Industry Committee on Sept. 10th, 2010

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

Thank you, Mr. Chairman.

Welcome, Mr. Paterson and Mr. Robertson.

I would like to come back to the $6 million bonus paid to the company's senior management. I am trying to follow the logic of your earlier answer to Ms. Hughes. First of all, you say that there is no reason to worry, since the money has not yet been paid. In other words, it will be paid later on. The fact remains that, for the managers, this is money in the bank. They can plan their expenses based on the money they expect to receive.

There is another thing that I don't understand. You say that you have to pay the bonus because you spend $12 million a month on lawyers, accountants, and so on. I am having a lot of trouble understanding the connection between the two. So, with respect to those comments, there is a question I would like you to answer. Along the same lines, I imagine that the $6 million does not constitute an annual bonus, but that the money will be paid out in one shot. How many company managers will be receiving a bonus?

[David Paterson]

Fifty-one are eligible.

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

It seems to me that in another respect, that logic is also somewhat inconsistent. When we're talking about a single-industry town, it can be assumed that if the plant shuts down, the employees and workers really won't have any other employment choices. However, if that does not work, managers can always go elsewhere. At the same time, you were saying earlier that the industry is on its knees. So it is obvious that managers also have limited options available to them.

Under the circumstances, I would like to know why you feel it is necessary to pay a $6 million bonus to your senior managers, particularly since you don't want to pay that money afterwards, and it is not really necessary to do that now in order to keep your management team. The inconsistent aspect of all of this is that workers are told they have no choice, because they happen to live in a single-industry town. However, managers do have choices elsewhere, even though the industry is on its knees and North America as a whole is undergoing a recession. I don't understand why a bonus should be paid to senior managers at your company.

[David Paterson]

It's not a retention bonus. It's a bonus to incent performance, or recognize performance, which is the culture that we've had, and hopefully will continue to have, to recognize performance of individuals as well as the company.

On your matter of a question concerning talent or people, yes, management tends to have more mobility than the hourly employees, historically, but we have to be able to retain people who are not industry-specific. When we look at management for our company, we want to ensure that we have the very best. It is a very difficult industry and it is difficult to attract people to this industry. We currently have over 100 positions open that we can't fill in management because of the industry we're in and the condition of being in the CCAA.

When we look for talent, we don't look within the industry. One of the things we've said we need to do is to bring successful people in from other industries to help us revitalize and re-energize this industry that we've all grown up in. We need to be able to do that, and compensation, in all its forms, is a critical part of having a successful management team.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Paterson.

Thank you, Mr. Scarpaleggia.

Mr. Blaney, please.

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

Thank you very much, Mr. Chairman. To begin with, I would like to commend you for managing to put together an impressive list of witnesses for today's meeting. I also note your comments and the legal opinion that you received regarding the need to avoid addressing issues related to the Companies' Creditors Arrangement Act.

I also wish to convey my greetings to the workers and family members who are with us today to follow the Committee's work as it relates to the future of the forest industry, and particularly AbitibiBowater.

I would like to come back to Mr. Proulx's comments. At the beginning of the meeting, he talked about domino money, Monopoly money—some $1.5 billion. It is important to remember that--

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

I have a point of order.

[The Chair, Conservative, Michael Chong]

Mr. Blaney, Mr. Proulx has a point of order.

Go ahead.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Mr. Chairman, I ask that you call our colleague to order. I never mentioned Monopoly money. Mr. Blaney spends his time amusing himself, whereas we spend ours trying to help workers and their families.

[The Chair, Conservative, Michael Chong]

In my opinion, that is not point of order.

I ask members, if they disagree with what another member is saying, to wait for their time, wait for their intervention, when the chair will recognize and give them the floor. That way we can have an orderly proceeding here. Otherwise we will get into constant interruptions on both sides, and that will not serve members of the committee or the public in any way. So please focus on....

The member at hand is Mr. Blaney, who has the floor.

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

Thank you, Mr. Chairman. Thank you for taking that altercation into account.

Of course, it is important to remind people that, at the end of the Liberal regime, in the midst of the sponsorship scandal, after 13 years of doing nothing for the forest industry, they came forward with empty promises and what I would describe as Monopoly money—

[The Chair, Conservative, Michael Chong]

Mr. Blaney, another member has a point of order.

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

We're trying to keep things on an even keel here. Why are we going on political diatribes?

[The Chair, Conservative, Michael Chong]

Well, members of this committee have the right to say what they want and to ask any questions they want. I don't think we want to start restricting the kinds of questions members are asking in terms of their political bents.

Now, you yourself may disagree with particular questions that members of the government are asking, but as I said before, please wait for your time to comment on that. Otherwise we're going to end up with a dysfunctional committee.

So please wait for your time. As I said before, members are free to express their views. You're not going to agree with everything everyone has to say, but please wait for your time, when the chair recognizes you, in order to make your case.

Mr. Blaney, you have the floor.

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

Mr. Chairman, the first thing we did when the Conservative government took office was to settle the softwood lumber dispute which had been poisoning the forest industry for more than a decade. That is what we did. Contrary to what the member of the Official Opposition has been saying, we invested considerable sums of money: $1 billion to support communities, and $1 billion to develop greener paper mills. There were also specific programs introduced, assistance for workers and industry restructuring.

So, could we do more? Yes, Mr. Chairman. Have we taken concrete action? Yes, Mr. Chairman. And colleagues on this side of the table supported those measures, unlike Bloc members who opposed specific initiatives to support the industry and workers. I find that totally unacceptable.

Having said that, I have a few questions for Mr. Paterson.

Mr. Paterson, we are here today to review the forest industry's current situation. As we know, Amazon sells more electronic books than it does paper books. There is a future for books and paper, but we know that the market is struggling. We agree with that and you yourself made that point.

I have a question for you. You mentioned that, under your emergence plan, you are expecting to continue to operate 19 plants, including 12 in Canada and 5 in Quebec. First of all, when do you expect to arrive at some resolution? Can you confirm when you expect to arrive at a resolution and implement that action plan?

[David Paterson]

Well, as we sit here in this room today, we're effectively executing that plan today, and that is the basis of our exit financing proposal that we're putting to the banks. That is the plan we've presented to the courts, both in the U.S. and Canada. So the timeframe, hopefully, is that we would exit in October and we would exit in the form we are currently operating today.

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

Fine, thank you.

How many jobs were there before the restructuring and how many jobs do you expect to maintain and potentially create under your emergence plan?

[David Paterson]

Unfortunately, we've lost a total of 7,000 jobs from the day we merged to the exit, in the U.S., Canada, and Great Britain, hourly and salaried. So we've gone from 18,000 employees to 11,000, and subject to not doing an acquisition or a divestiture, we believe that 11,000 is basically our employment base, with 8,000 of those employees being Canadians.

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

So, you have 8,000 jobs in Canada and are expecting to consolidate those jobs.

[David Paterson]

Yes, that is our plan.

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

We know that survival committees have been formed, in cooperation with communities, for workers who have no chance of returning to work. Can you tell us about what you are currently doing to ensure that these people can work and continue to receive a decent income, in this industry or another?

[David Paterson]

Well, whenever we've had to close a facility in any country we operate, we've tried to provide outplacement services and other help for people to find new jobs. Specifically to Gatineau and Dolbeau, there are committees formed in each of those communities to try to find a long-term solution to keep the facility operating, either as a paper mill or as some other type of industry. We've participated, both financially and professionally, in those studies. They're ongoing.

As we look to the future, in our discussions with provincial governments, they've asked for continued support of those efforts on a provincial level, both in terms of financial funding as well as management support. We will make that commitment as part of our emergence plan.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Paterson.

Thank you, Mr. Blaney.

Mr. Nadeau, please.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you very much, Mr. Chairman.

Mr. Paterson, let's not beat around the bush. Let's go back to the bonuses issue. You were saying that you have a deficit of $6.8 billion, which you would like to bring down to $1.1 billion. At the same time, the figure of $6 million was mentioned earlier. Let's not forget that not so long ago, AbitibiBowater gave bonuses of $60 million, including the infamous $27 million bonus given to John Weaver. Then, because of the outcry, you reduced that to $14 million, but you hired him at $80,000 a month until he reached the $27 million. In the meantime, you are telling the workers that they have to do their share, and make a sacrifice. The $6 million paid out to 51 senior managers corresponds to $117,000 each. And yet, at the AbitibiBowater plant in Gatineau, you were able to convince the workers in February to accept a 10% cut in their wages and a 6% cut in their benefits—for a total cut to their income of 16%—in order to help the industry recover. Then what did you do on August 24? You announced that you would be closing the plant permanently, but that you were keeping the restructuring committee.

Your entire approach to this is parasitic, and there I am quoting Mr. Sansfaçon from the newspaper Le Devoir. Even Lawrence Cannon, the Conservative Minister responsible for the Outaouais Region, talked about Atibibi-Bowater's inappropriate attitude towards its workers, with respect to the restructuring it is planning. It is absolutely indecent.

Tell me, Mr. Paterson, are you shutting down the Gatineau plant indefinitely, or do you have a restructuring committee to start up the plant again? What is the real answer?

[David Paterson]

Well, the real answer is that we do not, as a company, intend to restart Gatineau. My understanding of the intent of the restructuring committee is to find an alternative for Gatineau and a new owner who wishes to execute that alternative, and we would sell the facility. But we do not intend, as a company, to restart Gatineau, and that is part of our business plan.