by Kevin J. Clarke Last year, when Catalyst Paper Corporation spent 225 days under the Companies’ Creditors Arrangement Act (CCAA) restructuring the company, everyone—hourly workers, pensioners, our communities, investors and local suppliers—gave up substantial monies so that our BC company could achieve stronger financial footing to compete in world markets.
Competition in these markets is fierce. Catalyst is the fifth largest producer of graphic paper in North America. This means there are four larger companies and 35 similar or smaller companies all chasing the same business. Everything we’ve done, and the steps we will continue to take in 2013, is focused on making sure Catalyst is well positioned for continued industry consolidation. That we were able to emerge from CCAA in a stronger position, adding new customers during the restructuring, is testament to efforts and sacrifices of many.
Yet here’s BC Hydro forcing rate increases on BC value-added manufacturers, including Catalyst’s Powell River paper mill, that wipe out those financial sacrifices.
Purchase of electricity is Catalyst’s second-largest cost element after fibre chips. Catalyst is BC Hydro’s largest industrial customer, purchasing 20 per cent of its industrial load. That’s almost five per cent of BC Hydro’s entire provincial load. In 2010/11, our hydro costs were $100 million. By next fiscal year (2013/14) Catalyst will have to pay $127.4 million for the same amount of electricity, including $8 million in PST.
To emerge from restructuring to face a 27 per cent cost increase, simply because we are a value-added BC manufacturing company, is difficult to swallow. Just one year alone of PST on the company’s purchase of electricity wipes out 100 per cent of what Catalyst pension plan members contributed and 40 per cent of adjustment made by hourly employees. These steps were taken to support Catalyst’s viability as a BC manufacturer generating 7,000 direct and indirect jobs and $2 billion in annual economic activity for the province.
Powell River paper mill, which celebrated its 100th anniversary last year, employs 412 people and creates 1,810 spinoff jobs that are dependent on the mill operation. Approximately $50 million in wages and benefits, local spending and property taxes are generated by mill operations in support of the regional Powell River economy.
It may be the view in Victoria is that Catalyst and its employees, families, pensioners, and Powell River are all “big enough” to withstand the consequences of ill-advised hydro ratemaking. That’s not only wrong, it’s downright dangerous. Our employees and pensioners, our communities, our suppliers and customers rallied hard and together we preserved the jobs and economic benefits Catalyst generates. Economic development and job creation in Powell River and our coastal communities will disappear if, while we’re working to strengthen the community’s future, Victoria is undermining our efforts.
Our mill is part of this community. Catalyst employees, pensioners and suppliers live, work and raise their families right here in Powell River. So I’d ask that when it comes time to choose your provincial representative, be sure you know where candidates and their parties stand on issues like hydro rate increases. Rate increases triggered by policy-makers in far-off Victoria are paid right here in our community and must respect the sacrifices made to keep Catalyst operating. Let’s make sure Victoria invests in our future.
Kevin J. Clarke is the president and CEO of Catalyst Paper Corporation.
