The chain of bad economic news continues to add links. Yesterday it was the transport sector - Finnair and Viking Line - who announced layoffs and staff cuts. Now it is the turn of the Finnish pulp and paper industry, which is about to take a fatal blow with the closure of one of its paper mills this year.
The company UPM Communication Papers - which claims to be the world's leading producer of graphic papers - announced on Wednesday the permanent closure of one of its two production plants in Finland, the UPM Kaipola paper mill, latest by the end of 2020.
According to a statement for the stock exchange issued by the company, the planned closure of UPM Kaipola's three paper machines would impact approximately 450 positions and lead to a permanent reduction of 720,000 tonnes of graphic paper capacity, thereof 450,000 tonnes of newsprint and 270,000 tonnes of coated mechanical paper.
UPM has two paper mills located in Jämsa, some 200 kilometres from Helsinki and 100 kilometres from Tampere. Both plants, Kaipola and Jämsänkoski, have a combined personnel of 870 people, according to the company.
"This is devastating news to Kaipola. While Kaipola has competent teams and well operated machines, external factors such as high logistic costs, regulatory and tax burden, high costs of labour and increasing fibre costs make it the least competitive among UPM's paper mills," says Winfried Schaur, Executive Vice President of UPM Communication Paper.
Pulp and forestry operations
In addition, UPM Biorefining aims to further increase the efficiency of its pulp and forest operations in Finland. The planned measures focus on streamlining the operating model, optisiming the cost structure and advancing digitalization.
UPM will begin co-determination talks with employees at its Kymi, Kaukas and Pietarsaari pulp mills regarding planned changes in the mill and support organization.
"The planned changes aim to increase flexibility and efficiency in the areas of mill maintenance, production and administration. At most, these plans would lead to a reduction of 110 positions," the company says.
In the Finnish forest organization, UPM says the planned measures focus on improving cost-efficiency by streamlining the organisations and increasing the use of digital systems and services. Those plans would cost other 60 jobs maximum.
UPM Specialty Papers also plans "to reorganize and optimize the cost structure at the UPM Tervasaari mill, Finland, to improve competitiveness." The planned measures would impact approximately 50 positions.
Further, UPM says it plans "to reorganize and streamline its business function teams across Europe and North America." These plans will affect approximately 170 jobs in more than 10 countries. UPM also announced its intention to sell its Shotton paper mill, in Wales.
670 jobs in Finland
In total, the plans are estimated to impact approximately 840 positions, most of which are based in Finland (approximately 670, based on preliminary estimates listed by the company.) UPM expects the planned actions would result in annual cost savings of 75 million euros.
The company has earlier this year announced the closure of Chapelle paper mill in France, Jyväskylä plywood mill and streamlining in UPM Raflatac. These actions result in annual cost savings of approximately 45 million euros.
The company will arrange a press conference at the UPM Kaipola mill on Wednesday to explain its plans. Anu Ahola, Senior Vice President of News & Retail unit of UPM Communication Papers, and Antti Hermonen, General Manager of UPM Jämsä River mills will be present and available for questions.