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UPM to slash publication paper capacity by 800,000 t

Calendering machine at Jämsänkoski mill
Source: UPM
13 Nov 2014 − 

UPM plans to take 800,000 t of publication paper capacity from the European market. The company will close down one machine each at the mills Chapelle Darblay in France, Shotton in the UK and Jämsänkoski and Kaukas in Finland.

UPM will considerably reduce its publication paper capacity in Europe. The company announced it would take 345,000 t of newsprint as well as 235,000 t of SC paper and 225,000 t of coated mechanical paper capacity from the European market. The affected machines are to be permanently closed by the end of the first quarter of 2015.

The closures will affect newsprint machine PM 3 at the Chapelle Darblay mill in France (130,000 tpy), newsprint machine PM 1 at the Shotton mill in the UK (215,000 tpy) as well as SC paper machine PM 5 at the Jämsänkoski site (235,000 tpy) and coated mechanical paper machine PM 2 at the Kaukas mill (225,000 tpy), both in Finland. The four mills would continue to run and produce paper on the remaining machines at the sites, said UPM.

If the closures are implemented according to plan, the personnel at the mills will be reduced by some 550 persons, according to UPM. The company said it would start the employee and consultations processes during November.

UPM explained there was no getting around the fact that operations had to be adapted to the changing market environment which was characterised by overcapacity. "We have achieved a turnaround in profitability during 2014. Nevertheless, the current operating rates are unacceptably low and the current economic environment is not promising tailwind for 2015. We plan to adapt our production to meet the profitable customer demand", said Jussi Pesonen, President and CEO of UPM.

The measures are part of UPM's programme aimed at reducing variable and fixed costs and improving profits. The total annualised cost reduction impact was put at €150m. UPM furthermore announced it planned to centralise UPM Paper ENA supply chain planning and fulfilment activities to Augsburg and Dörpen in Germany.

The Chapelle Darblay mill has a total annual capacity of 380,000 t of standard and special newsprint and employs about 360 people. The standard newsprint capacity at the Shotton site is put at 490,000 tpy with a total of around 370 employees. The Jämsä River Mills manufacture SC paper, label paper and packaging papers at the Jämsänkoski unit and LWC paper, directory paper and newsprint at the Kaipola unit with a combined capacity of 1.6 million tpy. The number of employees amounts to 1,000. At the Kaukas site, UPM can produce up to 560,000 tpy of LWC and MWC paper and employs 320 people.

Find the entire article and any associated background information in EUWID Pulp and Paper no. 47.

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