Nanaimo Bulletin Story of the Year: Harmac

Dec 30, 2008

It was a pleasant summer morning when Gerry Tellier and Bob Smiley entered a Vancouver restaurant for a quick breakfast before making their way to B.C. Supreme Court Tellier, the president of Pulp, Paper and Woodworkers Union Local 8, and Smiley, the union's treasurer, were in Vancouver to attend yet another court date to determine the fate of Nanaimo 's Harmac mill and its 535 workers.

Through the din of the early morning diners, both men picked up on a conversation just a table away, where two other men had blueprints spread across their own table.

One of the men was Asian and didn't speak English well. The other spoke louder to compensate.

It was clear the strangers were talking about Harmac and how they wanted to dismantle the mill, separate the metal, ship it overseas and sell it.

"Our table got real quiet," recalled Tellier. "We didn't make a sound. We stopped stirring our coffees. They were talking about if they wanted to ship the whole mill over six months or spread it out over two or three years. It was unnerving."

That moment was a microcosm for everyone involved in the employee- backed bid to buy Harmac and return it to an operational state.

Between the mill's receiver, PricewaterhouseCoopers, several other bidders and Chief Justice Donald Brenner, the people who really cared about the mill found themselves in a litigation nightmare that could have ended with any number of scenarios.

"It was out of our hands in a lot of ways," said Paul Sadler, the mill manager, who helped lead the bid by the employees, along with investors Pioneer Log Homes, Vancouver 's Sampson Group and Totzauer Holdings.

"Admittedly, the process we ended up going through was far more strenuous and complicated than any of us had imagined. I think the key thing that got us through those four months was a firm belief in what we were doing and that keeping Harmac running was in the best interests of the community. We also had important help from outside people who wanted to see us succeed."

The fall of Harmac really began in the fall of 2007, when its parent company, Pope and Talbot, filed for bankruptcy, casting doubt on the future for workers, many of whom had spent their entire careers working at Harmac. Some were even second- or third-generation employees.

"A lot of the people here didn't know any other job," said Smiley. "Having to move to some other province or find some other work really got people a little nervous. This is their home. They didn't want to go anywhere else."

When Asia Pulp and Paper, a giant Malaysian company, made a big-league bid for the mill and announced it would keep it open, spirits once again rose.

But that was actually the beginning of a long, emotional and nerve-wracking roller-coaster ride.

On May 8, at the 11th hour, APP pulled out of its bid without any warning. Soon after, with Pope and Talbot's bridge financing long over, the mill went idle and the workers went home, unsure of what to do or who to turn to.

With all three of the mill's pulp lines down and only a skeleton crew on hand for security, an idea originally floated in early March between Tellier and Sadler resurfaced.

"It was just an off-the-cuff comment," said Tellier. "The idea was mentioned that maybe the workers and management should team up and buy the place. That idea never died."

It certainly didn't.

In fact, just days after Harmac went idle, a campaign began to get workers on side in a bid to buy the mill, despite PricewaterhouseCoopers, advising the court against it every step of the way.

Time was of the essence. The bleaker the mill's reopening looked, the more employees would leave town in search of other work.

By early June, with the help of Nanaimo lawyer John Lampman, Nanaimo-Parksville MLA Ron Cantelon and a host of others, the fledgling group set out on a journey that no other B.C. mill had ever taken.

"There was no template to follow, no guidelines to go by," said Sadler. "And with so many other variables around us, other bidders and that sort of thing, it was important for us to keep our eye on the ball and not be distracted by the noise around us. We had a vision and we didn't let anything lead us astray."

Through endless courtroom sessions over the summer, the group continued building the template to buy the mill back.

The business plan seemed to be working - it attracted investors and, in a unique twist, a competitive bidder joined the employees' bid in what became Nanaimo Forest Products.

That group featured Harmac employees and management, Pioneer Log Homes, the Sampson Group and Totzauer Holdings.

"We knew this was a plan that was both profitable and good for the community,"said Levi Sampson of the Sampson Group. "My family traditionally invested in oil and gas, a pulp mill was sort of new ground for us. But we saw the plan, we're a B.C. company, and we saw the value in this community. We saw this as a good investment."

Through July, other bidders fell away in a dizzying up-and-down process that saw three extended deadlines. Pricewaterhouse Cooper continued to recommend against NFP's purchase bid.

"There were times when we didn't know who was bidding or if we were bidding against ourselves," said Tellier.

"It was crazy, just crazy. Boy did we learn a lot."

But the rollercoaster took its toll.

"There were times when somebody would say we might not be able to do this or sort of get down and the next guy would step up and pick him up," said Sampson. "I think at one period or another, everybody got worn down and every time somebody was there being positive."

On Aug. 29, all of NFP's hard work paid off. Brenner awarded the sale to NFP for the price of $13.2 million and just hours later, under a cobalt blue sky, the Harmac flag flew proudly once again over the mill site.

"It was really emotional," said Sampson. "I had tears in my eyes. We had a 43-year veteran of the mill raise the flag. We were a family before that, but that moment really reinforced it."

Lampman, for his yeoman effort in guiding the group through legal mazes, was rewarded with a street near the plant named after him. It is now called Lampman Lane.

Smiley also credits Brenner with recognizing Harmac's importance to the community and that keeping the mill operational was in everybody's best interest, including the province of British Columbia .

"He's an experienced bankruptcy judge and he saw the value in having us keep the mill open," said Smiley. "I think there was some surprise toward his decision initially, for us to win, but I really believe he had the community in mind."

With the hard part over, an even more difficult chapter began.

Client relations had to be rebuilt, suppliers had to establish new contracts and employee agreements had to be banged out, along with a million details, some of which still remain. Employees worked from home to reestablish business relationships.

"One of the biggest decisions was to keep our fibre supply agreement with Western Forest Products," said Tellier. "Otherwise we would have been making pulp out of rocks."

With one pulp line running since September, employing 230 workers, Harmac is far from making its product out of rocks, though 60-70 other workers who expected to return in January with the relaunch of the second of three lines may have to wait until the economy improves.

Still, Harmac Pacific, as it officially became known on Nov. 9, is ready to once again be the cornerstone of Nanaimo 's economy in 2009 with new products and a new lease on life.

"In this economy, debt will be a big weight on companies," said Sampson. "We paid $13.2 million and didn't borrow anything from the banks. We feel very good about our future right now."

Smiley said the company's next challenge will be to retain the rest of the workers whose employment insurance will be running out soon.

"Some of our best employees are our youngest ones and we don't want to lose them to some potash plant in Saskatchewan ," he said.

For Sadler, looking back on the summer of 2008, he shakes his head in wonder at how so many people came together with a single vision to save a mill from closing, and how it was done in just four nerve-wracking months, when it could have taken years.

"This was about the people who worked here," said Sadler. "It's about the mill, its tradition and making the best products we can, but ultimately it is about the people."