Some Day the Sun Will Shine and Have Not Will Be No More (23 page)

Additionally, there was the cost of getting the large dock in shape and making
it operational, an integral part of the whole operation. I remember well my
conversations on this; the company and I agreed to do our own independent
assessments and then compare our numbers. We went about doing our assessment in
an unorthodox way.

We had recently appointed Tom Whelan as deputy minister of the Department of
Public Works, an engineer and Newfoundlander who had spent many years working
for the federal Department of Public Works supervising the construction of
docks/wharves all over the province. Tom was a no-nonsense type of guy—ask him a
question and you would get a straight answer—and not your typical federal
bureaucrat. So I called Tom up and told him I had a special project I wanted him
to do for me. I explained that we were in talks with a prospective buyer for the
refinery and that both the company and I had agreed to do our own independent
assessments on how much it would cost to make the refinery dock operational. He
was interested. I told him that we did not have much time, that I was looking
for a ballpark figure, that he could get whatever help he needed, and that I
wanted an answer in a few weeks. Several weeks later, Cumberland had
their figure and Whelan had submitted his figure.
Surprisingly, both assessments said the wharf could be made operational for
between $3 million and $5 million, a far cry from the $20 million that the other
studies had determined.

Cumberland proceeded with the rehabilitation using, where possible,
Newfoundland contractors, and almost all of the operational employees were from
the province. And no government money or other government concessions were asked
for or provided. Is there another project of its size in the history of
Newfoundland’s industrial development up to that time (1986) that has come on
stream without some sort of government assistance (and in this case after the
project had gone bankrupt)?

The refinery has been going ever since, producing 115,000 barrels of refined
product a day and employing 550 people, having pumped over $1 billion over the
years in capital upgrades. It was also awarded a Top 25 Employer distinction in
Atlantic Canada.

The one negative aspect of all this was that in the final talks with the
federal government, we were forced to advise Cumberland that the federal
government would only agree to the sale if no product was marketed in the rest
of Canada. This was a tough pill to swallow. In other words, the refinery’s
product could be sold in Newfoundland (a small market) or internationally, but
nowhere else in Canada. I remember the evening Bill Marshall and I called Jim
Haseotas (then president of Cumberland Farms) in Boston to inform him that we
were unsuccessful in getting this condition waived and to see whether he would
still proceed.

As we all know, Cumberland Farms went ahead with the project. But it always
stuck in my craw that we had a buyer who did not want any money from any
government and who was prepared to restart the refinery, and here was the
federal government putting trade restrictions on the sale of the product from
one province to another! In January, 2001, this restriction was finally lifted,
fifteen years after the refinery reopened. One wonders if something like this
could ever happen in any other part of the country.

Snatched from imminent destruction, the largest bankruptcy in
Canadian history up to that time, responsible for bringing down one of
Japan’s largest trading companies (Ataka), projected to have cost over
$100 million to restart when it came in less than $30 million, and being in
continuous operation ever since, qualifies the reopening of the refinery at Come
By Chance as one of the unheralded economic success stories in the history of
Newfoundland and Labrador.

THE CORNER BROOK PAPER
mill has a storied history—one of those
enterprises of the 1920s much heralded by the prime minister of the time, Sir
Richard Squires, as “putting the hum on the Humber (River),” a symbol of the
exaggerated optimism and of the many riches that lay waiting to be developed in
the hinterland of the island, which would make Newfoundland an exceedingly
prosperous place. It became an economic mainstay of Corner Brook for over sixty
years, notwithstanding the many concessions of trees and water necessary to get
it going.

In 1984, Bowater Corporation, which had taken over the operation in 1938,
announced that it was closing down and that it was no longer a viable operation,
alleging that wood costs and transportation costs were too high. This came as a
shock and a big blow to the economy of the west coast of the island. Of course,
the province was on the front line to show the leadership needed to ensure that
this tragic announcement would not happen and to allow some other company to
take over the operation.

The early days after the announcement were difficult ones, since Bowater owners
just seemed like they wanted to leave and that was that. They seemed
disinterested in working with us to ensure an orderly transition where we would
together seek other operators. Of course, the forests were provincial and the
significant (110 MW) power plant in Deer Lake was also provincial. But I was not
interested in looking at a provincial takeover for two reasons: I had a natural
aversion to such actions (government trying to run a paper mill was
not my way of developing the province, all the more given
the abysmal record of government with a recent linerboard mill in Stephenville);
and secondly, it was not at all clear, given the legislation under which the
original deal was done, whether the province would be successful in any such
effort. This did not stop me from using such an idea when I was frustrated with
Bowater’s early unco-operative approach when I exclaimed to them: “I guess what
the Lord giveth, the Lord could take away.”

However, co-operation improved and it was agreed that a divestiture committee
would be struck to assemble all the needed information and to actively market
the operation in the international marketplace. This was a massive undertaking
and help would be needed. It was agreed that we would hire Woods Gordon, a
well-known Canadian firm with expertise in this area. The late Len Delecat of
the firm, a true gem of a man, competent and hard-working, was to head up the
effort. All this hard work over many months culminated in us receiving several
bids, with the final determination that Kruger Inc. of Montreal showed the most
promise. Bowater was not entirely happy with this selection (I was told at the
time that Kruger had snatched some markets from Bowater in the southern United
States) but in the end complied with the decision.

Final negotiations then began with Kruger, the unions, and other interested
groups. This process was a little more drawn out than the parties expected, with
lawyers from both sides becoming so eager to impress their clients, that getting
a final agreement seemed secondary. This came to a head one evening in the
Cabinet room when both Kruger and the government agreed to have their respective
lawyers leave the room, at which time Mr. Kruger and myself with a couple of
advisers refocused the talks and highlighted key issues. Two big issues were
that the government was looking for a commitment from the company of over
$100 million over a number of years in capital upgrading of the mill, and they
were also looking to employ a larger number of non-union contractors in the
woods operations. At the end of the day, after tense talks with the unions and
other parties, agreement was reached whereby these two big issues were
incorporated into the agreement. Mr. Kruger was a wily negotiator
and tried, right up to our press conference announcing the deal at the Sir
Richard Squires Building (the government building in Corner Brook), to improve
the deal for the company. Once signed, however, Kruger was committed to the
agreement and has proven to be a very responsible employer in the province. At
the time, the $100 million was seen as a substantial figure, and of course it
was, but since 1984 the company has invested five times that amount and
notwithstanding the significant downturn in the paper industry, the mill is
still open and employs 600 in woods operations and 700 at the mill and the Deer
Lake power plant.

THE OFFSHORE FISHERY HAS
played a major role in the economic
life of the province for decades. This was an offshore trawler-driven fishery
and sustained several communities on the Burin Peninsula and other towns on the
south coast. Each had fish plants where the trawlers landed the fish, and the
plants employed hundreds of fish plant workers. When I was growing up in
Marystown (before they had their own plant), communities farther along the
peninsula were prospering from the offshore fishery: Grand Bank, Fortune, and
Burin; in Fortune Bay, Harbour Breton, and Gaultois; and farther west along the
south coast, Burgeo and Ramea.

The high interest rates of the early 1980s hit the offshore fishing companies
hard. These companies—Fishery Products Ltd., Lake Group, John Penny, National
Sea, and the Nickerson Group—who had in recent years expanded through bank
financing, now found that they were unable to meet their bank obligations and
turned to government for help. Protracted negotiation ensued, and through it all
an agreement was reached among all the parties: the federal government, the
provincial government, the fish companies, and the bank. It was called the
Fishery Restructuring Agreement, signed in September, 1983. Through the
agreement a new company was established, Fishery Products International, which
absorbed the assets of the troubled companies, received an infusion of cash
(over
$100 million), and reflected a new ownership structure:
the federal government 60%, the province 25%, the bank 12%, and 3% allocated for
employee participation. Sadly, as will be mentioned later, this highly
successful company was sold to private interests without the attendant
accommodations (so much a part of the original agreement) necessary at least for
some additional time to reflect the historically rural and sociological
dimensions of this industry.

I F T H I S W A S N
’
T E N O U G H
, in the
early 1980s the Constitution issue became a subject of endless meetings and
arguments between the provinces and the federal government.

Various attempts had been made earlier to “bring the constitution home”
(patriation) to Canada. In other words, that future constitutional amendment to
the British North America Act (the major written part of the Constitution) was
to be done in Canada, severing that last constitutional provision which saw our
country having to seek ratification for such a change through London. Premiers,
intergovernmental affairs specialists, constitutional lawyers, territorial
leaders, and aboriginal organizations spent countless days absorbed in
discussion.

One of the big stumbling blocks in the past was agreeing on an Amending Formula
that would guide additional constitutional reform in the future. And this would
prove to be difficult this time as well. But Prime Minister Trudeau had
additional ideas: with this patriation he wanted to add a Charter of Rights and
Freedoms.

While many of us were not opposed to such an idea, it was one that would have a
significant impact on the nature of the country over time and needed to be
thoroughly discussed and debated. This was not something that the prime minister
was particularly interested in doing; rather, he wanted to forge ahead with
great haste. He saw this as a golden opportunity to get some of his most
cherished ideas to bear constitutional entrenchment.

The other factor that drove the process was that the recent May,
1980, sovereignty association referendum in Quebec, although lost, was
assisted in being rejected by the prime minister’s timely, though vague,
commitment to a “renewed federalism.”

But it was the Charter of Rights and Freedoms that many of the provinces were
concerned about, especially how such a charter over time would affect the
division of powers, property rights, the ongoing powers of Parliament and
legislatures versus the judiciary. There were already many federal incursions
into provincial areas of responsibility, and many premiers and their advisers
were skeptical as to whether such charter changes could further erode provincial
powers duly detailed in the British North America Act of 1867. Hence, the
provinces began to insist on questioning whether certain existing provincial
powers could be changed without reference to the province, and in having other
issues added to the equation that had been bones of contention between the
provinces and the federal government for some time, such as strengthening the
provinces’ jurisdiction over natural resources and shared cost programs.

In June, 1980, the premiers met with the prime minister concerning possible
constitutional reform, at which time agreement was reached on twelve items to be
considered for such reform: this agenda would be referred to a Continuing
Committee of ministers on the Constitution who would further consider the twelve
matters referred to them. In August, constitutional matters dominated a
Premier’s Conference in Winnipeg and how the provinces would respond to various
federal positions on the twelve issues agreed to in June. The pace was
accelerating, and a major First Ministers Conference on the Constitution was
held from September 7 to September 13, but no agreement was possible. There were
many disagreements and a suspicion by some of the provinces (rumours were
rampant) that the federal government was not dealing in good faith. The prime
minister made it clear that our (Newfoundland’s) items of greater fisheries and
offshore jurisdiction, for example, were non-starters, to which we vehemently
disagreed. So, in this kind of federal intransigence compromise was
impossible.