Tembec Implements Cost Reduction Measures
Feb. 13, 2009 (Press Release)- Tembec today announced a series of initiatives aimed at cost reduction during a period of significant economic decline that has affected virtually every sector and every region of the world. The actions announced specifically focused on reducing overhead costs (SG&A), and include:
- a reduction of approximately 100 staff positions, being achieved
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
- a review of the Company's participation in all associations and
"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 & 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 as well as hourly personnel.
The Company has also 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 Mr. 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.