(The following story by Gordon Hamilton appeared on the Vancouver Sun website on November 9.)
VANCOUVER, B.C. — One of northern B.C.’s economic engines, Pope & Talbot’s Mackenzie pulp mill, came close to shutting down according to employees after a key supplier CN Rail suspended service when the forest company went into receivership Oct. 29.
Rail service resumed Thursday, said CN spokeswoman Kelli Svendsen after Pope & Talbot provided assurances of payment.
“We came to terms on credit yesterday,” Svendsen said Thursday.
Pope & Talbot spokesman Mark Rossolo said a “glitch” in the payment process caused the impasse but it has now been corrected.
All suppliers are being paid according to the requirements of the Canadian bankruptcy protection act, he said.
The crisis reached the point, according to employee Rick Berry, where the company had filled its own warehouse and a nearby airport hanger with bales of pulp. With no more room to store inventory, Berry said employees feared the mill would be forced to shut down.
“Basically, we are in trouble,” Berry said before rail cars showed up. “I think we are headed for a shutdown. And if we go down, the rest of Pope & Talbot’s operations go down. We are the one that is making money.”
Mill manager Tom Bougner said he could not confirm Berry’s comments about the inventory crisis, other than to say he cannot stop employees, who are passionate about their jobs, from expressing their opinions.
The Mackenzie mill employs about 300 people in a community of 5,000. It is producing 700 tonnes of pulp a day. With pulp prices the one bright spot in the North American forest products market, maintaining a steady flow of product is crucial for Pope & Talbot. The company is operating to earn cash to pay its creditors under the protection of the Companies Creditors Arrangement Act.
With no rail cars for nine days, Berry said the pulp mill now requires 50 to 60 cars to clear out the warehouses and the airport hanger.
Rossolo said 24 cars were loaded Wednesday and another 10 arrived Thursday.
“They are going to move through that inventory as quickly as possible.”
Pope & Talbot sought bankruptcy protection after it failed to meet creditor obligations. It has stated it intends to use the process to restructure and has put all its divisions up for sale.
Although headquartered in Portland, Ore., most of the company’s assets are in B.C. Besides the Mackenzie pulp mill, it owns the Harmac pulp mill near Nanaimo, a sawmill at Fort St. James, and three sawmills in southeastern B.C. In the U.S. it has a sawmill and a pulp mill.