TERRACE BAY, Ontario (From news reports) -- As people in Terrace Bay, Ont., wait for answers around its shuttered pulp mill, they're getting support from the provincial and federal NDP leaders who are calling for the mill to re-open.
Federal NDP leader Jagmeet Singh held a Zoom meeting with local officials Friday, adding his voice to calls for answers and accountability from the mill's owners Aditya Birla.
"What we're going to hope to do is put some pressure on the owners, on the business, to give us some insight on what could help keep the mill open," said Singh "They just want to know what's going on."
While Employment Insurance and job training support are important for laid off workers, what they really need is the mill running again so they can support themselves, Singh said.
In early January the mill's owners, AV Group, which is part of Aditya Birla, announced there will be a "temporary idling of its pulp operations, with immediate effect, due to prevailing market conditions," taking 400 workers off the job.
CBC News has put in several requests for interviews with the company since then, but has not yet received a response.
Aditya Birla, a fortune-500 company from India, stepped up to buy the idled pulp mill in 2012.
Community members say they felt betrayed and blindsided by the decision and are disappointed to see yet another owner withdraw from Terrace Bay.
Singh said he wants the provincial and federal governments to create better incentives for businesses to open and operate in Canada.
"We can provide support to businesses, but it has to be tied with ironclad guarantees that it's going to create jobs," said Singh.
Companies that receive government funding, tax credits, or other support but fail to provide stable employment to Canadians need to face severe penalties, he said.
"These blank cheques given to big companies... they took that money and then they left- that's something that [they] can't do," Singh said. "The penalties have to be severe enough that the business is afraid to do that."
Can the mill survive?
While many want to see the mill reopened, resurrection of facilities in struggling resource-based industries isn't always the most economical option, said Karl Skogstad, associate professor of economics at Lakehead University.
"Resource industries are fundamentally kind of boom or bust cycles," said Skogstad. Viability of operations like the pulp mill are tied to the price of their output product. Pulp prices have been volatile in recent years, according to industry experts, and are currently low.
Even if a new owner bought the mill, they could end up facing the same challenges as previous owners, said Skogstad.
The mill fell on hard times in the early 2000s when the pulp and paper industry entered a period of uncertainty. It went through cycles of shutting down, changing ownership, then shutting down again as different owners found themselves in debt.
The mill was fined $250,000 after pleading guilty in 2015 to seven offences under the Environmental Protection Act, and was temporarily shut down in wake of an explosion that killed a worker in October 2011.
However, Skogstad said it's hard to know what a potential business outlook would be for future mill owners without a detailed analysis of paper price forecasts, current worker wages, and other operational costs such as maintenance.
An uncommon proposal
Ontario's Ministry of Natural Resources and Forestry previously said in a statement that it is supporting the forestry sector through multiple funding programs.
"Our government will continue to explore all options for reviving operations at the AVTB mill, and support the Terrace Bay community throughout this process," said Melissa Candelaria, the ministry's press secretary.
The statement pointed to the Forest Sector Investment and Innovation Program, which has invested $41 million in 15 forest sector businesses, as well as the Ontario Forest Biomass Program, which is a $19.6 million investment to maximize the economic potential and environmental advantages of forest biomass, specifically underutilized wood and mill by-products.
Ontario NDP leader Marit Stiles, who visited Terrace Bay last week and spoke to local leadership, floated the idea of employee ownership as a way forward.
"Everything should be on the table," said Stiles. "We would like to approach them really as potential buyers, if there is the possibility for a worker partnership...new ownership or even employee ownership ."
This kind of ownership situation is rare in large, resource-based enterprises, said Skogstad. "There's a lot of risk involved."
While collective ownership is common among smaller businesses like coffee shops or grocery stores, it's both more expensive and volatile to take on a business like a pulp mill, he said. Employee ownership means staff have to absorb the economic impacts of any loss.
"Those losses just have the potential to be a lot bigger and thus potentially more harmful for those workers who then have to pay those costs," he said.
While uncommon, it has been done in Canada before- another Canadian mill that produces a similar kind of pulp on the verge of closure was once saved by an employee-backed purchase.
In 2008, the owners of Nanaimo's Harmac pulp mill shut operations down and laid off the workers. The 530 employees at the mill decided to buy part of it themselves, attract some investors and get back to work.
The permanent employees each committed to purchasing a $25,000 ownership stake in the company over a three year period, leading them to eventually hold 25% of the company equity, according to the company website.
The Harmac pulp mill had about 300 staff as of 2020.
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