Mill's leaked memo verifies report of cuts

The memo was accidentally sent to media following the mill's meeting with union officials Tuesday.

At the meeting, Corner Brook Pulp and Paper said will get back to its employees in the coming months with details of what the unions have been told are a "manning reorganization and rationalization" of the workforce in the first quarter of 2012.

Communications, Energy and Paperworkers Union national representaive Gary Healey told the media after today's morning meeting at the mill with officials from parent company Kruger that the mill is still working out the details of this plan and will meet with the unions in the first quarter.

No details of how many jobs will be affected were made available to the union, said Healey.

Initial reports had as many as 90 jobs affected, but that news changed in the past day.

Healey said the unions are happy those numbers did not materialize Tuesday.

Below is the text of the memo.

Internal Memo:

Corner Brook Pulp and Paper Limited

CONFIDENTIAL INFORMATION FOR INTERNAL USE ONLY – DO NOT RELEASE

Mill Rationalization for Long-Term Viability

Context

Based on industry benchmarks, Corner Brook Pulp and Paper’s production costs remain well above the North American average.

Labour costs alone represent $140 per tonne at CBPP, compared to $100 per tonne on average in North America, according to the Pulp and Paper Council of Canada’s 2010 data.

CBPP’s main competitor also announced publicly that it intends to reduce its labour costs to $80 per tonne.

Best performing mills of comparable size and output operate with 250 employees on average, whereas the CBPP mill operates with 385 employees.

Goal

Kruger Inc. wants to find solutions to ensure the long-term viability of the mill and thereby protect as many jobs as possible in Newfoundland and Labrador.

In order for the mill to survive and be competitive, it must rank within the first quartile of the industry. To achieve this goal, the mill must reduce its workforce accordingly.

Action Plan

During the first quarter of 2012, the Company will start implementing a workforce rationalization plan.

The plan will cover all aspects of Mill operations and will be executed in such a way as to minimize negative impact on employees.

January 2012