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Domtar reorganizes its activities in Vancouver

Press release from the issuing company

MONTREAL, Jan. 8 - Domtar Inc. announced today that it has decided to reorganize production activities at its Vancouver Mill to better meet customer needs and increase the mill's profitability. The Company plans to shut down one of the mill's two paper machines and restructure the activities of the second one to optimize the manufacturing of Domtar Luna coated paper. This restructuring process is expected to affect 80 employees and result in a 45,000-ton reduction of production capacity. "Our customers value our core product manufactured at the Vancouver Mill - Domtar Luna. However, they would like us to further increase product quality as well as its availability. Our restructuring plan therefore responds to customer needs and should allow the Company to increase its market share of coated papers," said Roland Gagnon, Senior Vice-President Canadian Pulp and Paper Manufacturing Group. "Our plan will also allow us to improve the mill's competitiveness and better cope with Asian competition. We are confident that the plan will enable us to revitalize this mill, which has been severely affected by the depreciation of the US dollar," added Mr. Gagnon. The Vancouver Mill produces approximately 120,000 tons annually of Domtar Luna coated paper on paper machine no.2. In addition, various products like business reply cards are manufactured on paper machine no.1. However, this machine does not have a core product and it lacks flexibility, which substantially limits our ability to optimize its product line. By permanently shutting down this machine, Domtar will be transfering some products developed with specific customers to other mills, while other products will be discontinued. This will enable the Company to better serve its customers and reduce costs at the same time. Consistent with its values, Domtar will make every effort to minimize the impact of decisions resulting in job losses. The Company will strive to relocate employees to other Domtar establishments if they so wish. Employees who permanently lose their jobs will be eligible for financial assistance as well as re-employment programs.