Stora Enso has announced major restructuring measures which include several machine closures and layoffs. Combined with previously initiated negotiations in the Packaging Materials division, the actions would result in total reductions of approximately 1,150 employees, the company said. The closures, if implemented, would affect the Sunila pulp production unit in Finland, the Dutch De Hoop containerboard and liner mill, one containerboard machine in Ostrołęka, Poland as well as the Estonian sawmill Näpi. Final decisions will be taken when negotiations with employee representatives are concluded.
The measures are aimed at strengthening the group’s long-term competitiveness, improving profitability and focussing on growth markets. Stora Enso says it is also taking the next step in driving a decentralised operating model targeting increased customer centricity, business focus and cost reductions.
As a consequence of the overcapacity in the European containerboard market, Stora Enso wants to reduce corrugated case material production capacity. The company is therefore proposing to permanently close down both production lines at the De Hoop site in the Netherlands and one of the four production lines at its Ostrołęka site in Poland in order to improve market balance.
500,000 tpy of containerboard and liner capacity to be taken from the market
The De Hoop site, which was acquired as part of the De Jong Packaging takeover at the beginning of the year, employs 185 people and has a capacity of 380,000 tpy of containerboard, honeycomb liner and plasterboard liner. The PM in Ostrołęka can produce up to 120,000 tpy of recycled containerboard and the negotiations impact 50 people. "These production lines are not long-term cost competitive in this new market environment," said Stora Enso, adding that it would continue to serve its containerboard customers from other sites. Subject to the outcome of the negotiations, the planned closures are scheduled to take place during the fourth quarter of 2023.
Stora Enso also plans to permanently cease pulp production and lignin extraction at the Sunila mill in Finland and will start negotiations with employees in this regard. "The Finnish wood market has been structurally impacted by increased competition for pulp wood and stopped wood imports from Russia. Under these new conditions, resulting in significantly higher wood costs, the Sunila site is no longer cost-competitive," the company explained.
The Sunila mill has a capacity of 375,000 tpy of softwood pulp and generates 50,000 tpy of lignin. A closure would reduce Stora Enso's annual market pulp capacities by 13 per cent. The pilot facility for hard carbon-based battery material at the site will continue to operate, says the company. 250 out of a total of 270 employees at Sunila are affected by the negotiations. The planned closure is scheduled to take place during the second half of 2023.
Stora Enso emphasises that the group’s strategy for developing biomaterial innovations remains unchanged. A feasibility study for lignin extraction has been initiated at the Skutskär pulp mill in Sweden. The Group also continues to develop other sourcing alternatives for long-term lignin supply, and to investigate competitive locations for commercial scale up of hard carbon production.
Finally, Stora Enso plans to close down its Näpi sawmill in Estonia due to reduced long-term raw material availability, increased wood costs and low profitability. The sawmill has an annual capacity of 50,000 m³ of sawn timber, 180,000 m³ of further processed wood products and 25,000 t of pellets. The planned closure would take place during the fourth quarter of 2023 and directly impact 100 employees, the company said.
Measures might result in 1,150 layoffs
Taken together, the planned closures would target a reduction of around 600 employees, Stora Enso said. The company will also initiate negotiations regarding a planned reduction of office employees within ins Group functions. While negotiations will be held with 1,300 employees, the company expects the number of redundancies to stand at 300. This comes in addition to layoffs which were already initiated in the Packaging Materials division. Stora Enso recently concluded a majority of the talks which resulted in the elimination of approximately 250 positions in its management and support functions.
"These measures are of course very difficult and would not be proposed unless it was absolutely necessary for our long-term competitiveness," the company commented.
Stora Enso reports that the planned actions would decrease its annual sales by around €380m, based on 2022 figures. Operational Ebit, in contrast, is expected to increase by around €110m.