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Tembec Negotialtions Stall; Employees Locked Out at Pine Falls Mill
Temiscaming, Quebec, Canada, 01 September 2009 – Tembec today confirmed that it has locked out employees at its Pine Falls newsprint mill following a failure to reach a new collective agreement. Site management and mill employees worked closely to ensure that the mill was shut down in a safe and environmentally sound manner.

The company was seeking changes in the collective agreement that would have resulted in improvement in the site’s cost competitiveness necessary to allow it to meet challenges created by the profound structural change in the demand for newsprint. Tembec indicated that it had met with local and regional representatives of the United Steelworkers (USW) and the Canadian Office and Professional Employees Union earlier in August and again last week, in the presence of a Ministry of Labour conciliator. The meetings last week were with a group that included two senior USW representatives, one of whom was from the USW Vancouver offices. Despite providing the union representatives with requested information related to the mill’s financial position, and despite having clearly set out the need for constructive change that would lead to improved costs and viability, management determined that the USW team appeared to lack the sense of urgency to seriously engage in negotiating.

“The newsprint industry is in the most challenging period it has ever faced. While current pricing levels and the higher valued Canadian dollar have aggravated this situation, the principal and critical issue is the dramatic oversupply of newsprint relative to current and foreseen demand,” said Chris Black, executive vice president and president of the Paper Group. “Simply put, there will be additional mill closures and sites must be cost competitive in order to survive,” he said.

“Tembec has an overall strategy for improving the competitive position of Pine Falls, a critical element of which is to achieve an immediate and significant reduction in labor cost per [metric] ton produced. However, it appears that serious negotiation on the critical cost issues will not be allowed to occur,” concluded Black.

The company indicated that it is prepared to return to the bargaining table whenever the USW advises that it is prepared to enter into serious negotiation on the key issues.

Tembec is a large, diversified and integrated forest products company and a global leader in sustainable forest management practices. The company’s principal operations are located in Canada and France. 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.


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