UPM considers lockout at Finnish paper mills

Paper company reports reduced turnover, but better result in first quarter

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Paper manufacturer UPM says that it will consider a lockout in the current labour dispute with employees.
      On Tuesday, members of the Paperworkers' Union shut down UPM's Pietarsaari pulp and paper mill, the Kymi pulp and paper mills at Kuusankoski, and the Walki Wisa plants in Valkeakoski. Today, Wednesday, all UPM factories in Finland are to go on strike.
      "At some point, the disturbances will become so great that we will also have to consider a lockout. If factories keep being started up and shut down, operations will become economically impossible. We also need to guarantee that the quality of the paper will meet the criteria", said UPM CEO Jussi Pesonen on Tuesday during the publication of the company's first quarter results.
     
UPM is taking the same view as Stora Enso, whose factories were shut down at the end of the week. In Imatra, Stora Enso has told its employees that the factories will not start up again until there are guarantees of the uninterrupted continuity of production. No such guarantees are likely to emerge.
      Stora Enso says that the reason for its tough line is that starting up and shutting down a factory can cause water pollution; some environmental damage has already been reported at the Kemijärvi paper mill.
     
Pesonen also said that international customers have expressed concern about the Finnish labour market situation. He has been asked that the company supply more paper manufactured at local paper factories in Central Europe and North America.
      This is a problem for UPM, because one magazine paper factory in Canada has stood idle from December because of a strike by personnel. Also, the company's factories in Central Europe have little free production capacity.
      In the contract talks, the paper industry has called for keeping paper factories open during Christmas and Midsummer. The holiday shutdowns add up to a full seven days a year.
      The employers' side is also concerned about a high rate of absenteeism, and wants to change rules concerning sick leave. Under the proposal, the first two days of a sick leave would be unpaid.
     
UPM's first quarter result showed a clear rise in profitability. However, this was achieved in a somewhat extraordinary way. The company reduced production, which led to a decline in turnover. At the same time, profits rose considerably over the same time last year.
      In the first part of the year the company's turnover declined by EUR 173 million to EUR 2,278 million. Profit nearly doubled to EUR 173 million.
      The aim of the production cutbacks was to push prices upwards. This succeeded in newsprint and magazine paper. However, turning down low-priced deals led to a loss in market share.
      UPM predicts that paper production will increase in the April - June period, when the company can benefit from the price rises. However, the strikes in Finland could undo the strategy.
      The strike at the Canada factory does not affect the total result of UPM very much, because the factory is not very profitable.


Previously in HS International Edition:
  National Conciliator to help seek solution to paper strike threat 826.4.2005)
  Government rejects calls for action against wildcat strikes (22.4.2005)

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