UPM's Miramichi mill starts up after a three-month shut-down

(UPM, Miramichi, May 4, 2006) - UPM's Miramichi mill in Canada started up on Wednesday after three months of shutdown. The money-losing mill has been idled since the beginning of February.

During the lay-off, the local management – together with employees - have compiled a new cost reduction and profit enhancement programme which aims at decreasing the fixed and variable costs as well as significantly improving the production efficiency of the Canadian mill.

"With serious efforts to implement this long-term programme, Miramichi has realistic possibilities to turn profitable again and to maintain the important role of serving the North American customer base as a local mill," says Jyrki Ovaska, President of UPM Magazine Paper Division.

The programme includes a 12% reduction in labour costs. The savings affect both hourly, salaried and management positions and they have been agreed upon with the local unions. The reduction will be reached through a combination of manning reductions and wage cuts effective until 2008. The personnel have also agreed to defer the contractual wage increases for this year.

In order to improve the mill's production efficiency, several key employees have been trained at UPM mills at Blandin in the US, at Caledonian in Scotland and at Rauma in Finland. In addition, UPM will provide extra operations know-how for Miramichi in the coming months in order to ensure that the efficiency improvement targets will be reached.

The provincial government in New Brunswick has assumed an active role in the process with UPM management during the three-month layoff.

"A steady and quick performance ramp-up is expected in the coming months. Most of the results of the programme are anticipated to materialise during the second half of this year, and the mill's progress will be monitored on a monthly basis. If the business environment deteriorates, the situation may change, but for now the prerequisites for profitable operation at Miramichi are better than they have been for years."

Both Miramichi coated groundwood machines are planned to start deliveries to customers by mid-May.