Finnish government allocates funds to areas hit by Stora Enso closures

More than 1,000 jobs to go, often in already weakened areas

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The government led by Prime Minister Matti Vanhanen announced yesterday that the areas affected by Stora Enso’s intended pulp and paper mill closures will be designated as areas of sudden structural change, eligible for higher than average corporate subsidies.
      The government also decided to increase the amount of sudden structural change subsidies by EUR 15 million in next year's budget. This amount of money should be used to speed up investments in order to create new jobs in the affected areas.
      Moreover, the government expects Stora Enso to help the affected employees to find alternative employment, in the same way as another Finnish pulp and paper manufacturer UPM did when it shut down its magazine paper plant at Voikkaa last year.
     
The Finnish pulp and paper company Stora Enso announced on Thursday its intention to close down permanently the Summa paper mill and one magazine paper machine at the Anjala mill, as well as its pulp mills in Kemijärvi and Norrsundet in Sweden.
      The number of personnel affected by the planned mill closures will amount to 1,100 jobs lost in Finland and a further 300 in Sweden, while the Stora Enso administrative staff will be reduced by about 300 in the UK, Finland, Sweden, and Germany. The total number of jobs lost in the company will thus amount to some 1,700 employees.
      The company reported further that the sawmilling operations in Kotka could also be divested if a satisfactory offer is received.
     
As a protest against the planned capacity reductions, the employees at Stora Enso’s pulp, paper, and paperboard mills decided to start a one-day stoppage early today - Friday. The office workers of the mills will join the demonstration in the afternoon.
      At Stora Enso’s Imatra mill the decision to walk out was reported to be unanimous and spontaneous.
      Chief shop steward Ilkka Nokelainen said that after yesterday's news, he is today even more shocked, as he has only gradually begun to realise what a substantial impact the intended capacity reductions will have on the entire country.
      The loss of more than 200 jobs in Kemijärvi is a particular blow to that region, which has already been hit recently by the departure for China four years ago of mobile phone handset battery charger manufacturers Salcomp, along with 600 local jobs.
     
Stora Enso CEO Jouko Karvinen has implied that apart from the current closures there might be even more coming.
      "I can no longer just sit and wait for better times or for the strengthening of the US dollar. We will have to respond to the reality of the situation we are in. If we do not manage to reduce raw material costs, we will have to take other measures. The situation is serious, as we are running out of time", Karvinen argued.
      After the closure of the mills, the wood purchases of Stora Enso will go down by a couple of million cubic metres per year. This will automatically reduce the prices for spruce and pine pulpwood, provided that the competing forest companies UPM and Metsäliitto do not increase their wood acquisitions.
     
On Thursday, Stora Enso also presented its results for the third quarter of 2007. When compared with last year, the net sales were more or less the same, while the reported operating profit before non-recurring items was slightly higher than a year ago, totalling EUR 252 million. The return on capital employed (ROCE) was 9.4 per cent, while the goal set by the company was 13 per cent.


Previously in HS International Edition:
  Stora Enso to shut down two factories in Finland and one in Sweden - 1,400 jobs to go (25.10.2007)
  Stora Enso pulls out of North America after massive losses (24.9.2007)
  Paper manufacturer UPM cutting thousands of jobs in Finland (9.3.2006)
  Salcomp to close charger plant in Kemijärvi; all production to transfer to China (11.9.2003)

Links:
  Stora Enso press release 25.10.2007: Stora Enso to cut magazine paper, newsprint and pulp capacity and reduce administrative staff
  Stora Enso Interim Review January-September 2007

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