Tembec: Negotiation impasse results in lockout at Pine Falls, Manitoba newsprint mill

    TEMISCAMING, QC, Sept. 1 /CNW Telbec/ - Tembec today confirmed that it
has locked out employees at its Pine Falls newsprint mill following a failure
to reach a new collective agreement. Site management and mill employees worked
closely to ensure that the mill was shut down in a safe and environmentally
sound manner.
    The Company was seeking changes in the collective agreement that would
have resulted in improvement in the site's cost competitiveness necessary to
allow it to meet challenges created by the profound structural change in the
demand for newsprint. Tembec indicated that it had met with both local and
regional representatives of the United Steelworkers ("USW") and the Canadian
Office and Professional Employees Union earlier in August and again last week,
in the presence of a Ministry of Labour conciliator. The meetings last week
were with a larger group that included two senior USW representatives, one of
whom was from the USW Vancouver offices. Despite providing the union
representatives with requested information related to the mill's financial
position, and despite having clearly set out the need for constructive change
that would lead to improved costs and viabililty, the USW team appeared to
lack the sense of urgency to seriously engage in negotiating.
    "The newsprint industry is in the most challenging period it has ever
faced. While current pricing levels and the higher valued Canadian dollar have
aggravated this situation, the principal and critical issue is the dramatic
oversupply of newsprint relative to current and foreseen demand," said Chris
Black, Executive Vice President and President of the Paper Group. "Simply put,
there will be additional mill closures and sites must be cost competitive in
order to survive."
    "Tembec has an overall strategy for improving the competitive position of
Pine Falls, a critical element of which is to achieve an immediate and
significant reduction in labour cost per tonne produced. However, it appears
that serious negotiation on the critical cost issues will not be allowed to
occur," concluded Mr. Black.
    The Company indicated that it is prepared to return to the bargaining
table whenever the USW advises that it is prepared to enter into serious
negotiation on the key issues.

    Tembec is a large, diversified and integrated forest products company
which stands as the global leader in sustainable forest management practices.
The Company's principal operations are located in Canada and France. Tembec's
common shares are listed on the Toronto Stock Exchange under the symbol TMB
and warrants under TMB.WT. Additional information on Tembec is available on
its website at www.tembec.com.

    This press release includes "forward-looking statements" within the
meaning of securities laws. Such statements relate to the Company's or
management's objectives, projections, estimates, expectations or predictions
of the future and can be identified by words such as "will", "anticipate",
"estimate", "expect" and "project" or variations of such words. These
statements are based on certain assumptions and analyses made by the Company
in light of its experience and its perception of future developments. Such
statements are subject to a number of risks and uncertainties, including, but
not limited to, changes in foreign exchange rates, product selling prices, raw
material and operating costs and other factors identified in our periodic
filings with securities regulatory authorities. Many of these risks are beyond
the control of the Company and, therefore, may cause actual actions or results
to materially differ from those expressed or implied herein. The Company
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or

For further information:

For further information: John Valley, Executive Vice President, Business
Development and Corporate Affairs, (416) 775-2819, john.valley@tembec.com;
Tracy Dottori, Human Resources Manager, Forest Products Group, (819) 627-4591,

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