Winnipeg Free Press

Winnipeg Free Press (Newspaper) - September 30, 1978, Winnipeg, Manitoba Free press business finance 1 in Winnipeg ban Steak mouse Limimg room i my i Orfin 7 Days a a Folk d p 189 Carlton Holiday inn Pas Plant shaky future Doest worry demand Outlook boosts Manfor breakeven Hope Leifur president of Manitoba forestry resources i would took for some improvement in the Cial perhaps wards the breakeven Point on a Cash by Paul Sullivan Churchill Forest industries is nationally renowned As the biggest financial Skeleton in Manitoba Chi is a household synonymous with Boondoggle and because of its colourful we often tend to forget the forestry Complex that brought Down a government is still around although the name has been tastefully changed to Manitoba forestry resources Man these the Sawmill and pulp and paper Mill that make up Manfor operate a dramatically at the much like any other Mill in North perhaps not like any other Mill with a debt Load six to eight times higher than any other Mill in it cant Hope to begin paying Back the development capital provided by the people of Manitoba for some time to come maybe considering Manors its remarkable that the Mill is operating at its legend now that the Manitoba governments eagerness to build a Northern forestry Complex made it vulnerable to the machinations of a couple of slim Swiss businessmen Alexander Kasser and Oskar they built the but with virtually no financial risk of their by the time it was All the Mani Toba government had paid out million for a Complex Worth no More than million and Kasser had paid himself million too much in consulting the Resul Tant scandal help topple the conservative disaster the unfinished Complex was put into receivership by the new nip government and a major financial and engineering audit was under taken to ascertain the scope of the the commission of inquiry into the Pas forestry and Indus trial Complex was it took three years to Complete its a fascinating study in the Road to hell being paved with Good Intel the Manitoba government has changed hands but the politicians Are still trying to recover some of its lost loot from who is laying Low in prospects of Success Are becoming increasingly Remote with each passing Back at the pulp its business As the chairman of the Board and president of the Crown corporation that runs the Pas Complex is Leifur a Winnipeg lawyer who has been involved in the his tory of Chi since april As director of civil litigation for the attorney generals Hall Grimson got involved about eight months before the Complex was put in i started out As Only one of a number of lawyers involved in some of the Legal aspects of the he said in a recent interview from Manors Winnipeg i didst think for a single moment id become As involved As i have Hallgrimson was named receiver manager to super Vise the running of the Complex for the two years it was in receiver in the govern ment took the assets out of receivership and gave them to a newly formed Crown Manitoba forestry Hallgrimson was named chairman of the Board and president of the Hes still the receiver All the Legal commitments of the Stormy birth of the Complex have yet to be cleared up and Hes still the although the immediate future of the firm is in its no secret this government would like to get out of this Busi to have private Enterprise take the government itself will have to evaluate and decide what to do when and if an offer is it would be improper for me to comment any i can say that to my we dont have anything Concrete at the present old school if the shaky future of Manfor As a Crown corporation bothers Hall he Doest show Hes a member of the old school of civil he started his career under and was on hand when the change to nip Rule took place in now under a conservative government its just full Circle As far Asim con Hallgrimson for five years Hallgrimson has had to ask himself whether the Pas forestry Complex will Ever be a moneymaking opera its a Tough question to based on last years perform the answer appeals to be a simple the 197677 year was the worst Ever for the despite sales of the total loss was a record Mil but figures can be mislead youve got to remember that figure includes depreciation of million and interest of our actual Cash loss was approximately a loss is a part of the answer is due to the fiercely cyclical nature of the pulp and paper in the demand was very great for pulp and paper we had a profit of Mil lion after interest and depreciation were but in the Market slumped and its Only in the last year things have started to to some sex theres nothing we can do about it was a worldwide Phe upswing a More pleasant phenomenon is a virtually unexpected up swing in the world demand for pulp and and a Welcome increase in Manors our sales have also increased this reports i would look for some improve ment in the financial per haps toward the breakeven Point on a Cash although the fiscal year ends it will be the Spring session of the Legisla Ture before the final 197778 Finan Cial picture is released by the gov a number of factors Are respond says for the recent upswing in pulp and paper world inventory of most of it which goes to make was million tons in 1977 this it is Back to nor about million the Manors major competitor on world have finally unloaded huge Stock piles they accumulated after re cession hit the to keep production Levels at pres Lump scandinavian governments subsidized and the stockpiles remained unsold until about six months that situation had to be Back to Normal before recovery took comments although Manfor can Only prod uce unbleached Kraft suit Able for Industrial Cement bags and supermarket Check stand it was nevertheless affected by the scandinavian but its the situation that has had the biggest bearing on the Resur gence of All of Manors pulp about tons is sold in the of the tons of Kraft paper manufactured annual 25 per cent goes to the 20 per cent is sold and 55 per cent is used in Canada to make Check stand bags Manfor is the largest supplier of Check stand bags in the of the 55 million Board feet of lumber manufactured 60 per cent is sold in the the rest in the is Manors major Cus closely tied pulp and paper is closely tied to the state of the Economy and closely follows the i would say in the there is a significant up turn in the and weve found the demand for our product Rise i know economists Are calling for a drop in the whether this will he sufficient to depress the paper Market will be open to i cant foresee anything in the next six insiders in the pulp and paper Trade say that once prices Start to they can expect an 18month climb before they the North american Market Price for pulp averaged about a ton last that Price has increased to in the third Quarter of this and it will increase even More before the 18month Peak is the last time this Hap the Price increased by Over 200 per because the prices Are set in the where most of the Mills Are located and most of the demand those quotes Are in a fact which pleases Hall Grimson no the depressed Dollar has had quite an Impact on the he we have substantial sales in the and that has resulted in a higher return for our Dollar helps us to overcome the advantage that the has in terms of the Cost of for our labor costs aver age 15 per cent higher than in the the conserva Tive government May be Selling Manfor at the time when it is just beginning to generate Revenue for the Public the future docs look quite says Hall whether or not Manfor will be Able to sustain its profitability is another because of the cyclical nature of the most plants tend to make As much Hay As possible when the Sun shines and try to sit tight when the Cycle is in the for a variety of Hallgrimson Manfor is not Welt suited to last out the years of unders Seti the Mill is this is one of our greatest we have a rated capacity of 375 Short tons a Day of pulp and if we were producing 800 tons per it would reduce our unit costs great certainly nobody would build a Mill of our size it would be interesting to know Why Kasser built the Mill so Small perhaps he Felt there want enough Wood but that gets into the realm of Hallgrimson says the Small dwarfed by the Northern Cli also present a theres no question that our saw Mill capacity is perhaps if we had larger we could have another shift and produce 75 Mil lion Board feet a because Manfor is restricted to basically one product in one problems increase during the slump when this Mill is in the whole operation is in there Are a lot of one Mill but this is an Industry where size is important and diversified companies have the perhaps the greatest puzzler is that Manors major product is unbleached pulp when most of the Market opportunities in the world Call for bleached its a huge Market for bleached Hall Grimson i dont know Why Kasser decided against build ing a bleaching maybe he thought it would Cost too much Kasser was a sly old youll have to ask him for the although i doubt youll be Able to find despite its disadvantages Hall Grimson believes that the Pas Complex May become a Saleable commodity in the future for two there is an ample Supply of Manfor can Cut cords a year in and at present Only uses perhaps More the Mill is suit Able for or and might become at Tractive to a company that finds building a new Plant just too sex the Cost of building new Mills has virtually become Treyve stopped making there is one new 800ton a Day Mill opening in Quebec that has Cost with costs so will the Mill Ever give a proper return expansion May be a better someone May see this facility As one that can be expanded into something that could be of greater on the other he this Mill has been Here for seven years and there Hast been a line of people waiting to take it isolation although it May Surprise some of the forestry companies that did not invest in the Hallgrimson believes that the isolation of the Mill is not a great the Only Mill that has an advantage Over us in terms of transportation is one that is built right on the where they can Cut the process and dump the product right on the boat for sex we have Good freight and with the rising value of this freight rates Are going to become less regardless of what the future May bring for present management is going to do its Best to operate As efficiently As Possi Hallgrimson our main priority is to get a higher you begin to sense when demand is such you can sell More than you so you just keep setting it higher until it affects your another priority is to conserve to keep the boilers the Mill goes through the equivalent of 12 million Gallons of Bun Ker a thick unrefined Petroleum a in two the Price of Oil has risen from eights cents to 47 cents a an increase Cost of about a ton on the to Cut the Mill has undertaken a million program to recover virtually All the waste from called hog fuel that will go to feed the in a couple of Manfor Hopes to run its boilers totally on hog comment off Awa failing to grapple with real problems by Wilson free press correspondent Ottawa prime minister Trudeau is visibly engaged in a determined struggle for political survival yet Ironi Cally since his 1 television address he and his ministers have appeared feckless in their approaches to the governments the latest example comes from Jean More rapidly and effectively damaged bythe finance portfolio than any other Man who has held it in the last 30 or 40 years except Walter after his speech this week to the International monetary fund in Wash Chretien declared that the government plans no extraordinary Steps to support the Dollar and insisted once More that it is being allowed to float towards whatever level world financial markets establish for no one could possibly find his re Marks More than totally they Are a Complete contradiction of the Chretien has borrowed billions to support the he has spent billions of these not to smooth out a downward but in an unmistakable Effort to prop the Dollar this Effort started when the coun try currency was still valued up around 89 More borrowings Only a few Days before his latest insistence that he is letting the nations currency Chretien was announcing that he was going Back into the new York Market to borrow another million to support finance min More than any other member of a need credibility and contradictions such As these Rob them of men who possess close contacts with the financial markets Are convinced that Lack of Confidence in both the government and the state of the Canadian Economy Are involved in the dollars weakness and that the loss of political Confidence probably accounts for no less than four or five cents of the de pressure has been building on the government to abandon this costly and unsuccessful Effort to keep the currency propped up and there have been Persis tent reports that experts within the official apparatus Are coming around to this stand it is evident that Canada cannot continue much longer to borrow billion after billion in this if Chretien was trying to pave the Way for a return to a True float there were considerably better ways of going about it than those he the Cost of the borrowings to support the including the nominal charges involved in the standby cred is around million if the government were to go on through the autumn and Winter As they have since that annual Cost would be shoved up to the billion Dollar so it is not unlikely that the finance minister is starting to change course the tragedy of much that is happen ing in this country at the present time is that there Are the Essen tial is that All aspects of the Economy should be looked at in the context of the and this includes the weak Ness of our currency and the persistent problem of the Adverse payments bal there Are no overnight solutions but there Are courses to be taken which would be effective in the the Rise in natural Gas prices did two things to Supply it made it economical to produce Gas from Low pressure Wells that had previously not been fully exploited and it touched off a Large and remarkably successful wave of new the Case for in creasing Gas exports is Strong if it is viewed in the full context of the Canad an the urgency of other prob in such a weighs against the arguments in favor of conservative policies of production largely for Domestic enlarged exports at world prices could be expected to stimulate further exploration we can no longer afford to View the natural resources without reference to its acute International pay ments vital change it is difficult to see much sense of urgency in the approach to the huge Reservoir of Oil in the Athabaska Sands although this remains one of the a Jean Chretien addressing a meeting of the International monetary fund ear Lier this week in washing Lions great Export admit the technology in use at the pres ent time is effective Only in dealing with the deposits relatively close to the surface and is not applicable to the vast am out of Oil locked in at lower but it is by developing Oil Sands production into a full fledged Industry with a great Cash flow that the discoveries necessary for the future will once they the Athabaska Reservoir is greater by far than that of saudi it seems to me that the vital change required is psychological that we need to recognize the extent of our potential in this country and get on with the Job of developing Shell oils interest in the Oil Sands should been courage and helped to bring that com Pany and its partners into Active Effort at there have been Persis tent reports that the japanese would be interested in an Athabaska develop ment if they could be certain of being allowed to Export the Oil which they would they been courage and Given the necessary Export to do so before too produce massive foreign Exchange earnings for this country and the investment required would help Cut into the alarmingly High japanese sur plus in its International in itself a major world after much negotiation and argue Canada finally secured 200mile fishing limits off its coast but in the East it is still the foreign fleets that Are equipped with the necessary Dee sea trawlers and factory if this sort of fishing is profitable fur fleets that must Cross the Atlantic to reach the grounds there must be possibilities in it for Canada possibilities of immediate employment in building a More wide ranging Fleet than exists at possibilities of improved incomes where they Are most desperately needed in this country and prospects of enlarged foreign earnings As yet what action have we seen to exploit a situation of Promise if the present attitudes of Ottawa had existed in the 1870s the Canadian Pacific would never have been built and the extremities of this country would never have been tied there Are things to be done in Canada but the political will to embark on them is not to be found Here in the National it is easier to Muse about capital punish ment and direct to con verse about the conserved society than to solve the real ;