01 December 2016
UPM PAPER ENA TO REDUCE CAPACITY
UPM on Nov. 3 announced plans to permanently reduce its graphic paper capacity in Europe by 305,000 tonnes. The capacity reductions are planned to take place in Austria and Germany.
UPM plans to permanently close two paper machines:
- SC paper machine 3 at UPM Steyrermühl, Austria
- SC paper machine 2 at UPM Augsburg, Germany
Number of persons affected by the plan is estimated 150 for UPM Augsburg and 125 for UPM Steyrermühl. The employee consultation processes will start in the course of November in line with the local legislation. The machines are planned to be closed after the consultation processes have been finalized.
The plan would result in annual cost savings of about EUR 30 million. UPM would book charges of approximately EUR 75 million as an item affecting comparability in Q4 2016. Of the total, approximately EUR 45 million would be cash costs.
According to the plan both mills would continue paper production on the remaining cost-competitive paper machines at the mill sites.
"The demand for SC papers, in line with other graphic papers, has been declining during the last years and the decline is expected to continue," said Winfried Schaur, Executive Vice President, UPM Paper ENA. "Even under challenging market conditions our employees have always given their best and we regret the impact of the planned closures on the personnel. However, we have to adjust our operations to match with long-term customer demand."
Anu Ahola, Senior Vice President, News & Retail, UPM Paper ENA, explained, "Due to the adverse market conditions we have conducted a thorough analysis on the cost competitiveness of our graphic paper machines. Because of their scale, technical age and limited further savings potential PM3 in Steyrermühl and PM2 in Augsburg are the least competitive SC PMs in UPM's machine park. The planned closures would ensure an efficient use of our remaining five SC paper machines."