UPM plans dismissal of 870 workers in Finnish plywood and timber operations

Heinola and Lappeenranta worst affected

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Forestry industry giant UPM is planning further significant restructuring measures to its plywood and timber operations in Finland.
      According to a UPM press release, the company “plans to permanently close the plywood mill and sawmill in Heinola, the Kaukas plywood mill in Lappeenranta, and the further processing mill in Parkano during the first half of 2010”.
      With the changes, UPM would reduce its workforce by 870 individuals. Last spring the company decided on the dismissal of 110 people and the closing down of the Lahti processing mill.
     
UPM justifies the measures by saying that they will help the company to ensure the competitiveness of its plywood and timber operations.
      The most extensive dismissals are expected at the Kaukas plywood mill in Lappeenranta, which employs 298 people. The Heinola plywood mill gives work to 212 individuals.
      There are plans to realise some of the dismissals as early retirement, relocation within UPM, and through retraining arrangements.
     
According to UPM, the market situation for plywood and timber products has been weak since the autumn 2008.
      “The Heinola plywood mill has been at a standstill since January and the Kaukas plywood mill since May this year. The employees of both of the mills have been temporarily laid off during the standstills.”
      The Heinola sawmill and the Parkano and Kaukas further processing mills have also had production curtailments throughout the year.
     
At the same time, UPM plans to invest around EUR 25 million in the expansion of the Savonlinna plywood mill and the development of production at the Kaukas sawmill and the Aureskoski further processing mill.
      The company’s aim is to develop the Savonlinna unit into the most efficient birch plywood mill in the world.
      “Centralisation and efficiency improvement create opportunities for profitable operations in Finland in the long term. The employee impacts of these plans are regrettable but the current situation is unsustainable. Cost competitiveness and an efficient production structure are necessary for both our Plywood and Timber businesses," says Jussi Vanhanen, Member of UPM's Group Executive Board and President of the Engineered materials Business Group, in the UPM press release.
     
UPM President and CEO Jussi Pesonen hinted towards possible dismissals already last week, when the company published its third quarter result. According to Pesonen, forest owners fail to offer adequate amounts of raw wood for the industry’s use.
      “The industry is lacking a steady flow of competitively priced raw material. This is most likely to lead to further capacity adjustments in the Finnish forest industry", Pesonen said.
      Considering the situation, the company’s result for July-September was fairly good. Still, the operating profit excluding special items fell by 40 per cent compared to a year earlier, totalling EUR 131 million.
     
Co-determination talks with employees concerning the plans will start immediately, UPM reports. The cost of the restructuring measures is estimated at around EUR 44 million.
      The UPM plywood business currently employs around 2,450 people in Finland.
      The company’s timber operations give work to about 900 Finns.


Previously in HS International Edition:
  UPM uses plant shut-downs to fight slowing demand for forestry products (29.10.2008)
  High price of wood and other rising costs lead to cuts in forest industry (11.9.2008)

Links:
  UPM Press Release 3.11.2009

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