About 600,000 tpy of uncoated and coated magazine paper capacity are to be removed from the market, UPM also plans to continue temporary layoffs in Finland.
UPM announced plans to permanently shut down its its Plattling mill in Germany, which would reduce the company's uncoated and coated magazine paper capacity by 595,000 tpy in Europe. The company said that these plans are "a continuation of necessary steps to proactively ensure competitiveness of our operations and align graphic paper capacity to a profitable customer demand."
The planned closure of UPM Plattling’s two paper machines would lead to a permanent reduction of 380,000 tonnes of uncoated publication paper and 215,000 tonnes of coated publication paper, UPM says. Both paper machines are planned to stop production by the end of this year.
The number of UPM employees affected by the closure in Plattling is estimated at 401. In addition, UPM expects implications for service providers on site.
UPM explains that during the past 15 years demand for printing and writing paper has been declining constantly and this trend is expected to continue. This year the decline in demand has been accentuated significantly. For the company a long-term predictability of production factors, such as energy supply, is essential. The uncertainty about reliability and cost competitiveness of the energy supply in Germany is currently a big challenge, the company says.
"Mature graphic paper markets require continuous and relentless efforts to ensure cost competitive operations that also meet the future customer demand. UPM is committed to leading our business in a responsible manner. We respect the interests of both our workforce and our customers and consider them a central part of our plans. We recognize that today's announcement is very difficult news for our employees in Plattling. Together with the employee representatives, we will seek responsible solutions for our personnel and enter directly into a fair dialogue,” says Massimo Reynaudo, Executive Vice President, UPM Communication Papers.
UPM says the plans announced today would strengthen the overall cost competitiveness of UPM Communication Papers and are "a prerequisite for consistent paper operations in the long run." UPM will incur restructuring charges of €122m and an impairment of €100m of the leased CHP plant. It expects the planned actions to result in annual fixed cost savings of an estimated €60m.
UPM Communication Papers prepares continuation of temporary layoffs in Finland
In addition, UPM Communication Papers plans to continue the temporary layoffs in Finland. These could take place in several periods and would last a maximum of 90 days, UPM says. Decisions on the continuation of the possible temporary layoffs in the four mills will be taken after the consultations have been concluded. The total number of employees covered by the employee consultations is approximately 1,100. UPM's four mills in Finland (Kymi, Jämsämkoski, Kaukas, Rauma) have a combined capacity of 2.2 million tpy of publication paper and fine paper.