UPM Kaipola paper mill to be permanently closed during the last quarter of 2020, operations continue at Jämsänkoski paper mill

Investor news 15.10.2020 13:00 EEST

Employee consultations for UPM Communication Papers were concluded at the Jämsä River mills this week. The UPM Kaipola paper mill in Jämsä, Finland, will be closed permanently by mid-December. UPM’s second paper mill in Jämsä, UPM Jämsänkoski, will continue operations with one graphic paper machine and two specialty paper machines.

The parties were not able to identify an economically viable solution for the future operation of UPM Kaipola. Consequently, Kaipola’s three paper machines will be permanently closed, affecting altogether 448 positions at the mill, of which 20 positions will be transferred to UPM Jämsänkoski’s Specialty Papers operations. Approximately 20 % of the redundancies will be retirements, with discussions pending. The closure will lead to an annual reduction of 720,000 tonnes of graphic paper capacity, thereof 450,000 tonnes of newsprint and 270,000 tonnes of coated mechanical paper. An after-care team will ensure safe conditions at the mill after the closing.

The decisions were based on thorough assessments of graphic paper demand, global economic development and the local operating environment. Global demand for graphic paper has been declining consistently for years. In addition, the COVID-19 pandemic and related measures have caused a short-term disruption in demand and weakened the overall economic outlook.

”UPM Kaipola has competent teams and well operated machines. However, external factors such as high logistics costs in Finland, high tax burden and cost of labour as well as increasing fibre costs make it the least competitive among UPM’s graphic paper mills. Its profitability outlook has permanently deteriorated,” says Winfried Schaur, Executive Vice President for UPM Communication Papers.

”The recent weeks have been demanding. The mill personnel has been temporarily laid-off due to low order inflow. Still, the consultations were carried out in a constructive spirit. The consultations focused on the reasons for the plan, its potential impact and alternatives, and comprehensive change support for the affected employees. Unfortunately, the current economic and market environments do not provide a business case for the continuation of production at UPM Kaipola and actions need to be taken to ensure the future competitiveness of UPM Communication Papers,” says Schaur.

”During the consultations we agreed on an extensive ‘From-job-to-job-program’ to support affected employees. The program has been our model for change support since 2006 and offers voluntary company support e.g. for retraining, re-employment, move to another city and health care in addition to the statutory support defined in the Finnish law and UPM labour agreements,” Schaur continues.

There have been enquiries from companies in different sectors concerning the UPM Kaipola site. UPM is looking into these enquiries. Further, UPM is participating in the cooperation group for sudden restructuring set up by the the city of Jämsä and is cooperating with authorities from the Finnish Ministry of Employment and Economy.

The actions announced today strengthen the overall cost competitiveness of UPM Communication Papers and are a prerequisite for consistent profitable performance in the long run. As items affecting comparability in Q3 2020, UPM recognizes restructuring charges in total of EUR 99 million, whereof EUR 38 million as cash costs. The actions will result in annual savings of EUR 47 million.

For further information please contact:
Winfried Schaur, Executive Vice President, UPM Communication Papers, tel. +49 821 3109225 (in English and German)
Anu Ahola, Senior Vice President, UPM Communication Papers, News & Retail, tel. +358 40 585 0891 (in Finnish and English)
Antti Hermonen, General Manager, Jämsä river mills, tel. +358 400 280 839 (all questions related to change support)

UPM, Media Relations
Mon-Fri 9:00-16:00 EET
tel. +358 40 588 3284

We deliver renewable and responsible solutions and innovate for a future beyond fossils across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication Papers and UPM Plywood. As the industry leader in responsibility we are committed to the UN Business Ambition for 1.5°C and the science-based targets to mitigate climate change. We employ 18,700 people worldwide and our annual sales are approximately EUR 10.2 billion. Our shares are listed on Nasdaq Helsinki Ltd. UPM Biofore – Beyond fossils. www.upm.com

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