MIRAMICHI - Employees at the UPM Kymmene paper and groundwood mills in Miramichi have agreed to a wage rollback in a bid to save their jobs. 
The wage cut for all unionized and salaried employees will take effect May 1.

"We've taken a 5.5 per cent rollback and a wage freeze in 2006," Chris Allison, president of Local 689 of the Communications, Energy and Paperworkers Union of Canada, said Monday.

"We get a two per cent increase in 2007, and we go back to normal in 2008."

Mr. Allison said any lost wages will be considered a loan to the company, and returned to the employees after two years of profits.

He said 15 people will be offered early retirement.

UPM officials say they need to cut costs by 12 per cent, and have warned that a proposed power rate increase on April 1 could be devastating.

The mill is in the midst of a three-month shutdown, and 450 unionized employees have been laid off. They are expected back when the mill resumes operations May 1.

Company officials hope the shutdown will save money and allow them to find new ways to make the mill more efficient.

Mr. Allison said it's time for the provincial government to assist and suggested funding could help with the retrofit of one of the mill's boilers.

Kirk MacDonald, the minister of Business New Brunswick, said Monday he's pleased labour costs have been trimmed.

He added government is looking at a number of initiatives to help cut costs.

"We've identified a number of supports that they're going to need on a go-forward basis," said Mr. MacDonald.

"Some of the components of this package are very complex, but we are working through those issues right now, and we hope to be moving together in a positive manner very soon."

Premier Bernard Lord met last month with UPM officials in Helsinki. Another meeting is expected soon when company officials travel to New Brunswick.

In December, the province announced a five-year, $250-million program aimed at upgrading technology and modernizing the industry.

Forestry is the leading industry in New Brunswick, employing more than 17,000 people directly and tens of thousands indirectly.

Analysts warn the pulp and paper sector in particular is being buffeted by change that is shifting production from the Northern to Southern Hemisphere and sweeping away the futures of many Canadian mill towns.

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