Ross Marowits, THE CANADIAN PRESS

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MONTREAL - Newspaper producer AbitibiBowater Inc. (TSX:ABH) is preparing to slash jobs at its mill in Grand Falls-Windsor, N.L., as it continues to find ways to make the operations competitive and avoid a series of plant closures that some analysts say are imminent.

Up to 150 of the mill's 450 jobs are expected to be cut as the newspaper giant attempts to reduce what it claims is the industry's highest cost plant in North America.

"It's a solid renewal plan that does come with an important (number) of layoffs," company spokesman Jean-Philippe Cote.

A leaked report of the company's proposal said it will include a complete reorganization of its woodlands division that will result in the loss of 22 jobs.

Control of the division, which includes loggers and harvesters, will be turned over to a general contractor. Wood will be chipped off-site instead of at the mill and the existing chip room will close, the CBC reported.

Silviculture operations will also be phased out as AbitibiBowater turns to contractors. The manual cut and bunch classification division and the Black Duck Camp will be closed.

Cote declined to confirm the contents of the report, but said the details are just part of a comprehensive plan designed to make the mill profitable again.

"People knew that we were coming with a tough plan that would include tough layoffs, but the good side of it is to make sure that the mill is given a competitive advantage."

AbitibiBowater is in the midst of a Phase 2 review of its operations that could lead to closures if specific mills can't be restructured to become competitive.

During the first phase, the Montreal-based company announced plans to close or idle more than half a dozen mills in Quebec, New Brunswick, Ontario, British Columbia and Texas.

RBC Capital Markets forestry analyst Paul Quinn said the company is implementing another US$20 per tonne monthly price increase, supported by 600,000 tonnes of capacity closures implemented earlier this year.

"We believe an announcement of phase 2 of the review, and additional closures is imminent," he wrote in a report on prospects for the forestry industry.

But Cote said plans haven't changed since the company announced in May that there are no immediate plans to close more mills.

"What we're doing is dealing with the business the best way we can so we can survive."

The union which was presented with the plan last week said the plan to cut jobs and restructure the operations are a pre-emptive strike to score a victory at a threatened plant ahead of next year's national contract negotiations.

"We're getting really to close to negotiations and if they can make inroads into one of their mills, that would probably get them some leverage in negotiations," said Gary Healey, national representative for the Communication, Energy and Paperworkers' Union.

He said the company isn't addressing the real problem at Grand Falls, which is years of insufficient investment at the mill, especially in the papermaking process.

"We don't like to be delivered ultimatums for one thing and the real problem in Grand Falls has nothing to do with their employees or the collective agreements around those employees, but has to do with the lack of investment over the years," he said in an interview.

But Cote said the company has invested an average of $11.5 million annually at the mill - $80 million in the last decade and $237 million over 20 years - beyond the regulatory requirements for its hydro operations.

He also insisted the restructuring has nothing to do with labour negotiations and is strictly related to the mill's cost and labour structure.

"That's the sole reason we're doing this at this mill. Let's not look outside for other reasons. The reason is in the actual operation of the mill itself."

AbitibiBowater, the eighth-largest publicly traded pulp and paper manufacturer in the world, produces newsprint, commercial printing papers, market pulp and wood products.

On the Toronto Stock Exchange, Abitibi shares closed up 15 cents to $6.83, an increase of 2.25 per cent on rising European demand for newsprint.

The world's largest newsprint producer has about 15 per cent of global capacity.