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Arauco Confirms 121 Layoffs Due to Closure of Horcones 2 Sawmill

Sponsors

Despite the announcement over the weekend of the definitive closure of the Horcones 2 sawmill, which led to the layoff of 94 forestry workers, this Tuesday, Arauco confirmed that the total number of dismissed workers is 121.

"There are 94 direct employees and 27 workers from service companies. Since the beginning of the year, we have been implementing various measures to mitigate the effects of rising costs and market changes," explained Mauricio Leiva, Public Affairs Manager of Arauco.

The company stated that the sawmill's closure is due to multiple factors, including supply difficulties, cost increases due to rural violence (land takeovers and road blockades), and reduced wood availability caused by wildfires. Additionally, they explained in a statement that "the complex international scenario and the sharp shift in market behavior have led to a significant drop in demand and product prices."

Regarding the measures taken by the company to address these challenges, Leiva added, "We have halted plant operations during long holidays, reduced shifts—previously double shifts, now down to one—and relocated as many workers as possible to our plants producing goods that still have some demand and remain competitive."

Similarly, Arauco's Public Affairs Manager emphasized that "not all workers from the Horcones 2 sawmill have left; we have relocated those we could to other sawmills or plants." He also noted that the company has sought the best possible conditions for the departing employees.

Authorities

The Regional Ministerial Secretariat of Labor (Seremi del Trabajo) of Biobío, led by Sandra Quintana, confirmed that no complaints have been filed with the Labor Directorate regarding the layoffs resulting from the sawmill's closure.

Meanwhile, the Municipality of Arauco reported that, according to their records, only 20 of the dismissed workers are from the commune where Arauco's sawmill is located.

Industry Groups

Álvaro Ananías, President of the Biobío Chamber of Production and Commerce (CPC), described the situation at Arauco's sawmill as very bad news, as it "demonstrates the severity of the economic challenges facing forestry companies after the summer wildfires. Companies are now suffering the consequences of terrorist acts that were neither prevented nor punished, along with timber theft, the complex international market scenario, and additional national economic and security factors."

For its part, the Chilean Wood Corporation (Corma) expressed concern over the numerous factors negatively impacting the forestry sector's development in the country. Corma added that, on top of the economic challenges inherent to any productive activity—such as price fluctuations and market behavior—there are serious acts of violence occurring almost daily in the south. These, along with crimes like timber theft and the intentional mega-fires of recent years, have led to a supply crisis for large, medium, and small companies in the sector, the impacts of which are now being felt.

Forestry Exports

Regarding the sector's current state, forestry exports reached US$2.767 billion by the end of the first half of the year, an 18.8% drop compared to 2022 but still above the levels recorded during the same period in 2020 and 2021, according to data from the Forestry Institute (Infor).

This figure includes June's exports, which totaled US$390 million—a low monthly amount seen only twice this year and previously recorded only during some months of the pandemic.

According to Agriculture Minister Esteban Valenzuela, the situation remains uncertain, with some signs of fragile recovery. "There were some signs of economic improvement, but there is a significant risk of decline. Although China's full reopening, our main export destination, contributed to greater global economic dynamism, inflationary effects persist, restricting global economies amid an underlying war conflict," he said.

In this context, the minister pointed to the weak performance of the global economy, which is projected to grow by only 2.1% this year, according to the latest World Bank estimates, stating that "this is the reason for the widespread decline in forestry shipments, resulting in a sharp deterioration of the sector's exports."
According to INFOR data, the decline in exports is widespread, affecting most major destination markets, products, and exporters, with some exceptions.

Source:www.diarioconcepcion.cl