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Until Queen Victoria sealed its fate as a comatose government town, elevating it to Canada's capital in 1857, Ottawa was a rowdy lumber camp.

It may be hard to find evidence of that boozy past amid the pricey condos, stately embassies and grey government architecture of today's Ottawa. But Ottawans are constantly reminded that others in the region are still hewing wood by the paper mill smoke stacks of Gatineau, Que., a few hundred metres across the river from Parliament Hill.

No mill is as central to the region's history as the landmark Domtar plant that straddles the Ottawa River, partly in Ontario, partly in Quebec. It was built by Ezra Butler Eddy in 1851. And anyone who has ever lit a match should know who he was.

The E.B. Eddy mill was for decades the principal motor of the local economy. It even spawned a distinctive architectural style as hundreds of so-called "matchbox" houses were put up in Hull (now part of Gatineau) to accommodate the mill's workers. Most of the houses were razed in the seventies to make way for government buildings, making those that remain cherished artifacts for urban anthropology buffs.

Garfield Weston - father of Loblaw magnate Galen, grandfather of current Loblaw pitchman and chief Galen G. - bought the mill in 1943 and it became the base from which the Westons built up E.B. Eddy Ltd. into one of the country's most profitable forest products companies. So profitable that Domtar paid $800-million for E.B. Eddy in 1998. The pricey deal was Raymond Royer's first major move to put his stamp on Montreal-based Domtar, after taking over as chief executive in 1996.

Mr. Royer has put many stamps on Domtar since then, transforming the company from a Canadian-focused ward of the Quebec state into North America's biggest producer of uncoated freesheet, the primary grade used in printing and copy papers. Nothing has left a bigger mark on the company, though, than Domtar's merger with the fine paper division of U.S.-based Weyerhaeuser, announced a year ago, but only consummated in March.

The 200 remaining workers at the E.B. Eddy mill know that only too well. Almost 200 of their colleagues lost their jobs last year when Domtar closed two of the mill's paper-making machines on the Ontario side. On Tuesday, Domtar announced the remaining machine on the Quebec side - which spews out about 125,000 tons of coated paper used in glossy magazines - will be shut down in October. After 156 years in operation, the E.B. Eddy mill might be converted into a museum.

Museum status is, of course, what much of Canada's pulp and paper industry is facing these days. The heady Canadian dollar, the price of securing Canadian wood to feed mills, low-cost South American competition and sinking North American paper demand are trends that show no signs of letting up.

Mr. Royer, who is expected to bow out as CEO by the end of 2008, is not wasting any time trying to make sure the new Domtar does not, like E.B. Eddy, become a footnote to history. For Mr. Royer, that means focusing on one product - uncoated freesheet - to such an extent that the company's stock symbol has been changed to UFS.

Mr. Royer has sold Domtar's 50-per-cent stake in cardboard box maker Norampac to partner Cascades in a deal valued at $560-million. Last month, he announced that Domtar was exiting the money-losing lumber business by selling its 10 sawmills in Ontario and Quebec to a new venture, Conifex, for $285-million.

The latter deal shows just how much Domtar has made a clear break from the traditional model of a vertically integrated Canadian forest products company that chops wood, saws the good parts into lumber and uses the rest to make soupy pulp that eventually becomes paper. Mr. Royer has decided to leave the headache inducing lumber business, which is governed by rigid timber-cutting licences granted by provincial governments, to others.

Unfortunately for Canadian workers, the new Domtar, though still based in Montreal, is hardly Canuck. After the closure of the E.B. Eddy mill, only three of Domtar's pulp and paper plants still in operation will be in Canada, compared with 10 south of the border.

What's more, Mr. Royer has hardly finished remaking Domtar. He said Tuesday that "further rationalization may be implemented in the near future." The only Domtar mill in Canada that isn't vulnerable is in Windsor, Que. It was built in 1987, which makes its paper-making machines spanking new by the standards of the antiquated Canadian industry.

If age is the only criteria, you might as well light a match to the rest. An Eddy match, if you want to get ironic about it.

kyakabuski@globeandmail.ca

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