The Incendiary End Game in Corner Brook #nlpoli

As a rule, when a cabinet minister speaks publicly about a private sector company’s significant financial problems, things are not good.

Natural resources minister Jerome Kennedy told the world on Friday and Saturday that Corner Brook Pulp and Paper Limited had a heavy bank debt and an unfunded pension liability of about $80 million.  Kennedy said the mill that hasn’t made money since at least 2006.

Things are so bad that Kennedy  that he expected Joe Kruger was coming for a meeting to tell the provincial government he was closing the west coast paper mill.

So why was Kennedy gabbing about stuff he’d known about for some time but kept to himself?

The Precipice Looms #nlpoli

Not surprisingly, Kruger issued an ultimatum on Tuesday to workers at its Corner Brook mill. CBC quoted the message from the company to the union in an online story:

"The first step to go forward will be to obtain a firm committment [sic] from employees by achieving a satisfactory agreement that will allow CBPPL to be competitive in the market," said the Kruger statement.

"Given the critical situation of the mill, this collective agreement will have to be reached by June 15 so that we can quickly move on to the next crucial step, which will be to submit the pension plan funding relief measures to a second vote and hopefully be able to apply them before the mill’s situation deteriorates any further."

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Diversifying the economy and slowing things down #nlpoli

Paul Oram was a colourful politician.

Well, colourful in the sense that he flamed out very quickly.  Regular readers of these scribbles will remember him as the guy who had no idea what had happened in the province during his lifetime.  Not long after taking over the health department, Oram precipitated a huge political crisis.  Then he high-tailed it from politics altogether with some pretty damning comments about how his colleagues were spending public money. 

These days Paul turns up as the token Tory on CBC Radio’s West Coast Morning Show political panel. he is still colourful.

On Monday’s show, Oram said that Muskrat Falls was a wonderful thing because it diversifies the provincial economy.  He did not say how.  Oram just said that it would.  No one asked him to explain what he meant.

That’s a lucky break for Paul.  You see, Muskrat Falls will not diversify the provincial economy. It is a public utility project.  What’s more, it does not produce any revenue other than what the people of this province will be forced to pay.  In that respect it is less of a way to diversify the economy as it is a new kind of government tax on the local economy.

But that’s okay: Paul has usually had trouble understanding this whole economic development thing.  That’s probably why Danny put him in charge of economic development at one point.

After bashing that around, the panel switched to talking about the provincial budget and health care.  Bernice Hillier – the host – asked Paul about the money in the budget for planning the new Corner brook hospital. 

Not a problem, said Paul.  The hospital is important.  The government will build it.

It’s just that times are tough, according to Paul.  The government is just slowing things down a bit until they have the money to build the hospital.

Interesting idea Paul had there.

Interesting because it is something that Oram’s old colleagues have categorically denied. 

Don’t have the money to build it now?

“That is one of the stupidest things I’ve heard in a long time,” said finance minister Tom Marshall last week.   Here’s what health minister Susan Sullivan said in the House of Assembly on Monday:

What we had in the past was a replacement design. Mr. Speaker, we are much more progressive than that. We do not want a replacement of the Corner Brook hospital; we want a hospital that is going to see us into the future. Therefore, we have asked them to go back, and with this $1 million we will look at a hospital that will meet the needs of the future in terms of essential services that are going to be in that hospital, Mr. Speaker. When that is done, then we will move forward with a design concept for the facility itself.

Paul Oram was a colourful politician.

He still says some curious things. Makes you wonder what he is going to say next.

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Corner Brook hospital: follow the money talk #nlpoli

Let’s get something clear up front.

The provincial government will build a new hospital in Corner Brook.

That much shouldn’t be in doubt.  The existing Western Memorial Hospital is long past due to be replaced.  The provincial government has the cash in the bank.  And even if they didn’t, they’d have to find the money somehow to build it.  That’s the thing about hospitals.  You have to build them even if you don;t have money in the bank.

The current political problem finance minister Tom Marshall faces in his hometown comes from the usual problem he and his colleagues seem to have:  they announce something, put timelines on it and then fail to deliver on time.

Then the other problem cuts in:  they resort to all sorts of bluster and such, all the while insisting that absolutely nothing is wrong. That’s the thing about the Tories:  you always know what they are going to say. 

Tom Marshall went to the Corner Brook Board of Trade on Friday to talk about the budget and, inevitably, the hospital. The Western Star sent Gary Kean out to report on it.  He’ll stay in politics until the steel for the hospital starts going up, insisted Marshall, “and I plan on going soon.”

Good on both points:  Marshall was supposed to retire last year.  He put it off as part of the deal cut inside the Tory caucus that left Kathy Dunderdale as leader to get them through the election.  Marshall is due to go as are a number of others, including, most likely, Dunderdale herself.

As for the money supply, he was equally firm that there wasn’t a problem.  He’s a quote from the Western Star story:

“That is one of the stupidest things I’ve heard in a long time,” Marshall said, when asked about criticism that government doesn’t have the money to proceed with construction right now.

“We are flush with cash. Our financial position is the strongest it has ever been. The economy is as strong as it’s ever been.”

Let us forget, for the moment, that the main message Tom is carrying around these days is that the provincial government coffers are flush with cash.  They are full to overflowing.  And now, having just finished spending public money the likes of which we have never seen in this province before – including taking the public debt to record heights -  Marshall  must now start on a 10 year program of spending cuts and layoffs in the provincial government the likes of which we have never seen in the country before, let alone the province.

Let us just forget all that for a moment.

Let us also dial back Tom’s inevitable hyperbolic outburst a bit.  They will have the cash. They will have to find the cash because they need to replace the hospital.

And so they will build a new hospital once they figure out what they want the hospital to do.

The first plan the health department came up with wasn’t the right one, according to health minister Susan Sullivan.  According to the Western Star,

Sullivan said the plan did not adequately reflect the province’s changing demographic, so planners were sent back to the drawing board to come up with a better programming strategy.

When the Western Star wondered how that could have happened, Sullivan claimed she didn’t know.  She wasn’t the minister when they started so she had no idea what they were asked to do.

And as for what “better programming strategy” means or what the “demographic“ thingy was, she didn’t let on. Those are wonderfully vague terms, wonderful bits of bureaucratic gobbledygook. What it sounds, like, though, is the same sort of problem the current administration have run into with other major projects.

The health centre in Lewisporte, for example, went so far over budget that the provincial government started hacking out services in order to get the costs under control. That was at the heart of the problems in 2009 that contributed to Paul Oram’s untimely departure from politics.

So while Corner Brook will get a new hospital - at some point in the future - the major problem seems to be a familiar one:  balancing what gets done in the hospital with what it costs to build it. Part of that problem could be in whatever promises He Who Must Not Be Named suggested eons ago that are simply no longer affordable, if they ever were in the first place.

Almost certainly, part of the hang up is within the health department.  After all, they are trying to cope with increasing pressures on budgets at a time when cash is getting tighter and tighter.  You see that’s the real issue.  Corner Brook will get a hospital, but the government’s financial and demographic problems will have a profound impact on what the hospital costs and therefore what the final hospital winds up doing.

Now as for all that financial stuff Tom Marshall mentioned that we said we’d forget for a moment?

Well, the moment is up.

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Dunderdale admin pours more cash into Corner Brook paper mill

On top of the millions in subsidies it has already provided to Corner Brook Pulp and Paper (Kruger), Kathy Dunderdale’s administration announced on Monday that it would pay $4.3 million over three years  to help workers at the mill upgrade their skills.

The only logical step next is for Kathy Dunderdale and her cabinet to give Kruger a receipt for the whole shooting match.

After all, taxpayers basically bought the mill piece by piece.

In related news, an economics professor at Memorial University thinks these sorts of subsidies don’t work:

[Michael] Wernerheim has high praise for the province's forest management strategy and for wanting to lay out a new path for an industry in decline, such as supporting smaller operations, like saw mills, and putting a greater focus on forests as ecosystems. 

But he found the government spends too much time, effort and money on continuing to support failing ways to protect jobs in the newsprint sector. 

"These short-term initiatives to protect jobs can retard the restructuring of the industry that we all want to see happening," he said.

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Kelly wins in Corner Brook

Gary Kelly won the by-election for Corner Brook City council polling 987 votes.  He topped a field of five candidates.

He ran a campaign with a significant presence in the social media and took to the streets of Corner Brook with his sign in hand, greeting pedestrians and waving to motorists. His effort was often the talk of the city throughout the campaign, and Wednesday evening the results proved its worth.

Expect to hear more about this guy in the future.

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CB city council by-election down to five

cornerbrooker.com has a great little piece on the west coast city’s municipal by-election.

This leaves five candidates competing for one City Council seat: June Alteen, Gary Kelly, Trent Quinton, Tarragh Shanahan, and Alton Whelan.

Aside from some lawn signs, most candidates have been fairly quiet so far, however I think that Gary Kelly is at least proving that he’s visible and willing to work for the position. You may have seen him marching up and down O’Connell Drive in all sorts of nasty weather, or standing outside hockey games at the Pepsi Centre with his bright yellow campaign sign, waving as the cars head down the hill.

They mention that Gary also has a website and is using Twitter and Facebook.  That’s not surprising for a guy who was an early adopter to blogging  and who ran one of the best little gems of a blog in the process. A lot of politicians in the province could learn a lot of lessons from Gary.

For what it’s worth, Gary has the Bond Papers endorsement. Corner Brook readers of these e-scribblers would be well served if they voted for Gary in the by-election.

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Economic Recovery: Not exactly as illustrated

By definition, anyone connected to “economic development” in any provincial government or quasi-government organization must be so positive and upbeat as to make a Pollyanna look like someone about to climb into a warm bath and open a major artery or six.

That pretty much sums up the view in central Newfoundland where the regions major private sector employer is gone and there is nothing on the go even remotely as big:

"(If it was contrary to what businesses are reporting) you would see it in job losses, you would see it in lack of inventory," [Amy Coady-Davis, chair of the Grand Falls-Windsor town economic development committee] said.

"The turnover is there - it is right in front of your face. You can't fudge those numbers. Sales are up, they have said they're up, you can see that they are up."

Well, not exactly, at least if you judge by some numbers included the same Telegram article and which came from no less an authority than the town’s own economic development agency:

According to the economic development office in Grand Falls-Windsor, housing starts are down 50 per cent from 2008 - there were 118 units built then as compared to 53 units in 2009.

There you have it.

And if that wasn’t enough, consider the view from the local chamber of commerce:

Gerald Thompson, president of the Chamber of Commerce - which represents 209 businesses in Grand Falls-Windsor - tends to agree with the town's positive outlook.

He said they are getting far more positive feedback from members than negative.

"... Although there's been a number of small businesses that have closed in the last year, we still know that the people that have done business here in this valley, their percentages over last year are up.”

Of course, they are up. 

Some of the people who used to patronize those businesses that have closed up have moved their custom to the ones remaining.

And those companies that went out of business? 

Well, they aren’t members of the chamber of commerce any more – most likely – so their voices wouldn’t heard when the chamber does a survey of members.

Just to add to the whole surreal atmosphere of the article, don’t forget that the president of the chamber of commerce cited as proof of the great things the positive view from the people who build new homes.

Oh yeah.

Things are so great in that business people are building only half as many homes as they did in that artificial bubble the year after the mill closed.  That would be the year of severance cheques and all that extra, short-term cash.

What happens from this point onward will be entirely the result of whatever economic activity there is left now that the Abitibi mill’s corpse has stopped twitching.  Those who are tempted to look at places like Stephenville need to think again.  All those paper mill workers found other jobs, mostly in Alberta.  Those sorts of options don’t exist for the crew from Grand Falls-Windsor.

Nor is there a chance that the province’s remaining paper mill – there were three in 2003, incidentally – will take up any slack.  It is struggling to survive.  The company that runs the mill is reportedly looking for a 10% wage roll back from workers.

The professional pollyannas can be as bright-eyed and optimistic as the want.

The reality may well prove to be not exactly as illustrated.

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How bad is it?

You just know things are pretty tense in Corner Brook.

You can tell because the provincial government has been pouring on the happy-talk while over at the city’s major employer, the company operating the paper mill is looking for a 10% wage roll-back from employees.

The latest happy-talk is a hope-drenched a study on the oil and gas potential for the west coast.

According to the official news release, the study was commissioned based on an election commitment from 2003. 

That’s okay. 

We can wait while you go and check your calendars again.

Yes, it was indeed seven years ago.

The work on this particular report, though, was only done in 2008.  Check the dates on some of the consultation sessions;  that’s the only way to figure out the timelines for sure since most of the document has been scrubbed of dates. You can hunt around and eventually find the news release that kicked it off, from December 2007. 

That would make it a bit more than two years for this study to see the light of day.

After all that time and all that work, the recommendations are stunning: 

Ensure a regulatory and administrative environment to maximize investment in onshore and offshore exploration and attract industry operators and businesses to the region;

Ensure the protection of key natural resource areas, including Gros Morne National Park, the Humber Valley and the Bay of Islands;

Establish a clear environmental regime between the provincial and federal governments;

Continue to improve infrastructure in the region through investments in education, health-care facilities, transportation and commercial land availability;

Encourage the planning, regeneration and use of existing infrastructure, including that in Port aux Basques, Stephenville, Corner Brook, Deer Lake, Port Saunders and St. Anthony, to ensure it continues to support existing economic sectors;

Maintain and upgrade infrastructure specific to the needs of potential hydrocarbon projects, including wharves and air facilities at Corner Brook and Stephenville;

Facilitate the training of local residents to help them meet the demand for skills in this emerging sector;

Continue to invest in public education, health care, cultural and recreational opportunities to serves the needs of the region; and,

Continue to promote the western region as a place of opportunity for business investment and families.

In a nutshell:  fix the roads, spend money on things like education and health care, protect the ecologically sensitive and important bits (like Gros Morne)  and “promote” the potential in the area.

They are about as surprising as the recommendations made by the task force that spent 18 months trying to figure out how to keep more young people from leaving the province.  Its major conclusion:  create work for them so they can find jobs and stay here.

All standard. 

All patently obvious.

Nothing concrete and measurable.

Like explaining what is meant by “[e]nsure a regulatory and administrative environment to maximize investment in onshore and offshore exploration and attract industry operators and businesses to the region.” 

Maybe there is a tax issue here or problems with issuing permits. You won’t find anything in the report to explain what this means.

And the stuff that appears to be specific  - like the suggestion to “twin” selected portions of the Trans-Canada between Port aux Basques and St. John’s as needed – is actually just a confirmation of what has been government policy since 1988.  Under the roads for rails agreement, the provincial government used federal cash to do exactly that.  And yes, for those who need reminding that would be from the last time the Conservatives formed the provincial government.

So what are these study guys talking about 20 years later?

Not a heckuva lot, apparently, given that any administration at any time can claim:

• to have either already done that or,
• to be doing exactly what was recommended as it carries out the existing maintenance of the existing road.

Look in vain and you will not find a single thing in this 71 pages of pure bumpf is tied to  drilling more holes, finding oil and getting it into production.

Things seem to be pretty tense in Corner Brook these days.  That’s just as they have been in other towns in this province since 2003 when the major employer found itself in hard financial straits.

What’s most interesting since 2003, though, has not been the problems themselves but how the provincial government has reacted to each development.

The oil and gas study released on Monday seems to be very much par for the course, very much a sign of the times.

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Having big guns helps

Paper maker Kruger may be getting additional financial help from the provincial government to keep its mill in Corner Brook operational.

There’s nothing new in this.  The provincial government has been subsidizing the forest industry for years.

What makes this a bit different is that the area has such strong representation in government.

No one is explaining to forestry workers why subsidies are bad, as fish minister Tom Hedderson did a few weeks ago when people wanted some cash to help out that troubled industry.

Having big guns helps.

Of course,  having those big guns a wee bit worried doesn’t hurt either.

You can tell they are worried about local public anxiety about the future of the Kruger operation when a news release appears advising that every provincial politician from the Corner Brook area will be traveling in a pack on Wednesday.

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Kruger slashes 130 jobs in Corner Brook

Corner Brook Pulp and Paper Limited announced Wednesday the company will not re-start the Corner Brook  mill’s idled Number 4 paper-making machine.  The move will result in the loss of 130 jobs.

The move is blamed on deteriorating markets.

The Premier and other members of cabinet met with union officials on Wednesday afternoon at the government’s main office building in Corner Brook.

"There's no numbers put on the table from a perspective of … 'government, give us a cheque for this amount of money.' But [what] we have said is that we're prepared to play our part quite simply as we always have in any of these situations," [Premier Danny] Williams said.

"Our primary concern at these times is always the workers, the workers who are affected right now. And this mill needs to stay viable and competitive and needs to stay alive. And that's what we're discussing."

That tone compares markedly to the confrontational one that characterized government discussions with AbitibiBowater in Grand Falls-Windsor before that mill closed earlier this year.

Corner Brook is represented in the House of Assembly by the Premier and justice minister Tom Marshall.

In a related story, loggers are protesting on the Great Northern Peninsula to draw attention to their plight.

The forestry industry employs between 400 and 500 people on the peninsula.

The protest was called off around midday [Tuesday] to give politicians time to respond to the loggers. [Spokesman Ralph]Payne said Transportation and Works Minister Trevor Taylor, who is the Tory legislature member for The Straits and White Bay North, did call Tuesday afternoon and agreed to meet with the association Thursday, but Payne wants more than that.

“We want to meet with all four of them and that includes Trevor Taylor, Natural Resources Minister Kathy Dunderdale and the two other MHAs from the area, Wally Young (Tory legislature member for St. Barbe) and Darryl Kelly (the Tory legislature member for Humber Valley),” said Payne.

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