Quebec papermaker Cascades said Tuesday that it is permanently closing its Burnaby containerboard plant, terminating 100 workers.
The high price of recycled fibre, higher labour costs at the Burnaby plant than at other operations, and the high Canadian dollar left the company no choice but to close the plant, Cascades communications vice-president Hubert Bolduc said.
The closure is to take place no later than Dec. 1.
The Burnaby plant, which is within Cascades' Norampac division, produced linerboard from 100-per-cent recycled fibre and heavy demand from China has squeezed the supply, driving prices up.
"Fibre is a very big component of our costs. We are the biggest consumer of recycled fibre in Canada and the biggest collector of recycled fibre," Bolduc said. "Fibre cost has gone from its lowest level two years ago at $25 a tonne to almost $200 a tonne today. That's a huge increase in fibre costs. It's something we are facing across Canada."
The mill's profitability has been below expectations, Norampac president Marc-Andre Dépin stated in a press release..
Labour costs, Bolduc said, are more expensive compared to costs in other jurisdictions, particularly the U.S., where Cascades operates. Further, he said the Burnaby plant is the smallest operation within the group, pushing labour costs per unit up. It has an annual capacity of 116,000 tonnes.
The Canadian dollar is the third factor, he said.
The Burnaby mill produces linerboard, which is used for the outer and inner surfaces of corrugated cardboard boxes. Production from the plant is to be transferred to plants in Ontario and the eastern United States.
Norampac also operates a plant in Richmond but Bolduc said it does not make the same type of product so production cannot be transferred there.
