Job cuts loom with trade spat over paper, lumber

Quebec paper and lumber producer Resolute Forest Products expects it will have to cut jobs soon as it faces U.S. trade actions on two fronts.

“It is unavoidable in my opinion because of the disruption in the market,” CEO Richard Garneau said Thursday in an interview after disclosing weaker first-quarter results.

The Montreal-based company has deposited $43 million with the U.S. Department of Commerce for 17.87 per cent duties imposed in November 2015 on imports of supercalendered paper which is mainly used in magazines, catalogues and advertising inserts. The annual cost of duties is about US$25 million.

It also expects to pay US$17 million this year and US$50 million annually for countervailing lumber duties.

Garneau said fighting both trade actions is very disruptive.

Resolute faces a 12.82 per cent preliminary duty for lumber, less than the 19.89 per cent retroactive duties applied to other Quebec and Ontario producers.

Garneau called both sums unfair given the market-based lumber pricing systems in Quebec and Ontario and said he’s confident they will be lowered in the final determination later this year because American authorities used Nova Scotia’s system as a benchmark and improperly applied Hydro-Quebec expenses in its calculations.

Still, Garneau expects the effect on Resolute and the Central Canadian lumber sector will be quick, with a reduction in sawmill shifts that will have a cascading effect on other jobs.

Resolute has 1,200 people working to support two supercalendered paper mills and 4,000 people in its lumber operations. Garneau declined to say how many workers could be affected.

Unifor, which represents 24,000 forestry workers at 134 companies, fears duties will hurt 25,000 Canadian jobs, punishing small communities dependent on the forest industry.