Almost 4,000 employees affected by shutdowns at pulp and paper mills
Overcapacity, cheap dollar, and Russian timber tariffs have put Finnish paper mills up against the wall
The downsizing of the Finnish forest industry has left as many as 3,786 employees without work in pulp, paper, and paperboard mills over a period of six years.
The difficulties faced by the chemical forest industry are attributable to the oversupply of paper, the Russian export duties on roundwood, and the strong euro.
The downsizing process has affected Kymenlaakso most severely. Over a short period, the region has lost more than 1,000 jobs following the closure of pulp and paper mills.
The process is likely to continue, as the Myllykoski paper mill in Kouvola and the Stora Enso pulp mill in Kotka are currently in jeopardy. More than 800 jobs are in the firing line.
In Varkaus, Stora Enso shut down a rather modern paper machine last week. In Kouvola, the workers at the Myllykoski paper mill have a presentiment that the mill could be closed down. In the next downturn, work at the Sunila pulp mill in Kotka could also come to an end.
Over a short period of time, the Finnish pulp, paper, and paperbord industry has lost almost 4,000 jobs.
How is it possible that Finland’s former national pride has failed so miserably?
The industrial downsizing was started by UPM when the company closed down its Voikkaa paper mill four years ago.
It was a major event, and the management of the company explained that the closure was necessary as a consequence of financial losses and overcapacity in the production of coated magazine paper.
Since then, the most significant reason for cutbacks has been explained to be Russia.
In the winter of 2007, Russia announced that it planned to raise its export tariffs on raw timber significantly.
Even though the plans have not been fully implemented so far, the mere threat of such tariff increases was bound to frighten the decision-makers of Finnish forest companies.
UPM has been followed closely by two other major Finnish paper manufacturers, Stora Enso and Metsäliitto.
Another important factor is the relationship between the euro and the dollar. Because of the cheap dollar, it has no longer been worthwhile to ship the surplus stocks of paper into the United States, which has led to tightening competition and lower markups in Europe.
The third factor is the fact that the demand for paper has ceased to grow in Europe.
In such a situation, companies start to fish customers from each others’ traditional operating areas for example by offering price reductions.
In spite of all this, it is surprising that only the small paperboard manufacturer Stromsdal in Juankoski has declared bankruptcy.
The centre of paper production is clearly moving from north to south, but Finland still has 50 pulp, paper, and paperboard mills as well as a large number of sawmills and panel plants.
When it comes to future prospects, pulp and paper manufacturers are now looking for something new that could save the Finnish forest industry.
A large number of strategy groups and brainstorming teams are discussing the feasibility of bioenergy in the forest industry.
Bioenergy is the buzz-word of the day.
The concept is conveniently vague, stretching from stacks of brushwood to black liquor, which is the spent cooking liquid that has been separated from the pulp produced by the kraft, soda, or semichemical pulping process.
The purpose of bioenergy is to prevent climate change by burning wood, while at the same time converting the business of climate change into money.
With the help of government subsidies, naturally.
Previously in HS International Edition:
Stora Enso to close down newsprint production at Varkaus Mill (23.4.2010)
Stora Enso to cut back production in Varkaus and sell Kotka mills (22.4.2010)
Paper manufacturer UPM cutting thousands of jobs in Finland (9.3.2006)
Stora Enso and UPM issue profit warnings (19.6.2008)
UPM: Russian wood tariffs could reduce paper production already this year (6.2.2008)
Stora Enso closing Summa and Kemijärvi mills at brisk pace (18.1.2008)
Google buys Stora Enso paper mill building in Hamina for use as data centre (13.2.2009)