Tembec CEO says he expects high lumber prices will prevent layoffs -- for now
The Tembec logo is seen at the forest products manufacturer's annual meeting in Montreal, Thursday, January 26, 2017. (Paul Chiasson / THE CANADIAN PRESS)
MONTREAL -- The CEO of one of Quebec's chief forestry companies says he doesn't think job losses are in the offing for his company, at least in the short term, despite the imposition of U.S. softwood lumber duties.
James Lopez, head of Tembec, says he believes higher lumber prices will offset the 19.88 per cent preliminary duty that took effect Monday against the Montreal-based firm on its softwood shipments to the U.S.
"My forecast right now has no layoffs in it," Lopez said in an interview Tuesday from New York City.
He said the situation could change, however, especially in Quebec, if prices fall during the seasonal end to the home construction season. The province has the highest wood costs in the country.
"If you did it purely by the numbers, you would say that mills in Quebec are at higher risk than anywhere else in Canada," he said.
Unifor, which represents represents 24,000 forestry workers at 134 companies, fears duties will hurt 25,000 Canadian jobs, punishing small communities dependent on the forest industry.
With the sale of its B.C. lumber assets, Tembec (TSX:TMB) said it's less exposed to lumber and in a better financial position than it was during the last softwood lumber dispute in 2001.
"I don't like it but it's going to be much less onerous on the company's cash flows and balance sheet now versus the last time around," Lopez said.
Tembec anticipates anti-dumping charges to be announced June 23 will be lower than the preliminary duties.
The company plans to pay $9 million in retroactive duties, which Lopez said he expects to recover early next year. Another $2.5 million per month will be paid in countervailing duties, Tembec said. It added that it expects about half of the costs of the duties will be passed on to customers.
Earlier Tuesday, Tembec reported earnings of $24 million or 24 cents per share in the quarter ended March 25, down slightly from its profit of $27 million or 27 cents per share a year earlier.
Sales in the company's second quarter rose slightly to $387 million, with more than 70 per cent from paper, pulp and specialty cellulose pulp.