Paper manufacturer UPM cutting thousands of jobs in Finland

Voikkaa paper mill and Valkeakoski pulp plant to shut down

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The pulp and paper manufacturer UPM announced a drastic reorganisation programme on Wednesday, which is to lead to the reduction of more than ten percent of the group's jobs.
      UPM is to cut 3,600 job worldwide, nearly 3,000 of which will be in Finland.
      Nearly 1,000 jobs will go from paper production that is to be shut down. UPM plans to close the magazine paper plant at Voikkaa in Kuusankoski in the autumn, as well as a pulp mill in Valkeakoski. Paper production machines are also to be shut down at two other mills in Kuusankoski and Valkeakoski. The remaining 2,600 jobs that are to be lost will be trimmed evenly from all of the company's units.
      UPM CEO Jussi Pesonen says that the cutbacks were made necessary by a new and rapidly changing business environment. "In the past four years our business profits have not risen even to our minimum goals", he says, adding that there is excess production capacity in Europe especially in the production of coated magazine paper, and coated fine paper.
      After the cutbacks, Pesonen expects that UPM will be a "very competitive manufacturer".
     
UPM hopes to improve its annual result by EUR 200 million. The announcement was welcomed by investors: the company's shares rose 5.4 percent on the Helsinki Stock Exchange.
     
The news came as a shock to the city of Kuusankoski in the southeast of Finland, where the closure of the Voikkaa paper mill will lead to the loss of 670 jobs. There will also be sharp cutbacks at the Kymi pulp mill, also in Kuusankoski.
      The news is a considerable blow to the municipal finances of Kuusankoski, which calculates that it could lose up to two percent of its tax revenue - or EUR 4.5 million in a year.
      Kuusankoski has 20,000 residents, 9,000 of whom are of working age. The city already has an unemployment rate of 13 percent.
     
The Finnish Paperworkers' Union sharply criticised the move, saying that the company should take responsibility for its people during difficult times as well.
      In a statement issued on Wednesday, the union's chairman Jouko Ahonen said that the plans were clearly drafted to placate the company's shareholders. In Ahonen's view, a better option would be to focus on the development of the company's factories.
      The union said that the loss of 3,000 jobs would cause unreasonable problems and human suffering in communities where the paper industry is a major employer. The Union of Salaried Employees (TU) urged UPM and its personnel groups to set up a programme to help find new employment for those who are losing their jobs.

More on this subject:
 EDITORIAL: UPM tries to improve profitability in one fell swoop

Links:
  UPM press release 8.3.06: UPM to start an extensive programme to restore its profitability - Efficiency improvement will involve all divisions and functions

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