The B.C. government moved Friday to protect pension benefits of salaried retirees and workers at Catalyst Paper in case the company is forced to take drastic action in the face of steep U.S. tariffs.
The government has changed pension-relief regulations so that Catalyst would be required to immediately cover any pension shortfall if the company closes or sells mills at Port Alberni, Crofton and Powell River.
Premier John Horgan said in an interview that the province began looking for ways to safeguard about 1,500 workers and nearly 1,000 pensioners after Catalyst sold off its U.S. assets in June.
“We passed an order in council [Friday] morning that would ensure that pensioners — current and future — were not put at the bottom of the list … but were in fact a high priority in any sale or restructuring,” he said.
“This is a signal to workers past and present that they can sleep easy, that should we not be able to find resolution for Catalyst, that their pension rights will be secure.”
The average company pension for salaried employees is less than $20,000 a year, the government said.
The cabinet decision modifies the relief that was granted Catalyst in 2012 when it filed for protection from creditors. At the time, the former Liberal government amended a regulation, giving the company more time to pay off a pension funding shortfall estimated at $74 million. Employee unions also agreed to wage concessions.
The company was allowed 16 years to cover the shortfall “with a balloon payment to pay off that solvency deficiency by June 30, 2028,” the government said in a statement.
Under the changes announced Friday, the pension shortfall will be payable immediately if Catalyst sells its assets or gets pushed into bankruptcy by looming U.S. tariffs.
B.C. trade officials expect those tariffs could hit 28.5 per cent by early August.
If there are no sales or filings, the exemption continues as it has since 2012.
Ned Dwyer, Catalyst’s president and chief executive officer, said in a statement that the company understands that its operations are critical to employees, pensioners, suppliers and communities.
“With strong pulp and paper prices, we have been able to withstand the onerous U.S. duties we face, but the industry requires real solutions to address the ongoing challenges in B.C. with respect to fibre, electricity costs and other competiveness issues,” he said.
Horgan said the government remains committed to dealing with those issues, protecting the long-term viability of Catalyst and standing with the federal government against punitive U.S. trade actions.
He said the regulation change is simply a reminder to the company of its obligations to workers and retirees.
“It wasn’t a threat or intimidation,” he said. “It was: ‘This is how it should be. These are your workers. They’ve made the company. They’ve kept the company going. And they need to be considered going forward.’
“And I believe that’s the responsible way for the company to respond.”
Gary McCaig, 70, of the Catalyst Salaried Employees and Pensioners group, said it was positive news for two reasons. “The first is that the government is going to protect pensions and the other is that they’re going to try to work with Catalyst to help them withstand some of the current blows that are being struck against them, particularly by tariffs.”
Port Alberni Mayor Mike Ruttan said the pensions of salaried workers are low enough as it is. “In the event that there’s another bankruptcy or there is a sale, those pensions need to be protected.”
North Cowichan Mayor Jon Lefebure, whose jurisdiction includes the Crofton mill, said he would hate to see a mill go under and leave pensioners short. “I think that would be a terrible situation,” he said.
“I think in the longer run we need to be very careful about the conditions that could force the mill to close, which is tariffs and lack of fibre supply.”
Horgan said the government has been in negotiations with Catalyst since April after the U.S. decided to levy heavy duties on exports of newsprint, book publishing and printing papers.
“What we all want — company, community and government — is to find a way forward, to stand together against the tariffs and then to address the challenges around fibre,” he said.
