Instead of closing its “marginal” plywood plant in Vancouver, management of Weldwood of Canada Limited offered to sell the plant to its employees in mid 1988. Subsequently, about 230 employees invested almost $3 million in the newly formed West Coast Plywood Company Limited.
The employee/owners of West Coast Plywood are the first to benefit from the new Employee Investment Act. According to an announcement by the B.C. Minister of Regional Development, Elwood Veitch, each employee will receive a maximum tax credit of $2,000 to help finance their share purchase. Employee investments range from $10,000 to $16,000 per investor. In addition, the Ministry of Regional Development has also provided a $4 million loan and a $2.5 million loan guarantee to assist with the purchase of the plant for a total price of $7.2 million.
While admitting it was “kind of desperate around last Christmas” when the plant was losing money, the company president reports that business has greatly improved in the last six months.
Initially, employees were asked to accept a 25% wage cut. Some refused to accept this cut and left for new jobs. Those who stayed have already earned back, through profit sharing, more than they lost in their previous wage cut. The new company plans to hire an additional 100 people over the next year and a half in view of the expected continued success of the company. (See Anne Fletcher, “Weldwood Workers Gain Vital Tax Credit,” Financial Post, October 11, 1989, p.4.)