Thunder Bay Fine Papers Production Begins
by Scott A. Sumner
Thunder Bay Business
It was smiles all around recently at Canada’s newest paper mill, Thunder Bay Fine Papers. Reversing the trend of over 140 paper mills of 180 in Canada being closed this mill with a long history in Thunder Bay was reopened after much hard work by many people.
“ The mill opened today, May 9th. It has been shut down for over 2 years with no heat, water or air for three Thunder Bay winters. Today we started making saleable paper on Paper machine 8. We first had crews in here on January 4, 2008 and 120 days later we are making paper,” smiled John Hitchman, COO for Thunder Bay Fine Papers. “ There was a lot of damage in terms of water being frozen from the city and the mill water systems we had to rework but we had no major mechanical or electrical problems. The machine 8 we saw today is 42 years old. It would be $100 million to replace that machine to make coated papers.
Today we will produce about 250 tons of saleable paper worth about $1000 per ton.”
The major market for Thunder Bay Fine Papers is in the US where they will be targeting Minneapolis, the fifth largest printing sector in North America as well as Chicago. They will also focus on Winnipeg and Toronto. The paper made first will be number 32 coated satin and used for text books and annual reports. The machine will also make coated reply cards.
“ We have a total of 180 people working at Thunder Bay Fine Papers today. In 6 weeks we will start number 5 machine followed by number 6 machine in late September and anticipate employment will be then be 320 employees with pay ranges from $16 to $23 per hour for journeyman A maintenance and paper makers,” noted Hitchman. “ We looked at what the
assets were here at the mill, what the capital requirements to do some things differently would be and then looked at the marketplace. We matched the assets and the capital to the market place, put together a marketing plan and went from there. The previous Cascade operation
made roughly 20 grades of paper. Thunder Bay Fine Paper is only going to make 8 grades. We redefined the markets and our focus.”
“ The investment made in the new mill was $42 million dollars. The Ontario government helped with government grants to allow us to borrow the money and start up the mill. I have been in this business all my life and am a Thunder Bay boy. I worked at this mill for 8 summers as a summer student and after university started as a control engineer and worked my way up to mill manager over 25 years,” stated Hitchman. “ I then joined Tembec and went to Australia for 4 years with a company that has 55 mills. They had a mill in Tasmania which is an island off Australia I worked at and then I did strategic planning in Melbourne. I have been lucky in my career. My employers over the years have treated me well.”
Local large investor in Thunder Bay Fine Papers, Danny Cruz, is in charge of the capital projects. “ We are spending $ 13 million in capital projects revamping some of the equipment. One of the jobs was having the paper mill painted and organizing the other two paper machines which are under construction. In No 6 we are putting in a new Couch, a unit that provides a lot of suction and takes out a lot of the water out of the stock making it from a jelly mass to something more firm. That is $800,000 project,” noted Danny Cruz. “ We are
changing the calender stack on number 6 paper machine and that will be $900,000 and because of the larger rolls we have to put in another super crane which will cost $400,000. Then in the back of the machine we are converting to a rolling bearing system costing $1 million. I have approximately 30 projects that tally up to a $13 million expenditure.”
“ A lot of other start up cost of $42 million is for inventory at start up and working capital. We have made contacts with many paper merchants who will sell our products. The customers wanted to see the product and they will now see it and know we are in business. Inquiries
are starting to come,” smiled Cruz. “ The mills in the newsprint business are having a difficult time. This mill is producing a product we feel is going to be in demand. We won’t have trouble getting customers to buy our product. The internet is causing the market for newsprint to go down . We will be producing paper for clients like National Geographic and Playboy. I think is a worthwhile project and the people who have invested will get a remarkably good return on their investment.You can still invest a small amount and we may have a second offering.”
The mill will be spending a further $35 million on a co gen project producing electricity and the waste steam used to heat the mill. It will save between $10 and $12 million a year on natural gas costs according to Cruz. “ It’s a great marriage. We will be burning bio mass and producing electricity which there is a customer for. That should be done in the next 18 months. All the machines will operate 24 hours a day. This mill could produce 200,000 tons at 1000 per ton producing $200 million per year in revenue. Paper mills don’t have a great reputation but once we have been operating for 1 or 2 years the true value will come out.”
Marvin Pupeza is the National Union Representative for the new Thunder Bay Fine Paper employees. “ It is a great day for celebration. No 8 has started up. There are approximately 180 people working with a collective agreement with wages increases and a profit sharing plan
that will put money in peoples pockets. It is well worth it being here today and seeing the faces of the guys, it is a great start,” smiled Marvin Pupeza. “ Some have been off work for two years. Some may have ran out their UIC and severance pay. People say once a paper maker, always a paper maker. Many felt it would be for a career. There has been turmoil with Abitibi dumping it, the employee ownership and Cascades taking over. Everyone has been through a lot. It is a good news story with not a lot of mills operating in our area. I believe only Dryden, Thunder Bay, Terrace Bay, Marathon Kapaspausing and SS Marie are up with only a few sawmills operating.”
“ The business plan for Thunder Bay Fine Papers was designed on a par dollar, focusing on a high end product with more margin and cogen to reduce energy costs, I understand. They will focus on some key high end areas,” indicated Pupeza. “ My Queen’s Park sources indicted they is some activity on a regulation from the endangered species act. It could stop any harvesting in Northern Ontario and if there is no fiber there is no mill. I didn’t want to detract from the good news story but if they walk away for the wood fiber they are playing with people lives.”
