UPM to start lay-off talks following shortage of birch logs

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Finnish-based paper manufacturer UPM is to launch co-determination talks concerning potential temporary lay-offs of 2,400 employees at its birch plywood mills in Eastern and Central Finland.
      According to a statement released on Tuesday, the reason is a decrease in the volume of birch logs imported from Russia.
      UPM's Finnish birch plywood mills are located in Heinola, Joensuu, Jyväskylä, Lappeenranta, and Savonlinna. The Pellos mill in Ristiina near Mikkeli, which produces spruce plywood, will continue operating as normal.
      The company needs some 870,000 cubic metres of birch logs every year, and half of this amount comes from Russia.
     
Kalevi Vanhala, the chairman of the Wood and Allied Workers’ Union, suspects that the purpose of the planned layoffs is to affect the forthcoming collective bargaining talks, as the situation at the plants was not reported at last week’s statutory co-determination meeting between the company’s management and employees.
     
Russia's delivery difficulties are said to be a result of last winter's poor forest harvesting conditions. The soil was wet, for which reason the logs could not be transferred away from the forests.
      So far, Russia's plan to raise the export tariffs for timber sold to Finland has had no significant impact, even though it has caused "a slight stir", according to Kari Hyvönen, the Senior Vice President of Operations at UPM Plywood.
      "However, the situation looks difficult for next autumn, as we do not have enough birch logs in storage. Because the co-determination talks will take a long time, we will have to prepare ourselves for the upcoming situation already at this stage", notes Hyvönen.
      From the beginning of July the export tariff for large-diameter birch logs will be ten euros per cubic metre, and in the spring of 2008 the tariff is to be raised to EUR 15 per cubic metre.
     
According to Hyvönen, all possible measures will be taken in Finland in order to keep the plywood mills running, while adjusting the birch plywood mills' production into line with the amount of raw material available.
      The shortage of raw material is occurring at a difficult moment, as the market prospects for plywood are good. Moreover, the birch plywood mills cannot switch from birch to spruce in no time, as there are certain differences in products.
     
"The customers will not have to suffer from production difficulties", Hyvönen promises, while not commenting on the question of whether or not the company will have to close down some production lines.
     
The layoff threat came as a surprise to the chief shop steward of UPM’s Heinola plywood mill, Terho Leppänen.
      "We have to bear in mind the fact that we depend largely on Russian wood. When there is no wood, we cannot help it", comments Leppänen.
     
Opposition leader Eero Heinäluoma, the chairman of the Social Democratic Party, says that the government has been passive in the wood tariff issue.
      According to the government, the dispute relating to Russia’s plan to raise the export tariffs for wood is not a bilateral problem between Finland and Russia, and the European Commission will negotiate the tariffs with Russia - not Finland.
      "In order to resolve this problem, bilateral negotiations between Finland and Russia are urgently needed. Finland cannot hide behind the European Union on this issue that is threatening the entire country, and particularly Eastern Finland", Heinäluoma urges.


Previously in HS International Edition:
  Minister Väyrynen: Russia seeks solution for wood tariff dispute (11.5.2007)
  Russian export tariff could end timber imports into Finland (12.2.2007)

Links:
  Press Release: UPM prepares for a shortage of birch logs and starts co-determination negotiations in birch plywood mills (15.5.2007)

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