Dexter defends loan to firm cutting jobs

Nova Scotia's premier says a $5-million loan to an unprofitable Dartmouth company that makes furniture for Ikea was necessary.

Scanwood Canada recently announced its intention to automate some of its work and cut 35 jobs in September.

"If this loan had not been advanced to Scanwood, there would be more than 200 people out looking for a job right now," Premier Darrell Dexter said about the loan made in March. "The reality is, this money is maintaining that company, maintaining jobs in the province."

The company, which employs 245 unionized workers, is introducing robotic machinery and an automated packing line next week. The move will reduce wage costs and increase output by 20 per cent, the company said, adding that even more jobs could be lost in the future.

"This is really not about layoffs. It's about saving jobs and the only route to do that is to modernize and to make sure we become competitive," said co-owner Bo Thorn. "We will do what it takes to make Scanwood profitable."

Four years ago, another Nova Scotia Ikea supplier shut down because it could not produce furniture at a low enough price. At the time, the provincial Tory government said there was little the province could do to help.

The company, Shaw Wood, put 200 people out of work when it closed.