AbitibiBowater Prepares to Exit Bankruptcy with Cost-Cutting Programs near Completion…Or Maybe Not
The employers, suppliers, and mill communities of AbitibiBowater are all breathing a sigh of relief. It is finally over. Sacrifices were required, but they are survivors – they made the cut – and now can expect things to settle down for a while. Well, maybe…or maybe not.
The future of newsprint is not promising, of course, and Canadian producers are still in the red. Nevertheless, market conditions are looking much better over the short-term and medium-term. Newsprint capacity and demand are in balance right now. It is also likely that some serious White Birch capacity will be eliminated prior to that company exiting bankruptcy. The newsprint market just might be healthy well into 2011.
Richard Garneau was President and CEO of Catalyst Paper from March 2007 until the 62 year old retired at the end of May to spend more time with his family. After that family thing was taken care of, he decided to look for something else to do. Apparently, AbitibiBowater, by coincidence, just happened to have a member of its board stepping down on that day, so three days after Mr. Garneau left Catalyst he decided to accept an invitation to become a member of the AbitibiBowater board. Funny how these things work out.
Garneau, as President of Catalyst, was absolutely committed to (some might say obsessed with) cutting costs. He was also willing to make hard decisions relative to reducing capacity, challenging municipal taxes, bringing employee costs down, etc.
Some business managers with that highly aggressive cost-cutting emphasis cause more problems that they solve. They are often poor leaders, with little people skills. They don’t listen or learn well, don’t understand the business they run, and tend make cuts across the board, just because it’s easy that way.
Garneau is not that kind of leader. Garneau was highly respected by the salaried employees at Catalyst, in spite of the difficult programs that he implemented. He was a realist. He knew the business and managed it well. People who know him tend to like him. Most Catalyst Paper employees were truly disappointed that he left the company. (I have no contact with union employees and since he has asked so much of them, they probably have a different view.)
So now that this highly respected manager is on the board of AbitibiBowater, two questions come to mind: How long before Garneau is appointed President of AbitibiBowater, and how deep did the AbitibiBowater cost-cutting programs really go?
Ok, I might be wrong; Garneau may just remain on the board. For this discussion, however, let’s assume he moves up. That would be interesting. AbitibiBowater employees believe that the company has been highly aggressive in lowering costs both before and during this bankruptcy process. The Catalyst people I have spoken with are highly skeptical. They believe that Richard Garneau will show AbitibiBowater a new way to look at costs. In this case, I have no opinion, but it will be fascinating to watch.