Metso to Reduce Workforce in Finland

Jan. 19, 2009 (Press Release) - Metso will start personnel negotiations regarding employee reductions in Finnish units serving the paper industry. The employee reduction is estimated to affect a total of 900-1,200 employees. Approximately 4,700 employees work in the units subject to the personnel negotiations. The possible reduction in the number of units and the consolidation of operations into bigger units will be examined as part of the negotiations.

The preliminarily planned employee reductions are due to the need to adjust production capacity to correspond with the permanently decreased machine and equipment demand in the pulp and paper industry. The situation has been further weakened due to the global economic crisis. The goal of the planned measures is to secure the competitiveness of the business by streamlining the operating and cost structure of the operations in Finland.

The personnel negotiations regarding the employee reductions will start in the Paper business line and in the Automation business line's Process Automation Systems unit. They affect all personnel groups at all locations of these businesses in Finland.

"It is very unfortunate that we have to start measures of this magnitude in Finland. However, we want to ensure the competitiveness of the solutions we offer to the pulp and paper industry also in the future; our intention is to remain the market and technology leader. It is our understanding that the new machine market will not return to the level of the recent years, so we will adjust our cost structure," says Metso's President and CEO Jorma Eloranta. "Through the negotiations being initiated, we will seek solutions to this situation together with the personnel."

In the Paper business line, the reduction need is estimated to be a total of 800-1,100 people in the Roll Finishing Systems unit in Hollola, the Technology center in Inkeroinen, the Jyväskylä units, the Järvenpää units, the Service center in Oulu, the Tampere roll factory, the Paper business line's Turku units, the Valkeakoski units and the Varkaus Service center. These units employ a total of approximately 3,800 people.

Last autumn, personnel negotiations regarding temporary lay-offs were held in the Paper business line's units in Finland. The measures have already been initiated to some extent, but unfortunately they are not enough in the prevailing market situation.

In the personnel negotiations, the possible reduction in the number of units and the consolidation of the operations into bigger units will be examined. At the same time, also the division of responsibilities between units in Finland and China will be defined.

The Automation business line's Process Automation Systems unit's employee reduction need is estimated to be 90-130 employees. It will be also studied whether some of the reductions can be replaced by temporary lay-offs of a larger number of employees. Process Automation Systems unit's 18 Finnish sites employ a total of just over 830 people. The biggest sites are in Tampere and Kajaani.

More than half of the orders received by the Process Automation Systems unit are from the pulp and paper industry customers. Another significant customer group is the energy and process industry. During the negotiations, the possibility of production consolidations, the reorganization, divesture and closure of certain businesses will be examined and site arrangements will be considered.

The personnel negotiations will start immediately in the Paper business line and the Process Automation Systems unit, and the aim is to conclude them by mid-March. The employee reductions are expected to take place during April-September of this year. In the adjustment negotiations, also the possibility of part-time employment, internal transfers and retirement arrangements will be examined. The number of permanent terminations will be settled in the personnel negotiations.

As a result of the arrangements, the annual expenses of the businesses in question are estimated to decrease by 40-50 million euros. The cost reductions are estimated to be realized in full starting in 2010. The non-recurring expenses caused by the arrangements and recorded in 2009 are estimated to be EUR 10-20 million. "The need, nature and scope of potential support packages will be clarified during the negotiations process. Therefore their cost effect cannot yet be estimated in detail."

Operational Focus On Services Business
The pulp and paper industry's new investments in the upcoming years are estimated to decrease by about one third, and most likely even more this year, compared to 2004-2008, and they will be more clearly focused on Asia and South America. The closures of customer mills in the Nordic countries and elsewhere in Europe and North America and the decreasing markets for new machines globally have reduced the demand for Metso's paper technology and process automation products.

"Because of the development described above, we will adjust the existing new paper and board machine production capacity in northern Europe and our cost structure to correspond to the permanently decreased demand. At the same time, we will direct our know-how globally to the services business," emphasizes Bertel Langenskiöld, President of Metso's Paper and Fiber Technology segment.

Metso aims to invest more strongly in developing the services business for the pulp and paper industry. The wide installed base of machinery and equipment offers good opportunities for developing rebuild, repair, maintenance, and spare and wear parts services. Consequently, Metso has strengthened its services resources close to its customers in emerging markets.

Metso has a total of about 9,300 employees in Finland, 3,800 of them work in the Paper business line and about 800 in the Automation business line's Process Automation Systems unit.

SOURCE: Metso Corp.

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