N.S. steel manufacturing plant to close after $56-million investment
THE CANADIAN PRESS
Published Friday, February 19, 2016 11:54AM AST
Last Updated Friday, February 19, 2016 3:18PM AST
TRENTON, N.S. -- A steel manufacturing facility in northeastern Nova Scotia that received $56.3 million in provincial money is shutting down, ending an ambitious plan to create hundreds of jobs in the wind energy sector.
Business Minister Mark Furey said Friday that the board of directors for DSME Trenton, known as DSTN, had informed government the company is ceasing operations permanently.
"They've been challenged in the past number of months to secure either an additional investor or contracts to sustain the facility going forward," he said in an interview.
"We know there's about a $400,000 monthly expenditure to keep that facility in its maintenance mode and the company realized it was unreasonable to continue in the manner it has."
Furey said that after more than five years in business, DSTN did not make money on any contracts or achieve job targets.
He said DSTN has indicated it has several million dollars in cash, equipment and property, which could "minimize the potential cost to taxpayers for any environmental cleanup or receivership fees."
Furey said that with the province as the primary secured creditor, it will file for receivership to try to recover as much of its investment as possible. He said he doubts the $36 million in repayable loans will be dispersed, but the province needs to determine the value of the property and its equipment through the receivership process.
Trenton Mayor Glen MacKinnon said the closure of the plant that dates back to the late 1800s is a big blow to the community of about 2,600 people.
"Obviously, it is not good news for the town," he said. "It means less jobs in Pictou County. Any economic hit to our area is very concerning and we will try as hard as we can to bring new a new entity into that facility."
Furey said there has been ongoing efforts, with the help of Ernst and Young, to secure contracts or investors.
"They spoke with over 100 companies and none of those discussions materialized, so I think that in itself is telling," Furey said.
The decision to close comes less than a month after the province said it wouldn't put any more public money into the manufacturing plant that had hoped to develop the capacity to produce 250 wind turbine towers and 200 blade sets per year.
At the time, the company said it was trying to secure orders in heavy steel fabrication in the wind, oil and gas and rail sectors.
The previous NDP government announced in 2010 it had taken a 49 per cent equity stake in the firm, committed $60 million to the manufacturing plant and predicted 500 jobs would be created within three years.
DSTN told government it cannot start payment on the repayable loans, which was scheduled to begin in early 2018.