Hudson Bay mill workers brace for layoffs

Hudson Bay mill workers brace for layoffs
OSB plant among threeWeyerhaeuser operationsfacing temporary layoffs


Lana Haight, The StarPhoenixPublished: Thursday, February 15, 2007
Hudson Bay is bracing for another economic hit as employees at a local mill face layoffs.
As many as 35 of the 183 employees at the Weyerhaeuser Co. oriented strand board (OSB) mill will lose their jobs by mid-March in what's hoped will be a temporary layoff.
"We're not 100 per cent sure how long this will continue," said Weyerhaeuser Co. spokesperson Wayne Roznowsky.
Last week, Weyerhaeuser Co. announced the production slowdown at its OSB mills in Hudson Bay, about 310 kilometres northeast of Saskatoon, as well as in Drayton Valley, Alta., and Sutton, W.Va. Each plant produces between 415 million and 640 million square feet of OSB annually. The company is planning to cut its production by as much as 600 million square feet this year.
Rather than closing one plant, Weyerhaeuser management decided to scale back production at the three facilities and issue temporary layoff notices. At the OSB 2000 mill in Hudson Bay that operates 24 hours a day, seven days a week, production will be cut to five days a week. It's unclear at this point who will be laid off.
"You can't just go by the last person hired because there may be some trades that are needed in the mill," said Paul Hallen, president of the United Steel Workers of America Local 1-184.
The production slowdown doesn't surprise Patricia Mohr, vice-president of economics at Scotiabank, who follows the forest industry.
"The industry is expanding capacity quite markedly in an environment of very weak demand," she said.
Record high profits at OSB mills during the past five years prompted some companies to build new plants. Two facilities, each producing more than 800 million square feet of board annually, began operating in the southern United States in the past couple of months. More U.S. plants are scheduled to come on stream this year, says Mohr.
But new home construction in the U.S., the primary market for OSB, has slowed after four years of record-breaking levels.
"In the spring of last year, you met pent up demand for housing in the U.S. and because of somewhat higher mortgage rates and much higher home prices, affordability was reduced," said Mohr.
The industry is going through a cycle that was not unexpected.
"(This) will be a tough year for OSB producers and for lumber producers, for that matter," said Mohr.
"It doesn't really make sense to operate at full capability when the prices are as weak as they are. You're better off to slow it and save your fibre for a better day."
The people of Hudson Bay are expecting that better day will come, says town administrator, Richard Dolezsar.
"In the past 40 years since OSB and aspenite have been produced in Hudson Bay, we have seen peaks and valleys in the markets and have seen similar production slowdowns and ramp-ups several times over the years. I guess we're expecting that's going to happen again and markets will return and the labour force will return to its full force," he said.
There is still no official word about the future of the Hudson Bay plywood mill also owned by Weyerhaeuser Co. About 190 employees were laid off at the beginning of January when Weyerhaeuser closed the mill. Plans for British Columbia-based C & C Wood Products to take over operations and have the plant running again by March were put on hold in January when the company's president died of a heart attack.
C & C Wood Products' letter of intent to purchase, signed in November, included Weyerhaeuser's sawmill in Carrot River where another 116 employees also were laid off in January.
lhaight@sp.canwest.com