Lockout starts at all Finnish paper mills

The member companies of Finnish Forest Industries Federation will start a lockout at all Finnish pulp and paper mills tomorrow, on Wednesday, May 18, 2005. The lockout will cover all UPM's Finnish pulp and paper mills and converting units.

The purpose of the lockout is to reduce the negative effects caused by the ongoing overtime ban declared by the Finnish Paper Workers' Union. Due to the ban, the pulp mills and the paper machines have been repeatedly shut down at the Finnish mills. Constant shutdowns cause production losses, raw material and energy losses as well as quality problems and additional environmental load.

The lockout was decided today after the State Conciliator did not consider the negotiations between the Paper Workers' Union and the Finnish Forest Industries Federation to warrant a settlement proposal.

The Finnish Forest Industries Federation has also declared another two-week lockout ending on June, 15. Therefore, UPM's production plants could be shut down for a maximum of four weeks. During that time, the Finnish Paper Workers' Union employees affected by the lockout will not be paid their salaries. The lockout will be called off should a settlement be reached. The negotiations will continue on Friday, May 20.

Should the lockout continue for several days, the daily losses of shutting down the pulp and paper production at UPM are approximately EUR 4 million. Strikes and lockouts will affect UPM's profit for the second quarter.

The labour agreement between the Finnish Paper Workers' Union and the Finnish Forest Industries Federation expired on February 15, 2005. In the negotiations regarding the new agreement, the most important issues are the possibility of running the machines also during Christmas and Midsummer as well as removing the restrictions on the use of subcontractors in maintenance and services. These are well established practices in other industries as well as in other paper producing countries. In addition, the industry wants to find ways to reduce Finnish paper workers' high absenteeism.

At UPM, the lockout will affect approximately 7,500 employees. Altogether there are some 24,000 Union members affected within the Finnish paper industry.

For more information, please contact:
Mr Sakari Toivonen, Director, HR, Northern Europe, tel. +358 40 512 2042


UPM
Corporate Communications
May 17, 2005