Finland Times

Forest industry group UPM plans to significantly reduce paper capacity in Europe by closure of four paper machines in Finland, France and Britain, said UPM in a press release published on Thursday.

     In order to improve its profitability, UPM set a new profit improvement target to increase 150 million euros (187 million U.S. dollars) annually by the end of 2015.

     The target includes cost-saving plans in all UPM businesses as well as capacity closures in the European paper business, which continues to suffer from overcapacity.

     UPM said that it will permanently reduce its publication paper capacity in Europe by approximately 800,000 tons in 2015.

   

 The capacity reduction leads to closure of a newsprint machine in France, a newsprint machine in Britain, as well as a SC paper machine and a coated mechanical paper machine in Finland.

     "The current operating rates are unacceptably low and the current economic environment is not promising tailwind for 2015," said Jussi Pesonen, President and CEO of UPM in the press release.

     He added, "We plan to adapt our production to meet the profitable customer demand. We also ensure savings without endangering customer deliveries in the structurally declining market."

     

The company will also centralize UPM Paper ENA (Europe & North America)'s activities of supply chain planning and order fulfillment to Augsburg and Dorpen in Germany.

     If the planed capacity reduction is put into effort, about 550 employees in the related mills will be laid off by the end of 2015, said UPM.

     Founded in 1996 and headquartered in Helsinki, Finland, UPM is one of the world's leading forest industry group. The group employs around 21,000 people and it has production plants in 14 countries around the world.

News agency STT adds: As part of its capacity enhancement programme, the UPM could reduce up to 283 jobs in Finland.

The company estimates to cut 226 jobs in Jämsä  following the closure Jämsä and Kaukos paper machines.

In addition, UPM will focus it supply chain operations in Germany which as a result will see 57 jobs lost in Tampere service centre.

According to Tapio Korpeinen, Chief Finance Officer at UPM said high costs in the country has led to the decision to close down paper machines in Jämsä and Kaupas.