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UPM to cut capacity at two European sites

Paper manufacturer UPM is to reduce its paper capacity in Europe by 305,000 tonnes to save £25m a year.

Two printing machines in Austria and Germany will be closed to cut the graphic paper volume, and 175 jobs are under threat at the two sites as the company looks to save £25m annually.

Both mills are to continue paper production on the remaining machines.

UPM conducted an analysis of the cost competitiveness on its uncoated magazine papers (SC) machines and decided that, because of scale, age and limited savings potential, two would close with operations focused on its five remaining SC machines.

Executive vice-president Winfried Schaur said: “The demand for SC papers, in line with other graphic papers, has been declining during [recent] years and the decline is expected to continue.

”Even under challenging market conditions, our employees have always given their best and we regret the impact of the planned closures on the personnel. However, we have to adjust our operations to match long-term customer demand.”

UPM sold its Schwedt mill in Germany earlier this year and announced that newsprint production will stop at the end of Q3 2017, removing 282,000 tonnes a year of newsprint capacity.

The UK paper industry has also been experiencing similar challenging market conditions. Last year, Aylesford paper mill, which annually produced 400,000 tonnes of recycled newsprint, closed causing paper prices in the UK to plummet.

Graphic and newsprint production was down 12.9% for H1 2016 compared with the previous year. Overall paper production was also down 7.2% year-on-year.


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