B.C. government protects pension money at Catalyst Paper operations

The Catalyst paper and pulp mill in Crofton, B.C. is shown in this undated file photo.

VICTORIA -- Looming forest industry tariff increases and deteriorating trade relations between Canada and United States prompted British Columbia's government to protect the pensions of retirees and workers at three Catalyst Paper pulp mills, Premier John Horgan said Friday.

Horgan said he is not aware of any impending closure or sale at Catalyst pulp operations in Powell River, Port Alberni or Crofton, but the government made the move in response to the company's sale of its U.S.-based forest companies last month and the prospect of higher lumber tariffs later this summer.

"This was a pre-emptive step," he said. "We continue to work with Catalyst to try and find solutions to their operating challenges as well as the trade issues brought forward by the U.S. Today, we want to make sure that pensioners knew and workers knew the government was taking steps to make sure Catalyst understood they had an obligation to their workers, present and past."

The company completed the sale of its U.S. operations last month in a deal worth US$175 million.

Catalyst and the province's former B.C. Liberal government agreed in 2012 to give the company 16 years to pay off pension funding shortfalls. Employee unions also agreed to wage concessions at the Port Alberni, Powell River and Crofton mills.

Horgan said the government has now changed the pension relief regulation so that Catalyst would be required to immediately cover the pension shortfall upon a sale or closure, protecting the pensions of 1,000 retired employees and 1,500 workers.

In a statement issued Friday, Catalyst CEO Ned Dwyer said they understand the company's operations are critical to its employees, pensioners, suppliers and communities.

"With strong pulp and paper prices we have been able to withstand the onerous U.S. duties we face, but the industry requires real solutions to address the ongoing challenges in B.C. with respect to fibre, electricity costs and other competitiveness issues."

A B.C. government statement said U.S.-Canada trade relations have deteriorated and provincial officials now anticipate tariffs as high as 28 per cent on Catalyst's paper products by August.

Catalyst's combined operations in B.C. generate more than $2 billion in annual economic activity and are key contributors to the local economies of Vancouver Island, Powell River and Metro Vancouver.