AbitibiBowater slashing head office staff by 25%

Insolvent paper giant AbitibiBowater is cutting its head office staff by 25 per cent as part of a plan to trim its overhead expenses by $100 million US a year.

Most of the 175 laid off full-time and contractual employees in Canada and the United States will be announced by Sept. 1.

Montreal-based AbitibiBowater has about 700 employees working in head office functions, including 400 in Montreal.

The company'sausterity measureswill lay the groundwork for a comprehensive restructuring plan that will unfold over the coming months, employees were told in a message from CEO Dave Paterson.

Other components of its cash-preservation efforts are:

• the suspension of the 2009 incentive compensation programs, including special equity awards.
• a reduction of warehousing and inventory levels.
• limitations of in-house contractors.
• the suspension of many association memberships.
• the reduction of business travel expenses.
• the review of corporate lease arrangements.

"The implementation of these measures is critical in order for the company to ultimately emerge as rapidly as possible from creditor protection filings a stronger, more sustainable organization," Paterson said.

"We are currently finalizing plans to reduce capacity in order to improve profitability as well as streamline AbitibiBowater's downtime strategy," he said.

The company also announced that weak market conditions have forced it to indefinitely idle two paper machines in Thunder Bay, Ont., effective Aug. 21.

The move will affect 360 workers. A total of 625 people are employed at the mill in northwestern Ontario.

Employees had just returned to work Monday from two weeks of downtime. Since April, workers have faced intermittent downtime.

AbitibiBowater is seeking an agreement from the union to reduce labour costs and wants the provincial government to reduce energy and fibre costs to enable one of the paper machines to be reactivated.