Post by elkoecho on Jan 31, 2009 3:13:54 GMT -7
Tembec to slash costs by 25%, or C$25M/year, through staff cuts, additional mill downtime to address 30% decline in sales volume
Jan 30, 2009 - Forestweb
LOS ANGELES, January 30, 2009 (Forestweb) - Tembec Inc. will reduce its selling, general and administrative costs by roughly 25%, or C$25 million (US$20 million) per year, to cope with a 30% drop in sales volume, the Toronto Sun reported Jan. 30.
James Lopez, CEO of the Montreal-based company, said the company would need to take aggressive action to bring fixed costs in line with sales volumes. Although details were not announced, Tembec said it would increase mill downtime and cut administrative staff to meet its cost-containment goals.
The company is also examining legal expenses, auditors, consultants and travel, looking for places to cut. Executive bonuses will also be reduced, but the company would not reveal the demands being made during union contract negotiations.
Tembec recently demanded that its suppliers reduce their costs by 10% to 20% to help it survive. Lopez said suppliers that did not comply would be replaced, even at the same cost.
About 2,000 of Tembec's 7,000 employees in Canada and France are unemployed or about to be laid off.
Lopez said the company was surprised by the drastic decline in the global pulp market, calling it "profound."
Forest industry analyst Paul Quinn of RBC Capital Markets said the situation would worsen in the coming months because Tembec would no longer be able to count on reduced currency to offset the drop-off in volumes and prices. Falling pulp prices will catch up with the company, he said.
Lopez said the Tembec is pleased about the $170 million included the federal budget for long-term market development and R&D but disappointed about its exclusion of short-term initiatives, such as refundable R&D tax credits for forest industry companies unable to pay taxes.
Jan 30, 2009 - Forestweb
LOS ANGELES, January 30, 2009 (Forestweb) - Tembec Inc. will reduce its selling, general and administrative costs by roughly 25%, or C$25 million (US$20 million) per year, to cope with a 30% drop in sales volume, the Toronto Sun reported Jan. 30.
James Lopez, CEO of the Montreal-based company, said the company would need to take aggressive action to bring fixed costs in line with sales volumes. Although details were not announced, Tembec said it would increase mill downtime and cut administrative staff to meet its cost-containment goals.
The company is also examining legal expenses, auditors, consultants and travel, looking for places to cut. Executive bonuses will also be reduced, but the company would not reveal the demands being made during union contract negotiations.
Tembec recently demanded that its suppliers reduce their costs by 10% to 20% to help it survive. Lopez said suppliers that did not comply would be replaced, even at the same cost.
About 2,000 of Tembec's 7,000 employees in Canada and France are unemployed or about to be laid off.
Lopez said the company was surprised by the drastic decline in the global pulp market, calling it "profound."
Forest industry analyst Paul Quinn of RBC Capital Markets said the situation would worsen in the coming months because Tembec would no longer be able to count on reduced currency to offset the drop-off in volumes and prices. Falling pulp prices will catch up with the company, he said.
Lopez said the Tembec is pleased about the $170 million included the federal budget for long-term market development and R&D but disappointed about its exclusion of short-term initiatives, such as refundable R&D tax credits for forest industry companies unable to pay taxes.