Loss-making Finnforest to shed 400 jobs in Finland

Metsäliitto Group to instigate heavy rationalisation in mechanical forest products arm

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Metsäliitto Group announced on Wednesday that it intends to improve the health of its sawmilling and processed wood products arm through a radical programme of job reductions. The subsidiary Finnforest is to begin negotiations with staff over sharp cuts in the workforce from May 11th.
      The employer's proposal is to axe around 400 jobs in Finland. Out of a total international workforce of just under 8,000, Finnforest employs some 2,600 persons in Finland, and a streamlining programme on this scale - some 15% of the overall staff locally - is unprecedented in the recent history of the Finnish mechanical wood processing industry.
     
Finnforest justifies the reductions by pointing to the company's latest figures, which do not make for pleasant reading. In 2003 Finnforest posted a loss before extraordinary items of EUR 25.1 million on annual turnover of just under EUR 1,800 million. In the first quarter of this year, losses of EUR 3.8 million replaced the small quarterly profit enjoyed a year previously.
      According to the Finnforest CEO Ari Martonen, some tough decisions have to be made. These were started in Britain, Germany, Norway, and Sweden, where around 1,000 jobs have been shaved. Now it is the turn of Finland. All personnel groups - in production, sales offices, head office staff, and executive management - will be subject to the same pruning.
      Martonen also points out that it will not merely be loss-making units that feel the axe: "Even those parts of the company that are in the black will be obliged to up their profitability."
     
The biggest single cost-item for the mechanical wood processing industry is the cost of raw materials. Logs for Finnforest are supplied by Metsäliitto, which is owned in turn by a cooperative organisation for Finnish forest owners, with some 130,000 members.
      A reduction of one euro in the stump price of a cubic metre of logs is estimated to produce EUR 6.5 million on the bottom line of the income statement, but demand has kept prices high.
      Industry analysts estimate that around 70% of total costs are found from the truckloads of raw timber reaching the sawmills, and hence the Wood and Allied Workers' Union questions the role of wages in Finnforest's losses, arguing that it is more an issue of the margin between raw material costs and prices for finished goods.


Links:
  Finnforest Press Release
  Finnforest Home
  Metsäliitto Group

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