Temiscaming, Quebec, Canada, 13 February 2009 – Tembec today announced a series of initiatives aimed at cost reduction during a period of significant economic decline. The actions announced specifically focused on reducing overhead costs (SG&A), and include:
- a reduction of approximately 100 staff positions, through a combination of terminations, layoffs, and retirements;
- a salary freeze for 2009 affecting management and staff personnel;
- a reduction in travel and related expenses; and
- a review of the company’s participation in all associations and research institutes.
“The actions announced today are extraordinary measures for our company. However, these are extraordinary times for the economy generally, and for forest products in particular,” said Jim Lopez, president and CEO. “The recapitalization of our company completed a year ago gave us a strong balance sheet and liquidity. We intend to take the steps necessary to preserve that position, and to allow Tembec to weather this economic storm. We regret the impact of these actions on affected employees and their families.”
These initiatives follow earlier temporary shutdowns of facilities in four Canadian provinces and in France that were taken in response to depressed market conditions for lumber, pulp, and newsprint. At the time these shutdowns were announced, the company indicated it had taken the extraordinary measure of laying off staff and hourly personnel.
The company also has undertaken a supplier cost reduction initiative aimed at targetting a 10% reduction from material suppliers and a 20% reduction from service suppliers. “We are extremely pleased with the response from the vast majority of our suppliers. They are aware of the challenges the current economic situation is imposing on all of us, and have responded accordingly,” said Lopez.
The company also announced the permanent closure of its hardwood sawmill located in Mattawa, Ontario. The sawmill, which has been idled since July 2008, had employed 59 people. The closing reflects the poor market conditions and the financial performance of the mill.
Tembec is a large, diversified, and integrated forest products company that is a global leader in sustainable forest management practices. With operations principally located in North America and in France, the company employs approximately 7000 people. Tembec’s common shares are listed on the Toronto Stock Exchange under the symbol TMB and warrants under TMB.WT. Additional information on Tembec is available at www.tembec.com.