FREDERICTON — A northern New Brunswick city that has endured one economic blow after another is bracing to learn the fate of a homegrown company on the brink of collapse, despite receiving millions in public funds in the last decade.
A court-appointed monitor is to report today if it has been able to come up with a plan to save the Miramichi-based Atcon group of companies by either a restructuring or a sale of assets.
Officials from Ernst and Young are to make recommendations to a provincial court judge on ways to save seven Atcon companies that are involved in a range of businesses including construction, road work and environmental services.
The rescue request was made March 1 by the group’s major creditor, Scotiabank.
According to documents filed in court by the bank, Atcon owes about $250 million to its creditors, with almost $100 million owed to the bank.
The New Brunswick government has invested $72.5 million in the companies since 2001, the bulk of which came in 2008 and 2009. That includes $50 million in loan guarantees last summer.
Atcon was started in 1978 by Miramichi-area native Robbie Tozer, and became involved in construction, wood panel manufacturing and environmental services.
The company grew quickly, landing contracts across Canada and elsewhere around the globe. At one point it employed about 2,000 people.
Many of those employees travelled from New Brunswick as part of Atcon contracts to operate heavy machinery on the Alberta oilsands.
The company also helped twin Trans-Canada Highway in western New Brunswick, from the Fredericton area to the Quebec border.
But it has struggled since. As of last month, there were 329 employees working for the Atcon group of companies, five of which are in receivership.
“Atcon meant a lot, and means a lot to Miramichi, especially over the years when the mills were shut down here,” said Miramichi Mayor Gerry Cormier. “Atcon was one of the few employers that kept going and kept money coming into our city and our region. They employed hundreds of people.”
Hundreds of jobs were lost in the Miramichi area in 1999 with the closing of the Heath Steel mine, and Canadian Forces Base Chatham.
UPM-Kymmene, a pulp and paper company, eliminated 400 jobs in 2004 when it tore down one of its mills and then closed another mill in 2007, resulting in the loss of another 650 jobs.
Also in 2007, forestry company Weyerhaeuser closed its oriented strand board mill, cutting 140 positions.
Cormier said it’s one thing for foreign-based companies to pack up and leave, but it’s particularly painful when a local company is faltering.
That feeling is echoed by Thomas Linkletter, owner of a hardware store in Miramichi, and a past president of the city’s chamber of commerce.
“The big companies that have closed before were all from out of Canada and they just pack up and go, but this guy is a Miramichier. He’s from here. He’s a hard worker and very smart,” Linkletter said. He said if the companies can’t survive, it will have a serious impact on the local economy.
“We were really excited to do business with the Atcon group. There were a lot of companies and they were in our Home Hardware store everyday doing business.”
Atcon did not return calls for comment.
Business New Brunswick Minister Victor Boudreau blames the global economic crisis for Atcon’s financial woes.
“You’ve had the global recession and the downturn in the Alberta tarsands, which is where a lot of Atcon’s work was based. We had the Deh Cho Bridge project that Atcon was removed from — because of a design issue — and things got complicated,” he said.
Atcon began construction of a $21.5-million steel fabrication plant in Miramichi in 2007 to produce components for the Deh Cho Bridge project in the Northwest Territories. But it lost the second phase of that contract and didn’t complete the fabrication facility.
Boudreau said he knew there was risk when the government provided loan guarantees last year.
“We felt at the time that it was important to preserve as many jobs as we could,” he said.
But Conservative finance critic Bruce Fitch said the government ignored the financial risk.
“Government is supposed to be the lender of last resort, but that doesn’t excuse you from doing your due diligence,” Fitch said. “It doesn’t excuse you from looking at the risk, and saying this is taxpayers’ money that I’m spending here.”