Resolute Responds

Today’s Chronicle Journal had a one-page ad by Resolute Forest Products written in response to a Chronicle Journal editorial on July 18^th entitled “Innovation But When”.   In the response, Resolute maintains that the editorial implies that there has been no capital investment or pro-active action taken by any Canadian or North American company relative to the forest products industry.  Resolute then proceeds to list the major capital projects it has recently announced: a 54 million dollar investment for improvements to a wood waste boiler and steam turbine installation at the Resolute Thunder Bay mill, an 8 million dollar upgrade of its sawmill complex, a 30 million dollar investment in the idled Ignace mill and another 20 million dollars at the newsprint mill in Iroquois Falls.

Resolute is justifiably miffed at being lumped in with a large chunk of the forest industry that did not invest sufficiently in its mills and met the perfect economic forestry storm of the early 21^st century with aging infrastructure and equipment. Resolute is indeed an example of a proactive and engaged forest products company and its investments are key to the survival and prosperity of the forest products industry in Thunder Bay and the Northwest.  There is also its relationship with CRIBE (Centre for Research and Innovation in the Bio-Economy) and FP Innovations, which will look at innovative ways of using forest biomass.

In Thunder Bay, Resolute is the only survivor of that economic storm with a mill complex that dates back to the 1920s.  The Resolute mill is the latest corporate incarnation of the Great Lakes Paper Company, which over time has been Great Lakes Forest Products, Canadian Pacific Forest Products, Avenor, and Abitibi-Bowater. A hallmark of the original Great Lakes Paper was that it was locally owned and an example of local Lakehead entrepreneurship.  Having our own locally owned head office meant substantial control over investment decisions and white-collar employment that deepened our local labour and professional opportunities.  Indeed, the fact that this is the only pulp mill that ultimately survived out of the four mills in Thunder Bay is a testament to the original good decision making in plant and equipment that made the company viable for resale and continued production in the long run.

Resolute is also correct in maintaining that it had to deal with economic events largely out of its control such as the appreciation of the Canadian dollar or the decline in demand for newsprint driven by the technological change of the computer age.  Indeed, taking out a one-page newspaper ad is a wonderful example of supplier- induced demand. However, Resolute has developed a selective historical memory and conveniently omits the effect of provincial government policies on the forest sector crisis.  Indeed, it was not too long ago that the North cried out in protest against provincial wood allocation and electricity price policies.  Moreover, there was the exceedingly slow response of the provincial government in realizing the extent of the crisis and finally offering some relief in areas such as electricity prices. 

Finally, it should be noted that even active management and being proactive cannot always save you from the realities of the market especially when combined with slow or ineffective government policy assistance or indeed detrimental trade policies such as the softwood lumber dispute.  Witness what has happened to the Buchanan mills even with all their energetic responses and efforts.  It is an important lesson we should not forget.