UPM to build new paper manufacturing line in France or Germany

Kajaani magazine paper production line may be in jeopardy

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The Finnish paper manufacturer UPM plans to set up a new magazine paper production machine in Germany or France.
      With the investment, the company hopes to serve its Central European customers better, says Jyrki Ovaska, President of the company’s Magazine Papers Division.
      The aim is to build a new machine producing uncoated SC magazine paper with a production capacity of about 400,000 tonnes.
      The machine is to be operational by late 2007. Possible locations include Augsburg or Schongau in Germany, or the Stracel factory near the French city of Strasbourg.
     
SC paper is used in mass-circulation magazines and in catalogues.
      In recent years UPM has invested mainly in coated magazine paper. Ovaska says that the market for uncoated paper is growing by about three percent a year.
      "We want to invest in our core business and improve our competitiveness. In addition, our customers have urged us to increase our production in Central Europe", Ovaska says.
     
Increased efficiency also means shutting down old production lines and making changes in production. The company promises to give out more detailed information on the new arrangements within a year.
      Ovaska would not yet say which of the company’s paper factories would be affected by the changes. However, UPM CEO Jussi Pesonen said recently that the company was considering shutting down some production lines in Finland as well.
      The Finnish factories are located in Jämsänkoski, Rauma, and Kajaani. The Kajaani factory has been the greatest headache for UPM - largely because of its remote location, and analysts consider it likely that one magazine paper machine might be shut down there.
      The Kajaani factory has a small SC magazine paper machine which began production in the 1960s. No investments have been made into improving the performance of the machine since the 1990s, contrary to the plants in Rauma and Jämsänkoski, whose machines have been serviced at regular intervals.
      Another possible candidate for a shutdown is the old SC paper machine in Augsburg, Germany. On the other hand, Augsburg is seen as a possible location for the new machine.
     
UPM is a leading manufacturer of magazine paper, with a 20% share of the world market. The company manufactures uncoated magazine paper in Finland, Austria, and Germany.
      UPM’s total production capacity for SC is 1.8 million tonnes, most of which, 1.3 million tonnes, is manufactured in Finland.
      The cost of a new paper machine would be between EUR 400 million to EUR 500 million.


Links:
  UPM Press Release: UPM to enhance its competitiveness in uncoated magazine paper

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