Two Finland-based paper producers have announced plans for reorganization that include the elimination of jobs. UPM Kymmene, the world’s largest producer of magazine paper, is planning to cut 1,600 jobs between 2009 and 2010 as part of its reorganization. Meanwhile, Stora Enso Oyj will eliminate 1,7000 positions as a result of its reorganization.

 

UPM is also considering the closure of a number of its mills in Finland as part of its restructuring. The changes come as a result of rising costs and a crowded industry. UPM CEO Jussi Pesonen said in a statement that “UPM's employees have succeeded in increasing the internal efficiency to a new level but unfortunately cost pressures have multiplied. The situation is striking particularly in Finland, where wood prices have increased to such a high level that profitable operation of all our units is no longer possible. With today's market outlook and the recent cost development, UPM's paper and pulp production in Finland cannot continue in its current form and extent.” Here, Pesonen alludes to Russia's skyrocketing tariff on roundwood, which is driving prices way up for countries like Finland who rely on Russia for their unprocessed wood (see What's on the Horizon?). Regarding the crowded industry, Pesonen said that consolidation is necessary to improve profitability. "Consolidation is integrally linked to improving competitiveness in the developed markets, especially in the European ones," he said.

Stora Enso Oyj, another Finland-based paper producer, also announced plans for a reorganization, which it said would eliminate 1,700 positions. As part of the reorganization, Stora Enso said it will close a paper machine in Germany that produces 140,000 tons of coated magazine paper per year. The company said it plans to invest $190 million to improve efficiency and that estimated annual operating profit would improve by about $200 by the end of 2010 as a result of the reorganization.

 

We'll keep an eye on these developments since they are sure to have an effect on the availability of coated magazine paper.

 

 

UPM Kymmene papers used by Lane Press customers: Finesse

Stora Enso Oyj papers used by Lane Press customrs: none