Tembec faces production downturn - January 18, 2008

Tembec has suffered reduced production because of a reduced work week, both at its Elko sawmill and its corresponding planer mill.The company will tolerate a similar situation at its Canal Flats sawmill and corresponding planer mill starting next week. Over the next three months, Tembec will take the equivalent of three weeks of production downtime, through reduced shifts at the mills.

Tembec is working with Human Resources and Social Development Canada (HRSDC) to implement a Work Sharing Program to reduce the impact on its affected employees during this period. Production requirements will be re-evaluated following the initial three-month period.

These curtailments will reduce production by approximately 24,000 mbf totalling an annualised reduction of 124,000 mbf since July 2007. The Canal Flats and Elko sawmills and planer mills have a combined annual production capacity of 420,000 mbf of SPF lumber and employ approximately 480 people.

Dennis Rounsville, Executive Vice President and President: “These curtailments are being taken due to the sharp decline in demand for lumber given poor housing market conditions in the United States, low lumber prices and the impact of the high valued Canadian dollar relative to the US currency.

“We are doing all we can in order to minimize the impact of this decision on our employees and the affected communities,” concluded Mr. Rounsville.

Management has informed employees of all affected sites of the company’s decision.