Kruger abandons newsprint production
The Kruger paper mill in Brompton is abandoning the production of newsprint to concentrate on more specialized paper in a move that should maintain its 248 jobs. In an agreement with the Quebec government, the company also hopes to preserve some 328 jobs at its Wayagamack mill in Trois Rivières.
The long-term decline in sales of newspapers and magazines has forced Kruger turn to alternative products with growing demand, but not without considerable government support.
The announcement was made on Friday in the presence of Premier Philippe Couillard and several members of his cabinet. Total investment of $107.5 million will be injected to diversify
production at both plants. The papermaker will then consolidate the assets of the two plants to create a new entity, Specialty Papers Kruger Holding Inc., into which Québec will invest $44.6 million and to become a 37.5 per cent shareholder. Investissement Québec will also add loans and a loan guarantees totalling just under $60 million. The new entity also includes the biomass cogeneration plant adjacent to the Brompton plant. In all, the deal represents investments of over $377 million.
“This is an extraordinary example of industrial transformation,” said Couillard. “The future is not rosy for newsprint and now is the time to change products. Kruger has made the right decision.
“I don’t think we’re going to talk about unemployment in the Eastern Townships; rather, we are talking about a shortage of skilled labour.”
Specialty Papers Kruger Holding S.E.C. will invest over the next three years to ensure the transition, particularly with regard to the purchase of new production equipment and the modification of existing equipment.
“Québec, and particularly the Estrie region, has the resources and energy to be a leader in innovation in our forestry industry,” the premier added. “As such, Kruger’s investments at the Brompton plant are an inspiring example of the integration of innovative technology that will certainly enable Quebec to become a major player in the specialized paper manufacturing sector.”
“The transformation of the production will be done over a period of three years and we will introduce our new products gradually,” added Kruger’s print division COO François D’amours. “We want to get out of the newsprint industry completely within three years.”
“Kruger was once a major producer of newsprint and paper for publication, but we started a process of diversification several years ago. For example, we will produce fat-resistant wrapping paper which is used in particular to pack hamburgers in fast food chains. This is a growing sector. “
In addition to food packaging, the plant will begin producing labeling products and coated papers for digital printing on inkjet presses, which is used in particular for large-format catalogues and circulars for targeted direct mail.
Kruger President Joseph Kruger welcomed the announcement with enthusiasm. “Stopping the production of newsprint is good news for the industry,” said President Joseph Kruger, “This will allow remaining plants to remain open longer.”
The production transformation will also have peripheral spin-offs as it involves an additional annual supply of 100,000 metric tons of wood chips, which will have a direct positive impact on sawmills.