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Rewinding firm capitalizes on industry's need to cut costs.

Rewinding firm capitalizes on industry's need to cut costs

While the majority of the pulp and paper industry languishes in the midst of the recession, Paper Mill Rewinding Inc. in Thunder Bay is prospering.

The company, which began operating in late 1989, salvages defective, damaged or incorrectly sized rolls of newsprint from mills in the Thunder Bay area and elsewhere in northwestern Ontario.

"We were operating on two shifts from May to October last year," said company president Andre Nicol in an interview in late January. "We're down to one shift now, but we should be back to two shifts in two or three weeks."

One reason the company has flourished during the downturn is the increasing importance of reducing costs in the pulp and paper industry.

While clients could not be reached for comment on their cost-savings, Nicol said his company's sales figures were close to projections for 1990.

"By the time we got to the middle of the year, we had already made a profit," Nicol said. "Figures were pretty well what we expected.

"We didn't anticipate a bad market."

While the company official admitted that it is "hard to read the business exactly," business for Paper Mill Rewinding should continue to be risk for the balance of the year.

One reason for Nicol's optimism is that his business is unaffected by government legislation for recycled paper content in newspapers sold at newsstands.

"Paper is paper to us," he noted.

However, Nicol admitted that Lakehead Newsprint, a company for which he is vice-president of sales and purchasing, is affected by such legislation. Lakehead Newsprint sources newsprint for its clients, a majority of which are located south of the border.

"Eventually, the laws (for recycled content) will get to all papers, especially if they're used by the government," Nicol predicted. "It's just a matter of time."

But at the Keefer Terminal there is talk of a possible expansion at Paper Mill Rewinding - depending on the amount of business it receives in the near future.

"We might install a second machine, but it depends on what goes on in the industry," Nicol said.

The company can currently process between one and three truck loads of newsprint per day. That capacity will double with the addition of a second machine.

The increase in business would also allow the company to better handle the debt incurred during its start-up.

The company initially received a $422,000 loan from the Northern Ontario Development Corporation (NODC) to help pay for start-up costs which totalled more than $1 million.

According to Nicol, the costs were more than anticipated, necessitating a $170,000 loan guarantee from the NODC.

"Some of the information for the machine wasn't available when we went for the loan," he said.

Nicol noted that the costs for concrete work to the building and a more expensive wrapping machine -used to wrap the salvaged rolls of newsprint after they are re-cut - resulted in the additional cost.

PHOTO : It cost Paper Mill Rewinding Inc. of Thunder Bay more than $1 million to start up operations in 1989. However, the profitable company is expecting "brisk" sales for the remainder of the year.

COPYRIGHT 1991 Laurentian Business Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Title Annotation:Paper Mill Rewinding Inc.; pulp and paper industry
Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Date:Mar 1, 1991
Previous Article:Industry adopts strategies to survive current downturn.
Next Article:Lumber sector still mired in deep slump.

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