UPM reduces capacity

UPM is to reduce production capacity at its label plants in Finland and Australia after a review of its operations. The global forest products group said it would close three ‘outdated’ coating lines at its self-adhesive label materials operation in Tampere, Finland, and one in Melbourne, Australia, by March 2008, with the loss of around 30 jobs.

The firm said it would transfer products from the Australian coating line to other production lines, and the factory would continue to serve the Australian market with locally produced materials and imports from other Asian factories.

In addition, UPM said overcapacity in Europe and the strong Euro would mean a three-month shutdown in Finland of one paper machine at Jmsnkoski and one at Tervasaari.

The Jmsnkoski mill produces specialty papers for labels and packaging, and uncoated magazine papers. The mill's four lines have a combined annual capacity of 870,000 tonnes.

The Tervasaari mill makes papers for labels, envelopes and bags. Its annual capacity from three lines is 350,000 tonnes.

The firm said it had decided to cut production capacity after estimating that demand growth would be slower next year than in 2007.

The cuts, which also include reducing capacity in magazine paper in Canada, newsprint in Finland and Austria, and timber products in Finland, would save 36m-50m (€50m-€70m) in reduced wood, recycled paper, energy and personnel costs.

In total, around 680 people will lose their jobs.