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A century on the Coast: Part nine

Five years ago no one with a crystal ball would have predicted the present at Howe Sound Pulp and Paper (HSPP). Five years ago newspapers were still going strong, the Canadian dollar was worth about $0.

Five years ago no one with a crystal ball would have predicted the present at Howe Sound Pulp and Paper (HSPP).

Five years ago newspapers were still going strong, the Canadian dollar was worth about $0.82 American and the mill was the largest non-government employer on the Sunshine Coast.

Fast forward to 2009 newspapers have declined in both page counts and circulation. The Japanese newsprint market has completely dried up. The Canadian dollar is hovering at $1 American. And the mill, although reduced in work force, is still the largest non-government employer on the Coast.

Mac Palmiere is the president and CEO of HSPP. Recently he talked to Coast Reporter about the current status of the mill and where he sees it going in the next 10 years.

A chemical engineer with a degree from the University of Calgary, one of the previous highlights of Palmiere's career was being one of six engineers chosen to work on the Alberta-Pacific project in 1988. The project was launched by the Alberta government in 1988. During the time Palmiere worked on this project, one of the mills he visited was HSPP during its modernization.

Another component Palmiere was familiar with long before he came to HSPP was the work of Al Strang, current manager, environment and external relations at the mill. In those early days of environmental awareness, Palmiere said Strang was seen as a leader in his field for both his commitment to environmental protection and his high standards.

In 2005, Palmiere joined Canfor (50 per cent owner in HSPP) as the regional manager in solid wood products.

A couple of years later, Canfor saw an opportunity for Palmiere at the local mill.

"I met with the board of HSPP and agreed to come and do my best," he said.

That was February 2008; by March 1 he was in the driver's seat. And later that year, with the global economic downturn, the challenges began in earnest.

"First we lost pulp and then paper products," he explained.

The expenses needed to be slashed and new markets and products found.

"It's been tough on the people here," he added. "With the currency strength and market turmoil, it's been very hard."

The mill, he said was designed to run not to sit idle, and the shutdowns were difficult for everyone at the mill, employees and employers alike.

Since the start of this year, the pulp market has shown some improvement. In the first quarter, Palmiere said there was an increase every month. Now another surge in the Canadian dollar is again eroding those gains.

The president has nothing but praise for the reaction to changes being made at the mill.

"We've had significant organizational changes, and I'm very pleased with the organization for the amount of change we've thrown at them. They [the employees] may not like it, but they understand [why it's necessary]," Palmiere explained.

The pulp market still looks favourable; according to Palmiere world inventory is very low.

"This bodes well for the foreseeable future, well into next year," he said.

With the loss of the Japanese market, HSPP has converted its paper to North American standards with signs of some improvement in the market. The mill is also making new paper products, too. They're converting to high-grade paper, high brightness such as you see in newspaper inserts. HSPP can and is producing directory grade paper such as is used in telephone directories. The market is promising on all these goods, and the customers like it, Palmiere said.

"Our objective is to diversify away from standard grade newsprint, and we have the machinery to do it," he declared.

The key to survival, in his mind, is managing the market.

"We're doing trials left, right and centre. Down the road I'm encouraged by [customer reaction]."

Another bright spot on the horizon is federal money to develop green energy products.

"With pulp, paper and power we'll have a three-legged stool instead of a two-legged stool. So that will make us a lot more stable," he noted. "People are worried [about the mill's future] and rightly so, but I'm encouraged by what I see in the long run," Palmiere shared.

He sees the next six to nine months as tough ones.

"It's the other half of the hurricane to go through. Once we get the paper aspect and the power project in place, I think HSPP has a good future. I firmly believe that," he said.

The last year has been gruelling for all associated with the mill. Palmiere likens it to a rodeo ride.

"This is like going to ride a bull, but there's no eight-second buzzer," he said.

He anticipates that after losing about 20 per cent of the work force to layoffs this year, 2010 should see some small gains.

"Next year we're budgeting more like 450 (up from the current 440 employees). So we do see some jobs coming back," he said.

The key, he said, is to get the paper machine running at full capacity. He thinks that will take another year.

"We have another nine months of hard work and then we'll improve," he stated.

In 10 years time, he sees the mill as still a viable business on the Sunshine Coast. He predicts that the pulp side will continue to be a good business both globally and at home. The paper side will continue to be a challenge moving forward.

"We're going to have to be very cost effective," he stressed.

He predicts the power business, once in place, will continue well into the mill's second century. Like many at the mill he rues that the many economic changes came during HSPP's centennial year.

"We're working hard just to survive. We'll get through this and then there'll be a celebration. We'll be a different business, but we'll still be there thriving while others aren't," he promised.