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AbitibiBowater's David Paterson gets out of print

Former AbitibiBowater CEO David Paterson

Hollis Bennett/Hollis Bennett

The last three years have been a hard education for David Paterson. In 2007, the U.S. paper veteran became CEO of AbitibiBowater, the Montreal-based newsprint goliath formed from the merger of Canada's Abitibi-Consolidated and Paterson's U.S. employer, Bowater. After the deal, the decline of the newsprint market turned into a rout, and AbitibiBowater filed for bankruptcy protection in April, 2009. Today, it's out of protection, smaller and leaner, but Paterson, at 56, won't be part of it much longer. He passed the torch on Jan. 1 to Richard Garneau, a veteran forestry executive, but will serve as an adviser until summer.

Why leave now? We have emerged from protection, so it is a new start. I had been asked whether I was committed to staying and living in Montreal for the long term. I thought about it and said, "No, I don't want to finish my career in Canada." I've got five to 10 years left to work and, mainly for personal reasons, I didn't want to be away from the States that long. My wife goes back and forth [between homes in Atlanta and Montreal] but my kids are in the U.S., and some day I hope to have grandkids there, too.

What's next for you? All my focus has been on getting the company out of bankruptcy, so I haven't spent any time worrying about that stuff. I've committed to help in the transition, and to spend time with my family. I'm going to take it easy for a while.

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What is your biggest piece of advice for your successor? You've got to keep changing the product mix and changing the performance of the company. This is not the end game. It is the beginning of the new company, and you've been given a fresh start. Standing still isn't going to work.

Did you find a different business culture in Quebec? If you look past the language issue, business practices in Quebec are pretty modern, pretty standard. The big difference is the Canadian federal system. In the U.S., the federal government has so much authority over regulation and taxes. In Canada, provinces have a much bigger say, especially around land management.

You clashed with Newfoundland and Labrador when the province expropriated assets of a mill you had closed. Was it coincidence that you and Danny Williams retired within two weeks of each other? That wasn't co-ordinated, I guarantee you that.

Did you send him a note? I haven't really communicated with Danny. I've met him, but I worked mainly through his staff. We had a pretty open dialogue. We just fundamentally disagreed. At the end of the day, it was a business matter, and we understood the province's point of view. It was the act of expropriation that was unique. We've had to close lots of mills in Canada and always worked to find a solution with the governments.

So Newfoundland's move was a shocker? Yes, it was. I learned a lot about NAFTA after that one. [The company launched a NAFTA challenge, and reached a $130-million settlement with Ottawa.]b>

Do you have regrets? When you are in a challenged industry, you have to get your fixed costs down as low as you can. It took the restructuring to get us super-serious about doing that. It's hard to do, because, in most businesses, fixed costs are people and facilities. But the revenue model didn't support the cost structure, and now we have reduced our fixed costs by over 50%. We should have been more aggressive from day one.

What was the darkest moment? For me, it was the two months leading up to the filing. Funding the restructuring was very challenging because of the state of credit markets, and we weren't performing well. We had lost 25% of our order book in newsprint in one year. For employees, the darkest moment was right after we filed. The reality hits you in the face-the psychology of going from a secure company to a bankrupt-filed company. The shock is a punch in the nose to your employees, and they get highly distracted.

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How did it feel when you came out of protection? Walking around the office that day, I actually saw people smiling. There is a deep sense of relief that you've got through it, and in a way that you can feel good about the future of the company.

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About the Author
Senior Writer, Report on Business

Gordon Pitts is an author, public speaker and business journalist, with a focus on management, strategy, and leadership. He was the 2009 winner of Canada's National Business Book Award for his fifth book, Stampede: The Rise of the West and Canada's New Power Elite. More

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