840 jobs to go as UPM shuts down mills, machines

The forest-based bio-industry company UPM on Wednesday announced to shut down paper machines at different paper mills that will impact on about 840 positions, said an official press release.

The company announced plans for permanent closure of UPM Kaipola Paper Mill in Finland, sale of UPM Shotton Paper Mill in Wales and streamlining Communication Papers business function teams.

In addition, UPM Bio-refining and UPM Specialty Papers announce plans for reorganising and streamlining activities in Finnish pulp mills, UPM Forest and UPM Tervasaari Mill in Finland.

The planned actions would result in annual cost savings of EUR 75 million. Decisions on the final plans will be made after the co-determination procedures have been concluded.

Continued long-term decline in graphic paper demand combined with weakened economic outlook require prompt actions to ensure performance in UPM Communication Papers. In a declining market, competitiveness in company operations as well as local operating environment is of utmost importance.

In 2020, the COVID-19 pandemic-related lockdown measures have caused a short-term demand disruption in the graphic paper market. While there are early signs of normalisation in paper demand after lockdowns, the ensuing economic outlook has deteriorated globally.

UPM Communication Papers plans to permanently close its Kaipola mill in Finland latest by the end of 2020. 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.

“This is devastating news to Kaipola. While Kaipola has competent teams and well operated machines, external factors such as high logistics costs, regulatory and tax burden, high cost of labour and increasing fibre costs make it the least competitive among UPM’s paper mills,” said UPM Communication Paper Executive Vice President Winfried Schaur.

Further, UPM Communication Papers plans to reorganise and streamline its business function teams across Europe and North America. These plans would affect approximately 170 positions in more than 10 countries. UPM also announces its intention to sell its UPM Shotton Paper Mill for conversion purposes.

Current production capacity of the mill is 250,000 tonnes of newsprint in Deeside, Wales. The mill assets include the materials recollection and recycling facility, deinking plant, paper machine line and energy infrastructure as well as established access to the UK recycled paper market.

“UPM Shotton is well positioned to serve the UK market. However, we look for outside opportunities for alternative long-term use of the mill as the newsprint consumption continues to decline. The paper machine is technically flexible to support conversion especially into containerboard production,” said Schaur.

UPM will begin employee consultation process at its Kymi, Kaukas, and Pietarsaari pulp mills regarding planned changes in the mills and support organisation.

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.

In the Finnish forest organisation, the planned measures focus on improving cost-efficiency by streamlining the organisation and increasing the use of digital systems and services. The plans would affect a maximum of 60 positions.

UPM Specialty Papers plans to reorganise and optimise the cost structure at UPM Tervasaari Mill, Finland to improve competitiveness. The planned measures would impact approximately 50 positions at the mill.