Unionized workers at beleaguered Catalyst Paper Corp. (TSX:CTL) have agreed to more than $18 million in wage and benefit cuts to help save the company from bankruptcy.
Catalyst has signed five-year agreements with two unions representing more than 1,000 mill workers at pulp and paper mills in Crofton, Port Alberni and Powell River.
The mills have been threatened with closure. The company posted a $1 billion loss in 2011 and is now under creditor protection, while it restructures.
Catalyst announced Monday it has concluded agreements with the Communications, Energy and Paperworkers Union of Canada (CEP) locals 1, 76, 592, 686 and 1132 – which represent 700 employees – as well as the Pulp, Paper and Woodworkers Union of Canada (PPWC) local 2, which represents 380 workers at the Crofton pulp mill.
The new contracts take effect April 30 and expire April 30, 2017.
Workers have agreed to a 10% hourly wage cut, as well as cuts to vacation and health benefits. They have also agreed to new work rules needed to put the company on a more competitive footing. The cutbacks are predicted to save the company $18 million to $20 million a year.
"Approval of the new labour agreements lets everyone know that the people who make up Catalyst are taking the actions necessary to save jobs and ensure we have a viable and competitive business for the future," said Catalyst CEO Kevin Clarke.
"We appreciate there is still an enormous amount of work to do to complete the restructuring plan that will enable the company to exit creditor protection on solid footing going forward."
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