modified version of an article published in the journal
Relations, No.732, May 2009.
On 4 December, the AbitibiBowater was announcing the permanent closure of paper mill in Grand Falls-Windsor in Newfoundland, a closure that caused the layoff of 750 workers in a city largely dependent activities of the company. Become currency common in an industry whose development model has become unsustainable, that kind of bad news might not have attracted so much attention if a political reaction was followed two weeks later on December 16, in fact, the Premier of Newfoundland and Labrador, Danny Williams, did pass legislation leading to the expropriation of all assets held by AbitibiBowater in the province, with the exception of the plant affected by the closure. In fact, they are cutting rights in public forests, but especially the hydro-electric power the plant that were the subject of a collective reappropriation through legislation.
Although this measure, which the years of economic and political liberalism have lost the habit, won the Premier of Newfoundland to see confirm his nickname "Danny Chavez", yet she had nothing really "revolutionary" . Indeed, under a contractual agreement in 1905 between the Government of Newfoundland and the Anglo-Newfoundland Development Company, the predecessor of AbitibiBowater, granting the Forest stumpage and damming of rivers was explicitly subject to a requirement for it to operate at least one production unit in the province. In Newfoundland As in Quebec, we know, the historical development of the manufacturing sector has mainly been based on a development strategy combining plant and dam, the internalization of costs of electricity for production companies to establish a comparative advantage across continentale.C east as well as announcing the closure of Grand Falls-Windsor, the last factory run by AbitibiBowater in Newfoundland, the forest had to legally end its economic commitments as well as the agreement, which of time, extinguished their rights to the exploitation of forest and water. " no paper, no power " has reaffirmed the Newfoundland government, determined to retain sovereignty over its natural resources.
However, this reaction was clearly not intended by AbitibiBowater, for whom the closure was part of a strategy to stabilize its financial situation. Hit hard by an industry downturn that its business model has helped to generate, AbitibiBowater has recently found major problems facing liquidity and solvency. With profits down sharply, and a debt of 6.2 $ billion - including $ 1 billion dollars must be repaid by the end of summer, the corporation decided to close plants to reduce its operating costs, and to divest most of its assets " appreciated "by the markets in order to generate new cash. For her, the closure of its plant in Grand Falls-Windsor corresponded well to do two things at once: make savings of fixed costs (salaries and equipment of the industrial complex) and, most importantly, maximize profits from the sale hydroelectric facilities adjacent to the plant. The value of assets circulating in the North American energy that literally exploded in recent years, AbitibiBowater has been in this industry a way out of financial crisis, even if it means breaking the tandem mill - dam that had once made his fortune, but today ' Today was a ball. It is precisely in the name of the opportunities presented by this formula for economic development of its territory as the Newfoundland legislature has cut short the proposed auction of expropriating the dams.
Faced with what appeared to him as a dangerous precedent, AbitibiBowater said that the expropriation violated his rights as an investor, and decided to use the provisions of Chapter 11 of NAFTA to extract financial compensation from the Canadian government. The procedure is now underway, and it is the Harper government will go plead the cause of Newfoundland before the NAFTA tribunal, which is responsible for determining the validity of complaints from AbitibiBowater and to determine the Where appropriate, the amount of the compensation to be paid.
Meanwhile, the forest has signaled its intention to sell several of its dams in Ontario and Quebec. Workers factories around these facilities obviously have reason for concern, insofar as the sale of these assets would mean the end of a supply of electricity at low cost, and therefore also the end of "comparative advantages" of productive units in Quebec. Especially AbitibiBowater will have to deal with financial powers that his problems have attracted like flies to manure in February, the U.S. investment fund Steelhead Partners became the majority shareholder of AbitibiBowater raising its position to 15% of shares held. Like all such funds, the purpose of this shareholder is to maximize the financial value of the company using all possible means short-term, including further lobbying for the company restructures, or liquid dismantle much of its assets. Other closures are expected. The crisis will be long and painful. What the example of Newfoundland has shown is that the dismantling of this model of development of the forestry industry can be an opportunity to "re-nationalization of assets, primarily for the benefit of rural communities. In this, it is a political way out of crisis that is, having the advantage of giving back to society a way reflected on his environment, a path that is yet to come bearing clashes with classes of North American business.
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