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UPM to reduce European capacity

Finnish paper maker UPM is shutting down a newsprint machine in the UK as part of a restructuring programme that will reduce the company’s publication paper capacity by 800,000 tonnes.

The company hopes the plan will deliver savings of €150m (£119m) by the end of 2015.

UPM will close a newsprint machine at its Shotton site, one at Chapelle in France, and two at Jämsä River Mills and Kaukas in Finland, although the mills will continue production using the remaining machines.

The company says the European market was suffering from overcapacity.

“The current operating rates are unacceptably low and the current economic environment is not promising tailwind for 2015,” said president and chief executive Jussi Pesonen.

“We plan to adapt our production to meet the profitable customer demand. We also ensure savings without endangering customer deliveries in the structurally declining market.”

The closures will be effective by March 2015 and result in 550 job cuts. UPM has started a consultation process with employees.

“We regret the impact of planned closures on our employees who, even under considerable pressure, have been loyal and committed,” said Pesonen.

“However, we have to adapt our operations to the changing market environment – this is the only way for a sustainable future.”

As part of the programme, UPM Paper ENA will also centralise the supply chain planning and order fulfilment activities to its centres in Augsburg and Dörpen in Germany.

The company will also start a review of the production, maintenance and other site operating practices across businesses and operating countries.

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