Howe Sound Pulp and Paper is cutting about 180 employees – more than a third of its workforce – and permanently shutting down its paper production operations, parent company Paper Excellence announced Thursday.

The closure is effective immediately. The cuts affect about 140 unionized workers and 40 salaried staff at the Port Mellon mill, the Sunshine Coast’s largest private employer.

“This is a very dark day for the membership and the community,” Unifor Local 1119 president Don Rheaume said late Thursday. “We recognize that and we’re going to do everything we can to mitigate this in every way we can.”

Affected employees will receive regular pay for 12 weeks, plus severance options, and their benefits will be intact until Dec. 31, company spokesperson Kathy Cloutier said Friday.

“Transfer opportunities to vacancies within other Paper Excellence pulp mills in Nova Scotia, Saskatchewan and here in British Columbia are open to union and salary employees,” Cloutier said.

David Kerr, vice president with Paper Excellence Canada, said the decision was difficult to make, but added the Kraft pulp mill and power generating businesses at HSPP “will now become stronger and more sustainable.”

The closure will leave 335 employees at the mill, mostly in the Kraft portion, Cloutier said.

One factor in the decision was the dwindling water supply in Lake Seven, which feeds the mill’s paper, pulp and power operations. The company confirmed it hopes the immediate shutdown of the paper operations will allow it to stretch the water supply and avoid temporary closures in the pulp and power sections of the mill.

“The future of our mill lies with our strong pulp and green energy opportunities that will continue to grow,” HSPP general manager Steve Bird said.

Another factor was the declining price and shrinking market for newsprint.

Rheaume said the announcement came as a shock to the union.

“We knew the markets have been very challenging in newsprint and this announcement was a big surprise to us,” he said.

A labour adjustments committee is being set up and the company has agreed to hold meetings with the union starting next week.

Rheaume said the “numbers can change” after the two sides sit down, as they did when job cuts were announced about a decade ago at the mill. However, he acknowledged, “it’s a different situation because the employer has announced a permanent closure.”

He said the union hopes to secure severance and early retirement packages and retraining opportunities for affected members.

“The management has indicated that there are many options on the table, and we’re going to explore all of them,” he said.

The company said it carried out an extensive review to look at other product options for its paper operations, but ruled them out due to equipment shortcomings and lack of market demand for the alternative products.

No further job losses are foreseen at this time, the company said.