Harmac mill culture 'model for the future'

By Gordon Hamilton, Vancouver Sun
February 26, 2009

The employee-shareholders at Harmac Pacific may have established the new model for the B.C. coastal pulp and paper industry, says Forests Minister Pat Bell.

Bell said in an interview that the jury is still out on Harmac, given the crisis in the forest sector. In the past week alone, a newsprint plant at Campbell River and kraft pulp plant at Crofton have closed indefinitely. Harmac is obviously doing something right, Bell said, considering it was undercapitalized and the plant was considered too old to be competitive when the employee-led group took possession of it Aug. 29.

"We need to take a look at it and see why it is working as well as it is," he said.

"I know that they struggle each and every day, but they have a strong management team and a strong work force.

"They have found ways to create efficiencies. Each and every millworker is always looking at ways to improve the operation. I would hate to bet against a company that has employee ownership in it. I think it is a great model. In some ways, it might be the model for the future."

Investment analyst Kevin Mason, of Equity Research Associates, said in an interview that Harmac appears to have achieved a seismic cultural shift by bringing workers on board in the success or failure of the company. Mason did not believe the mill was sustainable when it restarted, given the costs it faced.

"To their credit, they have made it this far and this is definitely farther than anyone in the industry ever expected they would go. We are only a few innings into the game but it didn't even look like they were going to get up to the plate."

Mason said often it takes a bankruptcy to force the depth of change needed to create a new business model.

"All across Canada we have built economic models that are not sustainable. You just have to look at General Motors.

Mason said the pulp industry has been in GM's place for years without being able to resolve the issue of high production costs.

"In some sense, Harmac has been able to do what (pulp) corporations have wanted to do for a decade or so."

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