WATCH: One of Vancouver Island’s largest employers faces a looming decision could spell further trouble for the company. The U.S. Commerce Department is expected to announce Thursday whether to extend, and possibly strengthen its punishing tariffs on Canadian newsprint. And the province is bracing for the possibility it could put Catalyst Paper out of business.
Catalyst Paper, one of Vancouver Island’s largest employers faces a looming decision that could spell further trouble for the company.
The U.S. Commerce Department is expected to announce Thursday whether to extend, and possibly strengthen its punishing tariffs on Canadian newsprint.
In a statement accompanying its announcement regarding measures to protect Catalyst pensions Friday, the province said its trade officials expect to see tariffs targeting Catalyst’s newsprint products raised to 28.5 per cent, up from the 22 per cent duty initially imposed in March.
Speaking to reporters Monday, Premier John Horgan expressed concern for the company’s future, while pledging to continue working to support its efforts to battle through.
“These tariffs are debilitating for the company,” he said.
“It was a step to ensure that we didn’t have a similar scenario that we had here in British Columbia about pensioners that worked for Sears that went to the bottom of the line when it came to addressing receivership. so should that be the choice that catalyst makes in the future we wanted to make sure the workers were at the top of the list not the bottom.”
Horgan says the province is continuing to work with Catalyst and local leaders in Port Alberni, North Cowichan and Powell River to address longstanding issues, including access to fiber supply, the tariffs are an urgent concern that could threaten the company’s operations.
Catalyst president Ned Dwyer has acknowledged the threat tariffs present at 22 per cent, saying “They pose a threat to our competitiveness and the sustainability of our business and we will continue to vigorously defend ourselves against them.”
Paper industry analyst Kevin Mason of ERA Research Associates says says an increase is a definite possibility that Catalyst ought to be prepared for.
“Common sense dictates that the duties should be zero, however, when it comes to US trade law, common sense doesn’t really apply lately. So I think its definitely good to be concerned,” he said.
He says that so far, Catalyst and other paper makers have been able to absorb the tariffs by raising prices. But that can’t be a long-term strategy
“Eventually those higher prices will feed the demand decline and it’s going to force some producers to close.”
If Catalyst can remain afloat with the US tariffs, Mason believes it has good prospects developing in the Chinese market, and may ultimately be purchased by a Chinese company. In June, Catalst completed the sale of three US mills to a Chinese paper maker.