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Metsä-Botnia threatens closure of pulp mill in Kaskinen

Metsä-Botnia threatens closure of pulp mill in Kaskinen
Metsä-Botnia threatens closure of pulp mill in Kaskinen
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Forest industry concern Metsä-Botnia, which is jointly owned by the Metsäliitto Group and UPM, has announced that it is considering the closure of its pulp mill in Kaskinen next year.
      Another option would be a temporary shutdown of production at the Kaskinen mill during the first quarter of 2009.
      If the mill is to be closed down permanently, 223 employees will be left without jobs. Taking into account even indirect consequences, the total loss of jobs could run to more than 300.
Metsä-Botnia explains its move by the poor profitability of the Kaskinen mill.
      ”The net operating profit for 2009 will be clearly negative”, says Ilkka Hämälä, the President and CEO of Metsä-Botnia.
      The Kaskinen pulp mill was established 35 years ago, which means that in the pulp industry it is just a middle-aged plant.
      With a capacity of 450,000 tons, the Kaskinen mill is also medium-sized.
The main product of the mill is hardwood pulp, which is made of both domestic birch and birch of Baltic origin. A part of the raw material also comes from South America.
Botnia says that its difficulties are attributable to the shortage of wood. The Metsäliitto Group, which is owned by Finnish forest-owners, is responsible for the mill’s raw material deliveries.
      In fact the Kaskinen pulp mill was founded to benefit them in the first place - after some political arm wrestling.
      The raw material supply at the Kaskinen mill has been tightened by the fact that Stora Enso has spread its wood purchasing organisation from east to west, while a major part of Stora Enso’s new buyers were recruited from Metsäliitto.
      It would be easy to deliver raw material to Kaskinen from Sweden, where wood costs less than in Finland. However, Botnia’s co-owner UPM would hardly approve that idea, as it has begun to import Swedish wood to its own mills on the west coat.
      Stoa Enso has also converted birch pulp mills into softwood plants, but Hämälä says that the trick cannot be performed in Kaskinen.
Two-thirds of the production at the Kaskinen pulp mill is sold to the co-owners Metsäliitto and UPM. The price of pulp has been ”steady, and high in dollar terms”, according to Hämälä.
      After Kaskinen, Metsä-Botnia built another slightly larger pulp mill in Äänekoski.
      ”The Äänekoski mill has been doing quite well, and its profitability is essentially better. It has been using domestic wood, and technically it is in fairly good condition”, Hämälä reported.
      Jouko Ahonen, the chairman of the Finnish Paper Workers’ Union, says that the planned closure of the Kaskinen pulp mill came as a shock to him.
      ”Botnia was the last company I would have expected to close down mills, as it is a prosperous company. Moreover, there are no sales difficulties for pulp, and the only problem is the high price of raw material”, Ahonen notes.
      According to Ahonen, Metsäliitto could very well ensure the wood supply for the Kaskinen mill, if it so wished.
      ”I am convinced that the forest companies just want to push down the prices of wood in every possible way. That’s what this is about - and not about a real shortage of wood”, Ahonen concluded.
According to the Central Union of Agricultural Producers and Forest Owners (MTK), the availability of wood is not the real reason for the closures of pulp mills.
      According to the organisation, the reduction of capacity is a result of the weak demand for forest products.
In the course of the past few months, the Finnish pulp and paper industry has embarked on extensive programmes to restore its profitability.
The reduction of production is a consequence of the excess supply of forest products, which is pushing down the prices. At the same time, the costs of wood have increased, as the industry has built too much capacity compared with the supply of wood.
UPM was the first Finnish paper manufacturer to start rationalising operations in its wood production. The company’s reorganisation programme lead to the closure of the Voikkaa paper mill in 2006, whereafter the company has announced that it would also axe the Kajaani paper mill and the Valkeakoski pulp mill.
Stora Enso has closed down the Summa paper mill and the Kemijärvi pulp mill, as well as paper machines at the Anjalankoski and Varkaus mills.
M-Real has closed its refined mechanical pulp mill in Lielahti near Tampere, and one paper machine in Jyväskylä.
Moreover, a number of sawmills and plywood mills have been shut down, while the numbers of work shifts have been reduced and employees have been laid off.

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)
  Paper manufacturer UPM cutting 680 jobs worldwide (18.12.2007)
  High price of wood and other rising costs lead to cuts in forest industry (11.9.2008)
  M-real sells four paper mills to South African Sappi Limited (30.9.2008)
  Stora Enso and UPM issue profit warnings (19.6.2008)
  UPM uses plant shut-downs to fight slowing demand for forestry products (29.10.2008)
  Stora Enso pulp mill closed down in Kemijärvi (28.4.2008)

  Central Union of Agricultural Producers and Forest Owners (MTK)
  Metsäliitto Group
  Metsä-Botnia press release (5.11.2008)

Helsingin Sanomat

  6.11.2008 - TODAY
 Metsä-Botnia threatens closure of pulp mill in Kaskinen

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