Losing about a third of the Domtar workforce to layoffs could cost the local economy as much as $15 million a year, a Thompson Rivers University economics professor said Tuesday.
In order to cushion that effect, the company could offer early retirement and buyout packages, said Peter Tsigaris.
“It will hurt the local economy. You are losing skilled workers with high-paying jobs,” he said.
The Daily News asked Tsigaris what impact the pending layoffs from Domtar shutting down one of its two mill operations at the Kamloops site will have on the region.
Tsigaris calculated that losing 125 workers who make about $80,000 a year equates to an annual loss of $10 million. He added a multiplier affect of 1.5 per cent to come up with the $15-million economic spin-off to the region.
“People lose their income, they can’t spend as much, and they spend in the local economy. That’s revenue to other firms, local firms,” he said. “They lose revenue, and therefore they make less money and will reduce their workforce.”
Domtar announced last month that 125 positions would be lost when the company shuts down one of its mills. The layoffs are expected to occur in March.
Communications, Energy and Paperworkers Union local 10B interim president Doug Cummings said the union and company meet daily to discuss how the downsizing will play out.
“There’s a process in place, it’s called an adjustment plan, and we’re working our way through it,” he said, adding he wasn’t in a position to comment further.
Tsigaris said companies will usually layoff non-union members first before cutting those with the lowest seniority. Employees with enough seniority can get bumped to other departments within the organization.
“It’s a ripple-down effect,” he said.
The Daily News was told in December that the layoff notices weren’t final because seniority and bumping processes will apply. No buyouts or early retirement packages were offered, but the union intended to raise those options with the company.
Domtar’s 425 unionized workers voted to accept a new collective agreement in October.
Domtar officials could not be reached Tuesday.