Northern Pulp makes vast contribution to economy

Published on March 3, 2014

To the editor,
In 2011 Paper Excellence came to Nova Scotia believing in the future of Northern Bleached Softwood Kraft and the Nova Scotia Forest Industry.  Northern Pulp produces northern bleached softwood kraft – the world market for NBSK increases 2 per cent per year – it is a product with a future.

For two years Northern Pulp has been working with the Nova Scotia Department of Natural Resources on a variety of fibre and mill initiatives that will ensure the long-term sustainability of the mill and economic benefits to our community, rural Nova Scotia and the province in general. 

Since taking ownership of Northern Pulp in March 2011, Paper Excellence has invested over $100 million to cover the mill’s operational costs and modernize the operation to support a return to profitability and realize its full potential.  We see Northern Pulp playing an important role in the ongoing transformation of the Nova Scotia economy and support the recommendations from the Nova Scotia Commission on Building our New Economy, led by Ray Ivany.  Our recent efforts are also in line with the report’s findings, for example Northern Pulp is focusing on export markets where demand for our product is growing. In fact, in 2012 kraft pulp was Nova Scotia’s largest forest product export.

I’d like to put into perspective the scale of our mill’s economic impact. Currently Northern Pulp has nearly 300 people at the mill as well as 400 others in forestry and contributes to at least 1,700 jobs in Nova Scotia. Northern Pulp injects over $2.5 million each month into the provincial economy through salaries and wages. We purchase goods and services to the tune of over $80 million dollars a year, and all told, we spend over $130 million every year on woodland activities.

More so, Northern Pulp is one of the critical engines driving the overall forest industry in Nova Scotia and were we to close down, the spin-off impact would be devastating to this sector.  The September 2013 APEC report on the Economic Impact of the Nova Scotia Forest Industry attests to the ongoing impact forestry has on our economy, especially rural Nova Scotia. APEC estimates that in 2012 the forest industry generated $575 million in GDP, $414 million in income and 10,200 jobs. Northern Pulp works in co-operation with most Nova Scotia sawmills – supplying them with just over 30 per cent of all their wood requirements and buying back much of their by-product chips and hog fuel. This is a strategic income stream for sawmills and vital to their sustainability.  This also ensures forest landowners that forest products flow to the highest value – sawlogs to sawmills with pulpwood and by-products coming to Northern Pulp.

This model works and supports many rural communities. The challenge for Northern Pulp is that the wood cost component of our overall pulp cost is too high. Northern Pulp currently pays $30 million more a year for its fibre than other equivalent sized pulp mills in Canada. The current situation of our high cost wood is a symptom of an imbalanced forest industry. This imbalance is being felt throughout the forest industry. Additional Crown allocation helps correct the imbalance and reduce our costs – allowing us to be competitive with other Canadian mills. 

A secure fibre supply is critical for ongoing capital investment and the industry’s long-term sustainability. Growing the forests for the future is important to Northern Pulp – it is the reason why we have our seedling nursery and tree orchard in Debert, which can produce more than 10 million seedlings a year. On an annual basis we plant more than 3.5 million seedlings and pre-commercial thin or manually weed more than 3,500 hectares of young forests on lands managed by Northern Pulp.

We know we’re not perfect. We have environmental issues and practices that need to get better and we need to improve our productivity and cost structure so we can remain competitive with other pulp mills in a global market. The men and women at the mill and in our fibre group are doing their best to achieve this, and success will require the support and participation of many.

The new provincial government is currently reviewing how the provinces uses business incentives – all we request is that whatever is decided in this regard, Northern Pulp receives the same consideration as other industries in Nova Scotia.

It’s true that the forest industry has faced challenges. Those challenges have forced us to re-invent ourselves to take part in a new economy. Today at Northern Pulp, we are optimistic about the future, and know that our employees, suppliers and stakeholders share that optimism. We look forward to working with all Nova Scotians to face our challenges and build a new economy that includes a strong forest industry.

Pedro Chang

Deputy CEO

Paper Excellence Canada