Kenora Forest Products Sold

September 21, 2020

By: The Working Forest Staff

KENORAONLINE.COM –Unifor spokesman Steve Boon says he’s looking forward to sitting down with the new owners, in order to talk about plans for a restart.

“This is great news for Kenora and 125 Unifor members at the mill, and we look forward to meeting with our members and then releasing more information, once we meet with representatives with Itasca Capital,” he said.

A numbered company 1347 LLC operating under Itasca Capital announced the purchase of Kenora Forest Products for $11.5 million. Itasca Capital also added Rick Doman of Eacom and Doman Industries to its board, along with Paul Rivett. The company is planning to change their name to GreenFirst Forest Products.

Mill workers were laid off about a year ago, and a labour adjustment centre had just opened on Matheson Street earlier this month. Itasca noted the sawmill has access to up to 450,000 cubic meters per year of high-quality, northern spruce, pine, fir timber, and it’s equipped to produce up to 100 million board feet per year on two shifts. The new owners added they expect the sawmill could be optimized to achieve a production capacity of 200 million board feet.

The new owners noted the sawmill is located near major transportation routes for Canadian markets, as well as key buyers in Minneapolis, Chicago, St. Louis, and Dallas. 

However, access to those American markets has been a sore point, as American tariffs on Canadian softwood contributed to the idling of Kenora Forest Products and the bankruptcy of Prendiville Industries.

The last softwood lumber agreement expired in 2015, and the Ontario Forest Industry Association says the tariffs imposed are simply meant to starve companies of cash, a tactic used by Americans in previous negotiations.

Kenora MP Eric Melillo said he was very pleased to see the sale moving forward.

“From our federal level, our party will keep working for the forest products sector and work to secure some equitable trade agreements with our partners,” said Melillo earlier today.

Hopes rose, when the union signed a six-year deal in August of 2014 calling for an 18 percent increase, during the life of the contract. A year later, skilled workers received an increase, as the company moved to attract and retain staff for the start-up. Their total pay increased by over 58 percent to $41.79 an hour, and to the top of eastern Canada’s sawmill industry.

However, production at the sawmill didn’t actually restart until the Family Day long weekend in 2016, after it had been idle for eight years during the forestry crisis.

Prendiville Industries had invested about $22 million in upgrades, before the restart. Owners spent another $4 million after a fire in the drying kilns in December of 2017.

American President Donald Trump announced 20 percent tariffs in April of 2017.

A $100 million federal aid package was announced in 2017, but the industry association said it was misinformation since it didn’t allow companies to borrow against money held at the border during the tariff dispute.

A new free trade agreement that went into effect July 1, the CUSMA, but it isn’t expected to provide any help for the softwood industry. 

When they declared bankruptcy last December, Kenora Forest Products had debts of just under $30 million, including about $10 million in disputed tariffs at the American border. 

Estimates filed with the court said the assets had a book value of close to $50 million, but court documents noted the possible market value might be less. 

Also known as the stud mill, for its production of lumber for framing in wood construction, Prendiville Industries acquired the mill in 1994. Eacom was in Kenora last October for recruiting, saying potential staff could be used in their other operations, as well. 

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