Troubled M-real to launch yet another restructuring programme

200 jobs to go in Finland

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Forest company M-real, a subsidiary of the Metsäliitto Group, has announced that it is launching the fourth step of its strategic review process to improve profitability and to reduce complexity by integrating two of the company's present business areas.
      The new programme includes the planned closures of M-real's BCTMP (bleached chemithermomechanical pulp) mill in Lielahti, near Tampere, and one of its two coated magazine paper machines at Kangas, in Jyväskylä. Apart from reorganizing the company's business area structure, the plan is to simplify the coated magazine paper business, and to streamline its sales and marketing organisations.
      The number of personnel affected by the planned measures will amount to 200 jobs lost in Finland - 80 employees at Kangas and 60 in Lielahti.
     
The new programme combined with the earlier profit improvement steps are expected to improve the company's position relating to the various phases of consolidation in the European paper industry, says Kari Jordan, the Chairman of M-real's Board of Directors and the President and CEO of the Metsäliitto Group.
      M-real's strategic review process started last year, and it is to be continued, according to Jordan.
      The focus of the company's strategy is on the paperboard business area which M-real plans to continue, while the other business areas, including coated fine paper, magazine paper, and copy paper, are open to discussion with other paper companies.
      "We have considerably reduced our capacity, which will contribute to restoring the paper market to a sound basis", notes Jordan.
     
M-real launched its systematic restructuring process already three years ago, when the company announced the first step of its belt-tightening programme.
      The target of the fourth step of M-real's strategic review process is to achieve an improvement of EUR 100 million in the company's total annual profits by the end of 2009.
      "The Kangas mill is unprofitable and losing money. The paper machine No. 2 is old while its profit for the current year is EUR 7 million in the red", reports Mikko Helander, CEO of M-real.
      While also the remaining magazine paper machine is reported to be loss-making, it appears unlikely that the mill will be able to continue unless there is a sharp upward trend in paper prices next year.
      "The Lielahti mill is our oldest and smallest BCTMP mill, and the current and future requirement for BCTMP is significantly less than our total capacity. Rising wood costs and the situation regarding wood availability have made it impossible for us to sell the surplus fibre at a profit", Mikko Helander points out.
      "It was like a bomb", commented Chief Shop Steward Kimmo Koukkari at M-real's Lielahti mill, when asked for his reaction to Tuesday's news.
      The shutdown of the Lielahti mill is scheduled to take place by the end of June, while the statutory negotiations with the personnel will be opened within the next few days.
      Three weeks ago, another Finnish pulp and paper company, Stora Enso, announced its planned mill closures, with the total number of jobs lost in Finland amounting to more than 1,200 employees.


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)
  Minister says government is not to intervene in Stora Enso closures (6.11.2007)
  M-real and Elcoteq to cut more than 1,000 jobs in Finland (7.2.2007)

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