. Millions and millions of dollars were invested there.

As for Gatineau, we assume it was a setup. That's what it is. These people did everything they could to make us look bad. In April of 2007, Mr. Cayouette said that if they shut down one machine, it would be the beginning of the end. In order to bring us on side, they threatened us. They started talking about rationalization. In 2008 and 2009, they premeditated a situation intending to make us look bad. Funds were invested in equipment, but nothing was invested in labour. There was a lack of both workers and training in the paper mills. The Assistant Director of the plant, Mr. Levasseur, even asked an assessment. Finally, they had the effrontery to give $3,3 million to the Gatineau plant in January and February of 2010 as an investment. That is part of their liabilities. These people are trying to get around the situation. We haven't received much cooperation on the recovery plan.

We have a very good recovery plan that we don't intend to table here. But we believe in it. We will get things going again and stay the course, with or without federal assistance. We will receive assistance from the provincial government, from the FTQ, from the workers and from CEP. We will start up the plant again because it is profitable. It's a question of survival. What I deplore about Mr. Harper is that he won't help us twice. You haven't helped us enough and you should do more. Making a mistake once is not a problem, but continuing to make a mistake is. You have an opportunity to mend your ways. One thing is certain, however, and that is that we will start up the plant again.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Carrière.

Mr. Lamontagne, please.

[Julien Lamontagne]

What my brother has just described is exactly what we went through in Dolbeau-Mistassini. These people behave in exactly the same fashion. When they went ahead with the merger, they wanted to take control of the resource. At the plant, they operated in exactly the same manner. Cuts were made one after the other. They invested nothing. They presented figures to prove that the plant wasn't profitable. They didn't agree on safety issues, no more than they agreed on anything else. We were always able to prove to them that the plant was profitable. Finally, when they didn't know what to do anymore, they dug in their heels on the issue of Boralex.

I am convinced that this is a setup that was prepared before the merger with Bowater. They said to themselves that other companies had made investments in these plants before Bowater had acquired them, that the equipment was new and had value, whereas the facilities were not worth much. They also concluded that it was in their interests to shut those plants down and use the recent equipment for their plants—the ones belonging to Abitibi-Consolidated Inc. That is what happened.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Lamontagne.

Mr. Nadeau, please.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you, Mr. Chairman.

This morning, we learned that Abitibi-Consolidated Inc. has a mega plant in Chile. In the midst of the eucalyptus forest, it produces incredible quantities of paper. Yet Mr. Paterson made no mention of this. Even people in the industry and the union were unaware of it.

The Thunder Bay example is also an interesting one. AbitibiBowater shut down the Thunder Bay plant. The Ontario government then said that it wanted to recover the money it had invested in that plant. So what did AbitibiBowater do? It reopened the Thunder Bay plant. So, it is possible to reopen plants.

Mr. Carrière, can you tell us more about the Gatineau plant's potential?

[Gaston Carrière]

We have to be careful. Theoretically, one of AbitibiBowater's plants should be more modern than the Gatineau plant, namely the one in Amos. It was newly built in 1982. It was previously a Donohue plant. But whether I'm talking about the old plant in Kénogami or plants in Alma, Laurentide, Clermont, Baie-Comeau, Mersey, Thorold, Iroquois Falls, Thunder Bay or Fort Frances, all of these plants are ones in which the employer should be investing, although they do not have the same infrastructure as the Gatineau plant.

The Gatineau plant is the industry flagship. When we presented our recovery plan to senior managers, we made it clear to them that they could not survive following emergence without the Gatineau infrastructure as part of their restructuring plan. In a way, their biggest blunder was the pension plan. There was a shortfall of $1.3 billion in the 24 pension plans, which were supposed to have a capital of $5.7 billion.

The federal government can certainly do a number of things to help us and guarantee that we will be first in line among creditors when such events occur. The federal government may want to look at what happens elsewhere in the world when multinationals get rid of workers with about as much ceremony as when they throw an empty lighter in the garbage. Some workers are being refused their pension even though they had only two days, two weeks, two months or four years left to work. Forty-four maintenance workers in their fifties will not be able to retire. In addition, 39 operational workers are discouraged, because some of them only have a grade 7 education. We even realized that there is one member of that group who didn't even complete grade 2, although he had never told me that before. He did his work and he was a good worker. We also have women workers and office employees. Some 150 workers will not be able to retire. And the situation is the same in Dolbeau, although the workers in Dolbeau, despite their bad luck, were luckier than we are, because their plant was shut down for a year and a half, whereas ours has only been closed for four months. It's appalling what they're doing. They're getting rid of their workers.

Whatever your political party, you should impose your will. There is one government that imposed its will and wasn't afraid to make decisions, and it was the Government of Newfoundland and Labrador. They seized the dam. If I had been able to seize the golf course, I would have. I asked the union's legal department to seize it. And the reason they put Dolbeau and Gatineau in the third wave of closures is because they liquidated our lay-off pay and notice. They ripped us off. Help us! In the name of the workers, I appeal to you for help! What they're doing is not right. It just isn't right. It's not just a commission. There should be a bailiff, and they should be put behind bars. They are thieves. That's what is happening. They are thieves.

[Voices]

Hear, hear!

[Gaston Carrière]

It's a good thing we are members of CEP, the Communications, Energy and Paperworkers Union of Canada, because without the union movement, we would be wearing a ball and chain and be fed nothing but bread and water. Men and women workers owe their working conditions to the union movement.

Now, as regards Gatineau and Dolbeau, please consider this tonight. The infrastructure is recent. Mr. Paterson said the industry has to be converted and move away from newsprint and specialized paper. I can speak for the Gatineau plant. Its infrastructure is recent, it is good, and we have an effective recovery plan. We forced management to support the recovery plan. The provincial government, CEP and the Gatineau LDC paid $200,000 for a feasibility study. We have another study on protecting equipment, and the City of Gatineau will be paying for that one. They moved everything to Dolbeau. I can tell you one thing, it isn't hard to convert a plant to carton or other types of production.

I provided a document to my colleague, Mr. Nadeau, but I cannot give it to you—and I apologize—because it is not available in both languages. That document explains that these plants have to be converted to other niche production areas.

I will say more about this later if you give me an opportunity.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Carrière.

Mr. Blaney, please.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Mr. Chairman, through you, I would like to invite Mr. Carrière to table his document so that we can have it translated and make it available in both official languages before having it distributed to Committee members.

[The Chair, Conservative, Michael Chong]

Yes, fine. We have the document and the clerk will have it translated into English. When it's ready in both official languages, all Committee members will receive a copy.

Mr. Wallace is up now. Please be brief.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair. I will be very quick.

First of all, Monsieur Carrière, I can understand why your brothers and sisters voted for you as the president of their local. You did a fine job there.

Mr. Coles, maybe you can answer this question for me. I have a couple of questions. I've heard two different messages today, one saying it would be easy to find buyers, and I thought I heard you say you've been around the world looking for buyers and it is difficult. Is it difficult to find buyers? Is that mainly because of what we heard earlier, that the order book is not full and there are not orders out there around the world and that is why it will be difficult to find buyers for these locations?

[David Coles]

Not specifically these, but in general, newsprint operations are in serious, serious trouble and we cannot raise interest in many of these operations. We can't find buyers.

[Mike Wallace, Conservative, Burlington, ON]

Without getting into too much detail, maybe you can tell me this, if you know. Is the program that the company is trying to come out of next week reliant upon one or either of these plants being sold, for the deal they're trying to make with their creditors?

[The Chair, Conservative, Michael Chong]

Mr. Coles, briefly.

[David Coles]

No.