MercoPress. South Atlantic News Agency

US subprime crisis hits Chilean wood molding industry

The subprime lending crisis in the United States recently forced Chile's Celulosa Arauco (CELCO), the forestry arm of the Angelini group, to close the La Araucana sawmill located in Los Álamos in Arauco province. The decision left 130 people unemployed.

CELCO is the primary provider of wood molding to the US market. The lending crisis, which has severely slowed the home construction industry in the United States, has forced the company to focus more on markets in Europe, Australia and the Pacific. Even so, CELCO has not been able to adjust production to cope with the loss in demand. "CELCO has made every necessary effort to be able to maintain this situation. However, the worsening of the crisis in the United States means that the situation has become unsustainable, forcing us to close the Araucana sawmill, a factory that employs 130 workers, for an indefinite period," said company public affairs manager Iván Chamorro. Although the plant only processes 2.7% of the 4 million cubic meters that the Angelini group produces annually, the closing will make very clear how much the housing crisis in the U.S. has impacted the industry. "We don't see a solution to the crisis right nowâ€Ã‚¦we expect the situation to stabilize and that in the next few years [conditions] will be restored," said Chamorro. He predicted a decrease in sales of 15 million US dollars per year. According to the executive, La Araucana has taken a series of steps to minimize the impact of the plant's closing on the workers, including early vacations of one or two weeks to 2,000 people. Shifts at the Horcones plant, which receives material from La Araucana, were reduced several months ago. Ninety percent of the products manufactured at Horcones go to the US market. Those workers who were laid off will receive 120% of the compensation for their years of service as a settlement. The company will also try to relocate 52 people to other facilities. The Santiago Times