Great Lakes Paper
Encyclopedia
The Great Lakes Paper Company was the operator of the largest and most modern pulp and paper manufacturing facility in the world. The Company employed over 4,000 in Northern Ontario, starting in 1924 as a pulp mill at Fort William, Ontario
(now Thunder Bay
, Ontario
Canada
). Great Lakes had a highly developed social network within the company, including a children's Christmas party held at a local arena, and an annual picnic held at a local park, as well as many sports teams and other social groups.
Great Lakes fell victim to trends in the pulp and paper industry in Northern Ontario over the past 15-20 years. Factors in the decline of Great Lakes and the pulp and paper industry in general included trends in advertising, electronic data transmission and storage and the Internet, all of which continue to have adverse effects on traditional print media. Newspaper, magazine and catalog publishing customers increasingly use other forms of media and advertising and electronic data transmission and storage, including television and the Internet, instead of paper products. North American newsprint demand has been in decline for several (annual declines of 5.6% in 2005, 6.1% in 2006, 10.3% in 2007, 11.2% in 2008 and 25.3% in 2009). Forecasts indicate that these declines in newsprint demand could continue for several years.
As well, negative impacts on the survival of the Company included increases in global newsprint capacity, particularly in China and Europe, which resulted in lower prices, volumes or both for the Canadian industry's exported products.
The relationship between industry supply and demand for forest products, rather than changes in the cost of raw materials, determines the industry’s ability to increase prices. Consequently, the industry has been unable to pass along increases in operating costs to its customers.
The major factors contributing to the ultimate merger and demise of the Company are:
• Energy prices, particularly for electricity, natural gas and fuel oil, which have been volatile in recent years.
• Wood fiber costs--wood fiber is the principal raw material used in the business. The primary source for wood fiber is timber. Environmental litigation and regulatory developments have caused significant reductions in the amount of timber available for commercial harvest in Canada. The Province of Ontario has been reluctant to approve new cutting rights pursuant to the Company’s forest licenses and forest management agreements. Legislation and litigation advanced by Aboriginal groups and litigation concerning the use of timberlands, the protection of endangered species, the promotion of forest biodiversity and the response to and prevention of catastrophic wildfires have also affected timber supplies.
Control of the Great Lakes Paper, a long-standing publicly owned company changed over the years and in 1974 was acquired by Canadian Pacific Limited
("CP"). CP changed the Company's name to Great Lakes Forest Products. It was later amalgamated with Canadian International Paper Company
becoming Canadian Pacific Forest Products and later spun off as Avenor. In 1998 the Company was acquired by Bowater
becoming Bowater Forest Products
. In 2007 Bowater and Abitibi-Consolidated
merged forming AbitibiBowater
.
In 2009 the newsprint portion of the Thunder Bay plant was idled indefinitely leaving only one line of the kraft mill operating and forcing the layoffs of several hundred employees. On April 16, 2009 Bowater filed for bankruptcy protection in the United States and underwent a restructuring. AbitibiBowater now trades as an over-the-counter stock. In February 2010, the largest remaining paper machine (#5) was restarted. In addition, the company renegotiated labor agreements; resized the workforce; rolled out a wage reduction across the woodlands operations; and renegotiated its power agreement. The combined changes resulted in a cash cost savings at the mill of over $150 per ton and AbitibiBowater believes Thunder Bay is now one of the lowest cash cost mills in the industry.
Fort William, Ontario
Fort William was a city in Northern Ontario, located on the Kaministiquia River, at its entrance to Lake Superior. It amalgamated with Port Arthur and the townships of Neebing and McIntyre to form the city of Thunder Bay in January 1970. Ever since then it has been the largest city in Northwestern...
(now Thunder Bay
Thunder Bay
-In Canada:Thunder Bay is the name of three places in the province of Ontario, Canada along Lake Superior:*Thunder Bay District, Ontario, a district in Northwestern Ontario*Thunder Bay, a city in Thunder Bay District*Thunder Bay, Unorganized, Ontario...
, Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
). Great Lakes had a highly developed social network within the company, including a children's Christmas party held at a local arena, and an annual picnic held at a local park, as well as many sports teams and other social groups.
Great Lakes fell victim to trends in the pulp and paper industry in Northern Ontario over the past 15-20 years. Factors in the decline of Great Lakes and the pulp and paper industry in general included trends in advertising, electronic data transmission and storage and the Internet, all of which continue to have adverse effects on traditional print media. Newspaper, magazine and catalog publishing customers increasingly use other forms of media and advertising and electronic data transmission and storage, including television and the Internet, instead of paper products. North American newsprint demand has been in decline for several (annual declines of 5.6% in 2005, 6.1% in 2006, 10.3% in 2007, 11.2% in 2008 and 25.3% in 2009). Forecasts indicate that these declines in newsprint demand could continue for several years.
As well, negative impacts on the survival of the Company included increases in global newsprint capacity, particularly in China and Europe, which resulted in lower prices, volumes or both for the Canadian industry's exported products.
The relationship between industry supply and demand for forest products, rather than changes in the cost of raw materials, determines the industry’s ability to increase prices. Consequently, the industry has been unable to pass along increases in operating costs to its customers.
The major factors contributing to the ultimate merger and demise of the Company are:
• Energy prices, particularly for electricity, natural gas and fuel oil, which have been volatile in recent years.
• Wood fiber costs--wood fiber is the principal raw material used in the business. The primary source for wood fiber is timber. Environmental litigation and regulatory developments have caused significant reductions in the amount of timber available for commercial harvest in Canada. The Province of Ontario has been reluctant to approve new cutting rights pursuant to the Company’s forest licenses and forest management agreements. Legislation and litigation advanced by Aboriginal groups and litigation concerning the use of timberlands, the protection of endangered species, the promotion of forest biodiversity and the response to and prevention of catastrophic wildfires have also affected timber supplies.
Control of the Great Lakes Paper, a long-standing publicly owned company changed over the years and in 1974 was acquired by Canadian Pacific Limited
Canadian Pacific Limited
Canadian Pacific Limited was created in 1971 to own properties formerly owned by Canadian Pacific Railway, a transportation and mining giant in Canada...
("CP"). CP changed the Company's name to Great Lakes Forest Products. It was later amalgamated with Canadian International Paper Company
Canadian International Paper Company
The Canadian International Paper Company was a Montreal-based forest products company, a former subsidiary of International Paper. It was originally formed as the St. Maurice Lumber Company in 1919 but was renamed in 1925...
becoming Canadian Pacific Forest Products and later spun off as Avenor. In 1998 the Company was acquired by Bowater
Bowater
Bowater was an American pulp and paper company based in Greenville, South Carolina. Bowater had 12 pulp and paper mills in the United States, Canada and South Korea and 13 North American sawmills. It had approximately 10,000 employees...
becoming Bowater Forest Products
Bowater Forest Products
Bowater Forest Products is an AbitibiBowater owned paper mill in Thunder Bay, Ontario. It began as Great Lakes Forest Products in 1898. Investments by American entrepreneurs from Chicago and Minneapolis created one of the largest paper mills in the world on the northern shore of the Kaministiquia...
. In 2007 Bowater and Abitibi-Consolidated
Abitibi-Consolidated
Abitibi Consolidated Inc. was a Canadian pulp and paper company based in Montreal, Quebec. Abitibi-Consolidated was formed from the merger of Abitibi-Price Inc. and Stone Consolidated Corp...
merged forming AbitibiBowater
AbitibiBowater
Resolute Forest Products , formerly known as AbitibiBowater Inc. is a pulp and paper manufacturer headquartered in Montreal, Quebec, Canada, formed by the merger of Bowater and Abitibi-Consolidated, which was announced 29 January 2007...
.
In 2009 the newsprint portion of the Thunder Bay plant was idled indefinitely leaving only one line of the kraft mill operating and forcing the layoffs of several hundred employees. On April 16, 2009 Bowater filed for bankruptcy protection in the United States and underwent a restructuring. AbitibiBowater now trades as an over-the-counter stock. In February 2010, the largest remaining paper machine (#5) was restarted. In addition, the company renegotiated labor agreements; resized the workforce; rolled out a wage reduction across the woodlands operations; and renegotiated its power agreement. The combined changes resulted in a cash cost savings at the mill of over $150 per ton and AbitibiBowater believes Thunder Bay is now one of the lowest cash cost mills in the industry.
Historical Time Line
- July 4, 1919 Organization of Great Lakes Paper Company Limited by Lewis L. Alstead and George A. Seaman; issue of letters patent
- 1920 acquires a proposed mill site adjoining Fort William, Ontario; acquires rights to Black Sturgeon and other timber limits
- 1923 Construction commences on groundwood mill
- 1924 First groundwood produced
- 1927-1929 Backus Brooks Enterprises of MinneapolisEdward Wellington BackusEdward Wellington Backus was a timber baron, dam builder, mill owner, financier, developer of the northern reaches of Minnesota, and president of the Ontario & Minnesota Power Company and Minnesota and Ontario Paper Company...
acquired the company and began erection of a paper mill.
- 1927 Construction commences on newsprint mill with two paper machines. One machine to be largest in world
- 1928 Operation of first newsprint machine "Judy"
- 1929 Operation of second newsprint machine "Jumbo" then the world's largest; mill consdered to be most modern paper manufacturing facility in the world.
- 1931 Enters receivership due to parent company, Ontario-Minnesota entering receivership owing Great Lakes $2-million
- 1935/1936 Group of 25 U.S. publishers purchases company from receiver; Ontario letters patent issued
- 1937 Woods department established reduce costs and establish control over wood delivery
- 1940 Acquires Dog River, Lac des Mille Lacs and English River timber limits
- 1953 Fox family of Montreal attains management control of company; executive offices moves to Fort William
- 1957 Number 3 paper machine "Jill" begins production
- 1958 Completed Paper Machine 4 "Jupiter" built by Black Clawson Company; at the time the largest paper machine in the world
- 1960 Horses no longer used in logging operations
- 1966 "A" Kraft mill begins operation
- 1973 New Kraft pulp mill
- 1974 began to operate a 32-rail car capacity ferry, the Incan Superior, between Thunder Bay and Superior, Wisconsin on Lake Superior. The service ran until 1992
- 1979 Canadian Pacific Investments purchases 54% after Fox family puts shares on market; name changed to Great Lakes Forest Products Ltd. (name changes to reflect company's expansion and diversification -- newsprint, kraft pulp, stud lumber, waferboard; (latter two products no longer manufactured at this location); purchase of Reed Paper in Dryden, Ontario.
- 1988 Canadian Pacific Forest Products Ltd. "CPFP" (result of merger between CIP Inc., Montreal, and Great Lakes Forest Products Ltd., Thunder Bay)
- 1990 Number 5 Paper Machine "Theresa Marie" part of a $500 million expansion/modernization program, was built to replace the now-defunct Paper Machines 1 & 2
- 1994 Avenor Inc. (publicly-owned Company; CP Ltd. no longer majority shareholder: name change was inspired by the Latin root for advantage, meaning "going forward" and from the word, "north." Prior to the merger, Canadian Pacific Ltd. owned CIP and held 54.3% of Great Lakes with the rest owned by public shareholders. In September 1993, Canadian Pacific Ltd. divested itself of its majority ownership by selling all of its 36.7 million common shares in CPFP. Consequent to the sale, the company changed its name to Avenor Inc. Under Avenor, the Thunder Bay site saw the addition of the introduction of recycled fiber into and the rebuild/streamlining of its groundwood operation. A comprehensive modernization program upgraded the facilities to the top ranks of North American mills from both a quality and cost standpoint. Deinking equipment give the facility capacity for 992,000 tpy of newsprint with a recycled fiber content level of 20%.
- 1998 Bowater Pulp and Paper Canada Inc. (through the acquisition of Avenor Inc., July 24, 1998, Bowater became the second largest producer of newsprint in the world and the third largest producer of market pulp in North America)
- 2002 Bowater Canadian Forest Products Inc. January 1, 2002, amalgamation of two of Bowater's subsidiaries, Bowater Pulp and Paper Canada Inc. and Bowater Canadian Forest Products Inc. (formerly Alliance Forest)
- 2007 Bowater Inc. completed combination with Abitibi-Consolidated to become AbitibiBowater on October 29th.
- 2009 AbitibiBowater files for bankruptcy protection in the U.S. and completes a restructuring.