UPM announces three-month shutdown of Canadian paper mill

The Finnish paper manufacturer UPM has announced a three-month shutdown of its Miramichi paper mill in the eastern province of New Brunswick in Canada.
      Workers at the paper mill and groundwood mill will be temporarily laid off from early February. The move will not affect most of the white-collar employees.
      UPM blames the decision on poor profitability. "The Miramichi mill has high operating costs, and the strong Canadian dollar makes the mill's exports to the US unprofitable. That's why we have decided to temporarily cease operations at Miramichi during the slowest season of the year", says Jyrki Ovaska, President of UPM's Magazine Paper Division.
      Ovaska says that Canada's paper industry is in crisis, and dozens of paper machines have been shut down due to poor profitability.
     
Canada exports most of its paper to the United States. Ovaska notes that the US dollar is now worth 1.15 Canadian dollars, whereas the long-term average for the greenback is CAD 1.37. He says that all exporters are in trouble as a result.
      Although the price of paper has risen significantly in the United States in recent months, Ovaska says that the change in the exchange rate has cancelled out the benefit for Canadian exporters.
     
UPM has meted out rough treatment to its factories in Canada. A year ago the company shut down a pulp mill operating alongside the Miramichi paper mill, leading to the loss of 300 jobs. The paper mill is the largest employer of the city of Miramichi.
      Soon after the closure of the pulp mill, negotiations on a new labour contract broke down, leading to a strike lasting eight months.
      When the strike ended in August, UPM said that the new contract contained a number of changes which would significantly improve its ability to operate.
      After the shutdown, the factory should be back in operation in early May. Ovaska would not give a direct answer, when asked if UPM had plans to close the mill.
      "Our aim is to make Miramichi a profitable paper mill", he says.
     
The Miramichi paper mill has an annual output capacity of 400,000 tonnes of coated magazine paper. Ovaska says that the company will be able to take care of its customers during the shutdown.
      "We practiced that during the long strike. At that time, orders were shifted to the Bland mill in the United States, and also to our factories in Europe. In addition, we managed to put paper in storage", Ovaska says.
      UPM ships half a million tonnes of paper from Europe to North America each year.


Previously in HS International Edition:
  UPM to outsource IT operations to Eastern Europe (18.10.2005)
  UPM to build new paper manufacturing line in France or Germany (15.8.2005)
  Canadian paper mill strikers: UPM resorted to contemptible lies (8.6.2005)
  Foremen to run machines at striking UPM plant in Canada (7.6.2005)

Links:
  UPM press release: UPM announces three-month lay-off at Miramichi mill in Canada