MANITOBA, Canada (From the Winnipeg Free Press) -- Tolko Industries Ltd. is shuttering its operations in The Pas as of Dec. 2, throwing more than 300 people out of work.

It's the second major blow to this town of 5,500 people in the past several weeks. The Pas, located about 630 kilometres northwest of Winnipeg, is also the operational headquarters of the Hudson Bay Railway that runs from The Pas to Churchill. Omnitrax Canada, the owner of that railway and the Port of Churchill, has dramatically reduced its operations.

"For the individual workers, it is a huge blow. Tolko is a major source of good-paying jobs in the area and there are lots of spinoff jobs," said Paul McKie, a national representative for Unifor, which represents about 235 workers at the pulp-and-paper mill.

The mill, which has operated in the northern Manitoba town since the late-1960s and once employed more than 1,000 people, produces heavy kraft paper used in applications such as cement bags. Eight years ago, Tolko ended its lumber production in the Pas when it closed its sawmill.

The province of Manitoba owned the facility that had been called Churchill Forest Industries from 1973 to 1989 and re-named it Manitoba Forestry Resources Ltd. (or ManFor). Repap Industries acquired it in 1989 and Tolko bought it in 1997.

Tolko is a family-owned, private business based in Vernon, B.C.

"This is not a decision we have entered into lightly. Over the 19 years we have been in the community, a great deal of work has been done, both internally and externally, to improve the mill's competitive position," Tolko president and CEO Brad Thorlakson said in a statement.

"Unfortunately, despite years of continued effort to improve the cost structure and business results of the operations, the business is not financially sustainable."

Jim Scott, mayor of The Pas, was stunned by the news.

"Obviously this is the most devastating news imaginable for our region," he said. "We are trying to process it all. We are talking about 330 jobs -- good-paying jobs -- that will be gone. This will likely impact 30 per cent or more of our population."

He said he will do what he can to help find a solution, including meetings with provincial and federal government officials.

"I personally know four husband and wife partners that work at Tolko," he said. "This is the largest tax-payer in the town. Immediately, you start to think about the impact on the housing market, new retail developments, what it will mean for the fixing of potholes. There is going to be a ripple effect."

A senior Unifor official said efforts are already being made to find another buyer.

"I don't disbelieve that Tolko has been losing money but I believe there is a future for the mill," said Scott Doherty, assistant to Unifor's national president Jerry Dias. "The impact on economy in that area will be devastating. So it becomes even more appropriate that all the stakeholders come to the table."

Jeremy Gregoire, a carpenter at the mill, and the vice-president of the Unifor local, said employees had been kept in the dark that anything this dire was imminent.

"I guess I'm just going to have to try to find other work," he said.

Tolko is the largest employer in The Pas with an annual payroll of about $37 million. In addition to the full-time staff, there are about 250 contract loggers from the area.

Scott believes transportation costs were the fatal blow for Tolko.

Amanda Lathlin, the NDP MLA for The Pas, said there is urgent need for the province to address the fallout of the Omnitrax and Tolko decisions that could leave communities that rely on the rail line for fresh food facing possible shortages and higher prices.

"We urge the Pallister government to act immediately to prevent a crisis in The Pas," said Lathlin. "The closure of the mills will be incredibly stressful for families who will have a tough time making ends meet without a regular income. It will also hurt many other local businesses and undermine the economic future of the entire region."

Cliff Cullen, the provincial Minister of Growth, Enterprise and Trade, said he was disappointed with Tolko's decision to shut its Manitoba operations and said the province will make sure support services are in place for the affected workers and their families and that the company lives up to its obligations regarding severance packages.

"While sustainable long-term capital investment by Tolko would have been encouraged and facilitated, it is apparent now that focus must shift to exploring more creative and innovative alternate models for this sector," Cullen said. "This development also reinforces the need for further economic diversification and development in Northern communities such as The Pas, a priority of our new government."

Tolko has 13 facilities across Western Canada, predominantly in B.C. It has three in Alberta and one in Saskatchewan. The Pas is its lone Manitoba facility.

In a submission to Manitoba Hydro in 2014, Tolko noted that its operations were suffering from competitive disadvantages, including higher fuel costs relative to competitors. Chief among those issues was the fact that Tolko uses a combination of oil and biomass and waste oil to fuel its steam boilers, unlike its competitors, which run on less-expensive natural gas.

The nearest natural gas pipeline to The Pas is 200 kilometres away. It would cost about $180 million to build the infrastructure necessary to gain access.

Even though it has decreased its reliance of fossil fuels, the company said its power costs per tonne of paper increased 33 per cent between 2010 and 2014.

In addition to higher fuel expenses, the plant suffers from high transportation costs and also lacks the economies of scale that integrated lumber and paper mills enjoy.

A company official said full details on termination issues will be available to employees the week of Sept. 6