Yarn mills owe millions to taxpayers

New Brunswick taxpayers could be on the hook for approximately $29 million if a northern cotton mill doesn't reopen after Christmas.

Two yarn mills owned by a British-based textile company gave layoff notices to their 400 employees on Monday.

Atlantic Fine Yarns in Pokemouche, and Atlantic Yarns in Atholville, told workers that both facilities will shut down temporarily on Dec. 7.

The approximately 200 Pokemouche workers are expected to be back on the job Jan. 2, when the mill's current inventory is sold.

In Atholville, 200 employees were told the layoffs are temporary, but with no date set to reopen the mill. The province has outstanding loan guarantees of $29 million with the Atholville mill. If it does not start up again, taxpayers may be forced to repay the entire amount.

The Pokemouche mill, which is expected to reopen, currently owes $35 million directly to the province.

New Brunswick taxpayers have invested heavily in the mills since they were built.

The Atholville mill went up in 1998 with help from a $6 million business loan and $245,000 training grant from the province. Three years later, the business expanded with a $150 million plant in Pokemouche, $40 million of which was a loan from the provincial government one of the largest loans ever given to a private company.

Both mills have received annual injections of provincial money from the province since they were built.

Business New Brunswick officials say the company has met all its financial obligations to the province, and is a good investment for taxpayers.

Business New Brunswick Minister Peter Mesheau says the closures are nothing to worry about. "This is a temporary shutdown until they work through their inventory," he said. "I have every faith that this business will start up again. This is a temporary stoppage."

The 400 layoffs could mean a bleak holiday season for workers and their families, however.

Communications Energy and Paperworkers Union rep Kim Power says the layoffs were sudden and unexpected.

"There was no heads up to the executive or to the union whatsoever. The local executive people went in and saw it posted the same as all the other employees."

In a letter sent to employees on Monday, the company gave workers only a one-line explanation for the shutdown. It blamed 'continuing poor market conditions' for the lay-offs, adding that the mill will only start up again if those conditions improve.

Power wants to know what that means for workers who will be left in the cold at a difficult time of year. "People will be laid off, effective December 7th, Christmas is just around the corner and the way the EI system works, they will have no money before Christmas."