Arauco Makes Good on Lease to Own Agreement with EDC

  Supplied by Sault Economic Development Corporation… Sault Ste. Marie, ON (January 29, 2016) – When people and groups work together for a common goal, great things can happen. An announcement today from Arauco North America (formerly Flakeboard Co.) and the Sault Ste. Marie Economic Development Corporation (SSMEDC) once again demonstrates that the adage is correct. The company is finalizing an agreement to purchase its facility from the SSMEDC, a transaction that completes an extremely successful multi-year partnership.

First, some background: in the mid-1990s, the SSMEDC worked with Federal and Provincial officials to help attract GP Flakeboard to Sault Ste. Marie. The company set up a facility on Base Line to manufacture medium-density fibreboard (MDF). This venture proved to be a successful for all parties involved, directly benefitting the local economy and community in general.

During its first years of operating, Flakeboard transported some of its MDF to a facility in southern Ontario to be laminated and used for mouldings, cabinets and other finished products. Seeing an opportunity, the SSMEDC team worked with Flakeboard and developed a business case to have the company expand its local operation and do the lamination right here in Sault Ste. Marie.

With business case in hand, the SSMEDC approached the Northern Ontario Heritage Fund, FedNor and the Community Development Corporation. The three funding agencies, along with the City of Sault Ste. Marie, stepped up to the plate to support the Flakeboard expansion project. At that time, due to regulations, some funding agencies were not permitted to provide investments directly to the private sector. As such, the SSMEDC received a portion of the government funds and had the new facility constructed.

Long story short, with support from all levels of government, Flakeboard added a melamine lamination plant to its Sault Ste. Marie operation in 2004. A rail spur was also built to enable the finished product to be efficiently transported direct to markets across the continent. For the past decade, Flakeboard, which was purchased by Chile-based Arauco in 2012, has been making monthly payments to the SSMEDC under a lease-to-own agreement. The final payment was recently made.

“This initiative required some outside-the-box thinking from the private sector, government funding agencies and economic development officials,” said Don Mitchell, President and Board Chair of the SSMEDC. “The end result is a very successful initiative that the community and Arauco are extremely proud of. In Sault Ste. Marie, perhaps more than any other community, folks find ways to reach common ground, work together and get things done. This initiative is yet another prime example.”

These comments were echoed by Mike Rosso, Vice President of Arauco North America. “Relationships, cooperation and commitment are key themes that can set yourself apart from your competition,” he said. “These themes became the culture within the facility with our talented workforce and when working with our community stakeholders over the years. The creative partnership between Arauco, government and economic development officials has proven to be a success for both the company and the community.”