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Updated: 10:02 p.m. Tuesday, March 6, 2012 | Posted: 8:33 p.m. Tuesday, March 6, 2012

CEO: No ‘veto’ power for Appleton union

United Steelworkers cannot prohibit deal that will cut 330 jobs.

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CEO: No ‘veto’ power for Appleton union photo
Appleton Papers will lay off 330 workers at its West Alex Bell Road plant. About 100 workers will remain at the plant, the company announced Thursday.The company will obtain pulp from another source, Montreal-based Domtar, and will shut down its local pulp machines, Covell said. He said the company told him that production of pulp was considered too expensive to continue at the local plant. Staff Photo by Jim Witmer

By Thomas Gnau

Staff Writer

The United Steelworkers can’t “veto” a paper-supply agreement between Appleton and Domtar, a pact that will allow Appleton to cut 330 jobs from its West Carrollton mill, Appleton executives told industry analysts in a conference call Tuesday.

“They do not have union veto power,” Mark Richards, Appleton chairman, president and chief executive, said in the call.

The agreement announced late last month would have Montreal-based Domtar supply Appleton with base paper for 15 years, allowing Appleton to shut down paper-making operations at its 1030 W. Alex Bell Road plant. About 100 employees would remain at the plant’s thermal-paper coating operation.

After the company announced the Domtar pact, talks began between Appleton and the USW, which represents more than 400 workers at the West Carrollton plant. The talks are part of a “protocol” the company must follow, Richards said.

“It’s a process with the union. There’s a decision-making step and then there’s an effects step,” Richards said. “The protocol requires that we follow that process.”

To produce a plan that offers Appleton the same savings as the Domtar pact, the USW would have to find $25 million to $30 million of improved earnings before EBITDA, Tom Ferree, Appleton chief financial officer, said in the call. The cost of labor and benefits that Appleton “incurs” with its West Carrollton bargaining unit is about $30 million, he said.

EBITDA stands for earnings before interest, taxes, depreciation and amortization, a standard measure of corporate earnings.

Bill Van Den Brandt, an Appleton spokesman, said the company has a good relationship with the Steelworkers and does not want to “pre-judge” the outcome.

“Admittedly, there are big savings involved here,” Van Den Brandt said. “So it’s not a small task” to produce an alternative to the Domtar agreement.

A message seeking comment was left with Jim Allen, president of USW Local 266, the mill’s union.

Further discussions between the USW and the company are set for next week, Van Den Brandt said.

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