New collective labour agreement ends the lockout at the paper mills in Finland

The Finnish Forest Industries Federation and the Paperworkers' Union have concluded a new collective labour agreement that ends the lockout at UPM's Finnish pulp and paper mills and converting units. The lockout will end today, 1 July, 2005. Strikes and the lockout have lasted for 47 days at UPM's mills.

"The new contract is a step in the right direction and meets the modern needs better than before. The agreement will create opportunities to develop the competitiveness of the Finnish units. The new contract leaves room and possibilities for the local mill management and employees to agree locally on how to organise the work in a reasonable manner. It is also positive that people can return to their normal daily routines" says Jussi Pesonen, President and CEO of UPM.

"The shutdown of production at the Finnish mills for over six weeks has tested the patience of our customers and business partners. They have been forced to take various special actions to secure their own operations. We all at UPM must work hard to normalise the situation as soon as possible."

The cost impact of the new three-year collective labour agreement will be 4.4% for the first two years and the third year will be agreed upon separately during autumn 2007. The agreement is in line with the general collective labour agreement in Finland. The agreement allows the running of paper mills also during Christmas and Midsummer, which will increase UPM's available production capacity more than 1%. Furthermore, there can be local agreements on the use of subcontractors in maintenance and services or an agreement can be negotiated by an impartial chairman elected by both parties. In addition, the contract allows local agreements on new kinds of shift and work time arrangements.

"The shortening of paper workers' working time will affect negatively. Neither did the agreement text include any solutions to reduce Finnish paper workers' high absenteeism. It is disappointing that we will still suffer from the rigid and complex collective agreement structure," says Jussi Pesonen.

The starting up of UPM's paper machines will begin gradually and the mills are expected to be operating at full producing capacity during next week. Special attention will be paid on the controlled start-up of the paper machines and the load on the environment.

For further information, please contact:
Mr Sakari Toivonen, Director, HR, Northern Europe, UPM, tel. +358 40 512 2042
Mr Hans Sohlström, Executive Vice President, Marketing, UPM, tel. +358 400 547 717
Mrs Marja Tuderman, Vice President, Environmental Issues, UPM, tel. +358 40 540 4947

UPM
Corporate Communications
July 1, 2005