UPM says its UK operations will not be affected by the company’s decision to reduce 1.3m tonnes of its European paper operations due to overcapacity in the market.
The company acquired Myllykoski at the beginning of August, making it the world’s largest user of recovered fibre (See MRW story).
Following a review of its long term competitiveness to integrate Myllykoski, UPM plans to remove permanently 1.2m tonnes of magazine paper capacity in Finland, Germany and France and 110,000 tonnes of newsprint capacity in Germany. It has calculated that around €200m (£177m) will be saved by streamlining European operations.
The changes will see the loss of 1,170 employees.
According to UPM’s UK spokesperson, there are no current plans to streamline UK operations. It is not known whether the changes will reduce the amount of recovered fibre UPM uses.
“A lot of mills are interchangeable for different grades. So, if one mill is down, another mill can produce the same paper,” the spokesperson said.
It is hoped the plans will improve the profitability and cost competitiveness of its magazine papers.
UPM president and chief executive Jussi Pesonen said: “The paper industry faces severe challenges due to high raw material, energy and logistics costs and considerable overcapacity. The profitability of our paper business is clearly below the level required to run long-term sustainable operations.
“With the planned actions we would respond to the magazine paper overcapacity challenge for our own benefit. In addition, we would ensure the efficient use of our remaining capacity. However, this plan would not solve the cost challenges of the industry.”
UPM plans to:
- close the UPM Myllykoski mill in Kouvola, Finland
- close UPM Albbruck mill in Germany
- close the paper machine 3 at the UPM Ettringen mill in Germany
- sell or close the UPM Stracel mill from the UPM Paper Business Group
- transfer sheeting lines from the UPM Albbruck mill to the UPM Plattling mill in Germany
- restructure any overlapping paper sales and network supply chain
- temporarily close paper machine 2 at UPM Nordland Papier in Germany
- streamline operations in Pietarsaari pulp and paper mills in Finland