Domtar - History

History

In 1848, Henry Potter Burt founded Burt, Boulton Holdings Ltd. in England, a company that specialized in treating timber against rot from moisture. The company used substances, such as creosote derived from coal tar, to prolong lumber's useful life, supplying railway ties and pilings for wharves and foundations throughout Europe and the British Empire. Within eleven years Burt, Boulton was exporting to North America and acquired a sawmill in Quebec's Eastern Townships — the forerunner of Domtar's Windsor fine papers complex.

In the coal-intensive environment of the nineteenth and early twentieth centuries, there was an ever-increasing source of coal tar, and a demand for treated wood. Growth continued for Burt, Boulton Holdings Ltd. and led to the founding of a new company on February 4, 1903. It was called the Dominion Tar and Chemical Company, Limited. Dominion Tar's first plant was located in Cape Breton, Nova Scotia, and began operations just eight months later.

In 1910, the company obtained two major contracts. The first, from the Canadian Pacific Railway, was to treat railway ties, and the second, with the Lake Superior Iron & Steel Company, was to process tar produced from the coke ovens at its Sault Ste. Marie, Ontario mill. This required the financing of two new plants at opposite ends of Eastern Canada. Burt, Boulton retained the majority of shares in the company but took on Senator John S. McLennan from Nova Scotia and Drummond, McCall & Co. of Montreal as the corporation's first Canadian shareholders.

When the First World War broke out in 1914, Dominion Tar established its head office in Montreal, where it remains today.

Throughout the first quarter of the twentieth century, Dominion Tar opened offices in Toronto, Halifax, Vancouver, and Calgary. On November 26, 1928, Canadian business magnates Sir Herbert Holt of Montreal and Harold Gundy of Toronto acquired the British-owned corporation.

The newly established North American Dominion Tar & Chemical Company Ltd. received its Canadian charter in 1929 and became a public company listed on the Montreal and Toronto stock exchanges. By the following year, it had unlisted trading privileges on the American Stock Exchange.

During the Great Depression of 1931-36, operating costs were slashed and capital expenditures delayed. Employee wages were reduced 10% and management was consolidated. Several plants were closed — some temporarily, others permanently. Dominion Tar withheld its annual dividend on common stock from 1932 to 1937.

In 1937, Dominion Tar invested in Industrial Minerals, an Alberta company that was producing salt under the Sifto brand. (Over time, other familiar brand names such as Arborite, Gyproc and Javex were added to the list.)

In the 1950s, Dominion Tar saw its assets grow from $35 million to over $500 million, with annual sales surging from $33 million to $325 million, and annual net profits climbing from less than $2.25 million to almost $19 million. Operations were still based on coal tar, salt, and construction materials. However, throughout this decade the company negotiated a series of acquisitions to fuel its growth. In 1956, Dominion Tar began accumulating shares of Howard Smith Paper Mills, Canada's largest fine paper company. The subsequent acquisitions of the Howard Smith and St. Lawrence companies in 1961 would mark the company's entry into paper production.

It also elevated Dominion Tar into the ranks of the largest Canadian-owned corporations, with plants located across the country, over $350 million in assets, and annual sales to match.

While continuing to invest in all its business sectors, Dominion Tar began to concentrate efforts on paper manufacturing, and converted the Windsor, Quebec pulp mill to exclusive production of bleached hardwood pulp and building a new greenfield pulp mill in Lebel-sur-Quévillon.

In 1962, the Cape Breton operations were abandoned, leaving behind Dominion Tar's contribution to the Sydney Tar Ponds, a Canadian hazardous waste site on Cape Breton Island, Nova Scotia.

In 1965, the Dominion Tar & Chemical Company, Limited became known as Domtar Ltd., later changed to Domtar Inc. In addition, the newly minted Domtar was reorganized into Chemicals, Consumer Products (sold to Bristol Myers in 1967), Construction Materials, Kraft and Fine Papers, Newsprint and Containerboard, and Packaging divisions. By 1967, total assets had reached $477 million. Domtar was now determined to become a leader in paper manufacturing.

Throughout the 1970s, Domtar began to re-evaluate its non-paper businesses as it continued to expand. The first noteworthy venture was the acquisition of Buntin Reid Paper Co. Ltd., the largest independent fine paper merchant in Canada.

Next came the modernization and expansion of the flagship Cornwall, Ontario mill (closed in 2006), the expansion of the Caledonia gypsum wallboard plant, investments in a new laminated products plant at Huntsville, and the acquisition of McFarlaneson & Hodgson Inc., a major Canadian fine paper merchant. Domtar also launched several joint ventures to increase its lumber operations and to supply more wood to its newsprint mill in Dolbeau, Quebec.

At this time, La Caisse de dépôt et placement du Québec acquired a controlling interest in the company. Founded by the Quebec government a dozen years earlier, the Caisse was mandated to invest Quebec Pension Plan funds into the private and public sectors.

In 1979, Domtar acquired Reed Limited, a subsidiary of a U.K. pulp and paper manufacturer, with three corrugated container plants, a linerboard mill, and a waste paper recycling plant, all in the Toronto area. That same year, Domtar expanded its West Coast gypsum facilities in the United States and Canada. Lastly, the company founded Domtar Resources Inc. as an entry into the natural gas and oil exploration business in western Canada. The leveling off of energy costs eventually led to the venture's demise.

In the early 1980s, Domtar withdrew from its manufacturing activities abroad and closed its U.K. fine paper mill. Paper remained paramount and Domtar began to explore the potential for paper recycling, and the Packaging Group proceeded to convert purchased waste paper into pulp.

Domtar's profitable activities through the early 1980s attracted the participation of La Société générale de financement du Québec which, together with the Caisse, jointly acquired 42% of all outstanding common shares.

In 1989, the company divested itself of the Arborite Products and Salt divisions, and exited the consumer products business to turn to manufacturing commodities for conversion or packaging prior to sale.

In December 1997, Domtar and Cascades Inc. developed a joint venture called Norampac. A major North American manufacturer and distributor of container board, Norampac is Canada's largest producer of corrugated packaging. In 1998, it bought the E. B. Eddy Company.

In January 2000, Domtar launched an e-business application, e-PAPER, enabling merchants and distributors to communicate with Domtar via the Internet. It also enabled customers to check on inventory, place orders, and track orders in transit via truck-mounted GPS units.

In July 2000, Domtar completed its acquisition of Ris Paper Company Inc., one of the largest independent merchants of commercial printing and business papers in the United States. On August 7, 2001, Domtar purchased four paper mills and their associated businesses and assets from Georgia-Pacific Corporation for a total of US$1.65 billion. With the acquisition of mills in Ashdown, Arkansas; Nekoosa and Port Edwards Wisconsin; and Woodland, Maine, Domtar became Canada's largest paper company in terms of sales, third-largest producer of uncoated free sheet paper in North America, and fourth-largest in the world. The Port Edwards plant was closed in 2008.

On August 22, 2006, Domtar, Inc. agreed to combine with the paper business of U.S. forest products company Weyerhaeuser Co. to form a new, U.S.-based publicly traded company operating as Domtar Corporation. On March 7, 2007, the transaction between Domtar, Inc. and Weyerhaeuser was officially completed.

The Head Office of Domtar Corporation is located in Montreal, Quebec, and its operating headquarters are in Fort Mill, South Carolina. Domtar is not viewed as a Canadian entity, and does not qualify for inclusion in Canadian stock indexes.

Cornwall coated cover was produced for a time in Chinese paper mills due to the closure of the Cornwall, Ontario plant, but production has since ceased.