Domtar to close 4 mills, over 900 jobs cut

One day after forestry company Abitibi-Consolidated Inc. announced the closure of four sawmills, Domtar Inc. has announced a similar move.

Domtar said Wednesday that three sawmills in Quebec and one in Ontario will close indefinitely by Oct. 27. A total of about 490 mill jobs will be lost, while another 450 forest workers will be laid off.

The cuts include:

• 100 workers at the Matagami sawmill (Que.), which will close Oct. 27.
• 125 workers at the Val d'Or sawmill (Que.), which will close Oct. 27.
• 125 workers at the Lebel-sur-Quevillonsawmill (Que.), which will close immediately.
• 140 workers at the Nairn sawmill (Ont.), which will close temporarily Oct 13.

The closures are primarily due to the pressure of higher timber costs and lower demand for both lumber and wood chips, the company said.

Domtar said the closures will take out about 400 million board-feet of lumber production.

"On the one hand, substantially higher procurement and processing costs for sawlogs have impacted the competitive position of our sawmills in recent years," said Richard Garneau, Domtar's executive vice-president of operations.

"On the other hand, the slowdown in demand has exerted considerable downward pressure on selling prices for wood products in recent months. These two main factors have led us to make these difficult decisions," he said in a release.

Shares of Domtar slipped 10 cents to close at $6.80 on the TSX in the wake of the announcement.

Domtar's decision comes one day after Abitibi-Consolidated announced it will shut down four sawmills in Quebec, which will leave about 380 mill employees and 300 forestry workers unemployed at the following plants:

• Champneuf sawmill in Abitibi-Tmiscamingue.
• Saint-Thomas sawmill in the Saguenay-Lac-Saint-Jean.
• Outardes sawmill in the eastern North Shore region.
• Saint-Raymond sawmill near Quebec City.

The slowdown inthe U.S. home-buildingbusiness has hit Canadian lumber producers hard. The sawmill industry in Quebec, for instance,is working at only 63 per cent capacity, the province's natural resources minister saidTuesday.

QuebecPremier Jean Charestsaid Wednesday his governmentis preparing an emergency package to help the province's forestry industry, which would include, among other elements, measures to reduce the cost of wood fibre, the raw material used by sawmills.