Catalyst Cuts 227 Jobs

RICHMOND, B.C. (AP) -- Catalyst Paper said it will cut 227 jobs at its two largest mills amid rising input costs and fibre shortages, as it posted a wider first-quarter loss.

 

The Vancouver-area company says the cuts will affect 145 hourly and staff employees at the Elk Falls mill in Campbell River, B.C. as the No. 1 paper machine, which was curtailed last September, is indefinitely idled.

 

About 82 positions will be reduced at the Crofton mill in North Cowichan, ''as the operation takes steps to bring its overall cost structure closer to best-quartile performance.''

 

The announcement came as Catalyst posted a first quarter loss of $37.4 million, 17 cents per share, on sales of $399.5 million. That compared with a net loss of $25.6 million, 12 cents per share, on sales of $478.1 million for the same period in 2007.

 

The company's shares fell five cents, almost five per cent, to trade at 99 cents on the Toronto Stock Exchange.

 

''The Elk Falls mill has been most affected by fibre and market dynamics to date,'' CEO Richard Garneau said in a statement.

 

''With the permanent closure of the TimberWest and other sawmills taking curtailment, the potential to restart No. 1 paper machine in the foreseeable future has disappeared.''

 

Garneau said Catalyst ''appreciated this is not welcome news for employees or the community,'' but said it needed ''to make the best possible use of available fibre supply to support our most profitable business.''

 

Costs related to the changes will not exceed $4 million.

 

In reporting its quarterly results, Catalyst said it benefited from pricing momentum across most product lines as well as cost reductions resulting from mill and corporate restructurings undertaken last year.

 

Offsetting those gains was a challenging economic climate in North America, increased input costs and the continued strength of the Canadian dollar.

 

A steep decline in the U.S. housing starts triggered additional sawmill curtailments in British Columbia during the quarter, which reduced wood residue availability and increased costs, the company said.

 

''Fibre constraints required us to curtail 65,000 tons of pulp and paper at our Elk Falls mill during the quarter,'' said Garneau.

 

Catalyst produces mechanical printing papers and market kraft pulp.