The low Canadian dollar is providing a boost for Corner Brook Pulp and Paper, but its parent company says profits are not soaring.
Kruger Inc. vice-president Daniel Archambault said newsprint is sold in U.S. dollars, so the weak loonie is positive for exporters like newsprint companies.
"The Canadian dollar is right now a positive factor for us. However, it does not really resolve the structural issue of the newsprint market," Archambault told CBC's Corner Brook Morning Show.
He said that demand for newsprint dropped by more than 12 per cent on world markets last year, which forced prices down, wiping out the exchange rate advantage.
"At the end of 2015, our revenue in Canadian dollars were about the same that they were when the dollar was at parity, because the price went down drastically while the exchange went on the right side," said Archambault.
"So that's what we're facing. It's a challenging market."
Archambault said the price will eventually stabilize but the low dollar does give the mill some breathing room.
Corner Brook Pulp and Paper's primary markets are in the U.S. and South America, with other product sold to India and elsewhere around the globe.
Archambault said continuing to produce a high-quality product that newspapers want and reducing manufacturing costs are both key to remaining competitive.
"So when we sell a tonne of newsprint on the world market, you know, we have a positive margin on the end."
Archambault said the low cost of oil has also had a positive impact.
The companies shipping costs are lower, and its machinery uses diesel, which also lowers the wood costs.
Mill operation costs, however, remain the same.
"The mill, as its day to day operation, other than for its moving equipment doesn't use any bunker, we're generating our steam from bio-mass and a bit of recycled oil that we buy on the market … the low price of oil doesn't have really an impact on the mill itself," he said.
To keep the Corner Brook mill competitive, Archambault said they will keep the mill producing newsprint while trying to increase the value they offer to their customers.
He said this mill has an advantage because of the integration with Deer Lake Power, which according to the company, produces almost 75 per cent of the mill's power requirements.
"We've invested, you know, monies and time to improve our quality, have a new grade, new basis weight to meet the market demand and maybe differentiate ourselves from our competition," said Archambault.
"For example, we're introducing a very lightweight sheet that is an advantage on the printer because it's going to give him a very good printing quality but it's going to reduce its cost because on the per tonne basis, he's going to have a lot more yardage of newsprint."
Over the years the mill has had to tighten up its operations and workers have made concessions to keep things going, but Archambault said its employees relations are "moving ahead as they should be".
Archambault concluded that a company that can produce a low cost, high quality product will stay in business.
"Newsprint, when you look at the technology today is a product of the past, but you know there will always be newsprint consumed in the world for many, many years to come — there'll be less but there'll be some."
Source : cbc.ca