UPM will take 305,000 t of graphic paper capacity from the market by closing down two machines in Germany and Austria. This adds to the already announced closure of newsprint capacity in Schwedt, due in September 2017.
UPM is planning to permanently reduce its graphic paper capacity in Europe by 305,000 tonnes. The company announced the closure of PM 3 at the Steyrermühl mill in Austria and PM 2 at the Augsburg facility in Germany. Both machines produce SC paper. The mills will continue paper production on the remaining machines at the sites, said UPM. After the closures, UPM will still dispose of five SC paper machines.
UPM said the machines will be closed down when the consultation processes with employee representatives are finalised. These talks are to start in the course of November. 125 employees in Steyrermühl and 150 in Augsburg are affected by the measure.
The company explained that the decision was taken after an analysis on the cost competitiveness of its graphic paper machines. Because of their scale, technical age and limited further savings potential the two affected PMs are UPM's least competitive SC paper machines, according to the company.
"The demand for SC papers, in line with other graphic papers, has been declining during the last years and the decline is expected to continue. [...] We regret the impact of the planned closures on the personnel. However, we have to adjust our operations to match with long-term customer demand," said Winfried Schaur, Executive Vice President of UPM Paper ENA.
UPM expects the closures to result in annual cost savings of about €30m. The company said it will book charges of approximately €75m as an item affecting comparability in the fourth quarter of 2016.
UPM Steyrermühl produces newsprint and uncoated magazine papers (SC) with a capacity of 485,000 tpy. Located in Upper Austria, the mill employs about 400 people.
UPM Augsburg is a manufacturer of coated (LWC) and uncoated magazine papers (SC). The mill, located in southern Germany, has a capacity of 498,000 tpy and employs about 440 people.
Schwedt mill to cease newsprint production in September 2017
UPM furthermore announced that newsprint production at the Schwedt mill in Germany will be stopped at the end of the third quarter of 2017. The company sold the mill to Leipa Georg Leinfelder in July this year. As announced earlier, the new owner plans to convert the site to make white-top testliner with a capacity of 450,000 tpy in the future. At the moment, up to 282,000 tpy of newsprint can be manufactured in Schwedt.