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Tembec Takes Downtime to Adjust to Market Conditions
Temiscaming, Quebec, Canada, 03 February 2009 – Tembec today announced a series of market-related shutdowns affecting all of its British Columbia facilities, its newsprint mill in Manitoba, and one additional sawmill in Ontario.

In British Columbia, the Canal Flats and Elko sawmills, and the Cranbrook finger joint facility, will shut down for approximately eight weeks starting 09 February 2009. The softwood Kraft pulp mill in Skookumchuck will cease operating on 23 February for a six-week period. The high yield pulp mill in Chetwynd was idled on 02 February and will remain down until market conditions support a resumption of operations. The combined curtailments will affect approximately 975 employees. In addition, the newsprint mill in Pine Falls, Manitoba, will shut down for two weeks, effective 10 February, affecting approximately 300 employees. The company’s Hearst, Ontario, sawmill, which employs roughly 125 employees, will shut down for a six-week period beginning on 09 February.

These shutdowns are in response to depressed markets for lumber, pulp, and newsprint. Lumber markets and prices continue to be negatively affected by the ongoing housing downturn in the United States. Pulp markets have been affected by the global economic slowdown and the related effect on packaging and other pulp consuming products. The North American newsprint market continues to experience a structural decline, compounded by the effect of the current recession on newspaper advertising.

These outages will affect staff and hourly personnel. Employees at all affected sites have been informed of the company’s decision. The company also indicated it will be reviewing fiber supply and procurement needs as a result of these shutdowns, and will respond accordingly.

“The extensive idlings announced today follow a careful review of current and forecasted market conditions. As difficult as these decisions may be for employees, contractors and communities, they are necessary to minimize losses, manage cash, and reduce inventories,” said Jim Lopez, president and chief executive officer. “We will obviously continue to monitor market conditions closely and will manage operating rates accordingly.”

The Canal Flats and Elko sawmills have annual capacities of 180,000 mbf and  270,000 mbf, respectively, while the Cranbrook facility produces 25,000 mbf of finger jointed lumber per year. The Hearst sawmill has an annual capacity of 160,000 mbf. The Skookumchuck kraft mill produces 270,000 metric tons of softwood pulp per year, and the high yield pulp mill in Chetwynd has an annual capacity of 240,000 metric tons of hardwood pulp. The Pine Falls newsprint facility produces 185,000 metric tons annually.

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.

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