Forestry products company UPM announced Tuesday that it plans to shutter a magazine paper manufacturing machine at its plant in Rauma, southwest Finland, in a move that would terminate about one-third of positions at the facility.
The SC paper machine was manufactured in 1971 and the firm said that it will cease operations by the end of this year. UPM said that it was launching redundancy talks to terminate 179 positions associated with the decommissioning of the machine.
Fourteen of the 179 workers affected by the retirement of the paper machine are on fixed-term employment contracts. Altogether UPM employs 520 permanent workers at the Rauma plant.
The company said that production will continue as usual on the two remaining paper machines in Rauma.
"This is a dark day for the Rauma paper plant but it’s not a big surprise. The reduction of capacity has been going on for many years and now it’s our turn. Furloughs are not enough," plant manager Timo Suurtala said.
UPM aiming for improved competitiveness
The paper products firm said that it will also implement other operational changes in a bid to eliminate redundancies in paper production capacity and ultimately to improve competitiveness.
"During the past 10 years the market has weakened steadily. That decline has now become sharper and we have too much capacity. At the moment, the SC paper machine in Rauma is the least profitable," Suurtala explained.
The factory director said that shuttering one machine would also weaken competitiveness of the two remaining machines, as fixed costs are more easily shared by three than by two machines.
The last time a paper machine was shut down in Rauma was in 2013, when nearly 90 people lost their jobs.
Factory up for sale in France
UPM said that it is also planning to sell the Chapelle newspaper factory in Grand-Couronne, France.
Implementing the planned decommissioning and plant closures would mean a 265,000-tonne reduction in UPM’s SC capacity and a 240,000-ton decrease in newspaper production.
However, the firm estimated that ending production on the SC paper machine would save roughly 20 million euros annually.
UPM said that it plans to set up a new service centre in Wroclaw, Poland, a proposal that it said would affect 168 employees at 11 different locations.
Mayor: Rauma will help affected employees
Rauma mayor Kari Koski described the UPM announcement as "unfortunate" for a paper production municipality.
"This was a blow that no one wished for, but now that it has come it must be dealt with. This is the way of the world and that grade of paper cannot be produced competitively in Finland," Koski said.
The mayor added that he has no precise information about the details of the redundancy plans, referring to the possibility of retirement as an exit for some employees. However he noted that the city would do its best to help the people who will become jobless.
"The impact on employment in Rauma will be about one percent, but you have to remember that the situation is difficult for everyone affected," he pointed out.
"Rauma will have more than 1,000 new jobs so we will overcome this, but of course they won’t be the same as in the paper factory, because salaries there are rather high," he commented.