W. Hamburger to Close Frohnleiten Containerboard Mill in Austria by May 2013

W. Hamburger's Frohnleiten recycled containerboard mill in Austria will be gradually closed over the next 6 months.

Oct. 31, 2012 - W. Hamburger GmbH said that it will close its Frohnleiten recycled containerboard mill in Styria, Austria during 2013. The mill employs 100 people.

The mill operates two paper machines — PM1 (90,000 tpy) and PM2 (80,000 tpy) — which produce linerboard and fluted paper.

One of the machines will be shut down on Nov. 1, 2012 and the other on April 30, 2013 at which time the mill will be closed.

The mill's staff was notified yesterday (Oct. 30).

In a statement the company said, "After taking over the plant in the year 2010, W. Hamburger GmbH tried everything to achieve economic efficiency of the paper mill by means of synergies with the Hamburger plant in Pitten/Lower Austria, as well as through investments and reorganization. Due to over-capacities on the European paper market and the intensified international competitive context, the company did not succeed in breaking the 15-months lasting period of loss in Frohnleiten.

Harald Ganster, managing director of W. Hamburger, said, “Being obliged to close-down a traditional company like Frohnleiten, in which generations have been employed, and which, as an important employer, has revitalized and helped to form the region, is a very difficult task for us.”

“We will of course be committed to our employees in the course of the plant closure, in order to make the change into a new period of their life easier.”

A social-compensation plan with a work foundation will be negotiated within the next weeks with the workers’ council, the company added.

Lack of orders due to over-capacity in the market

"The main reason for this close down is the intensified international competitive context due to over-capacities, mainly on the European market. The specific equipment in Frohnleiten with a total capacity of 170,000 tons, produced on two small paper machines with only 2.5 m working width, is not able to compensate long term cost disadvantages on the market," the company said

"In Great Britain and Poland, two new paper machines with a capacity of 450,000 tonnes, respectively, and a working width of 7.5 m, go into operation within a few months. Moreover, the current situation in the business sector does not give reason to expect a turnaround: Overseas markets cannot be supplied cost-effectively because of the euro-/dollar-exchange rate. The same applies to exports to Russia and Turkey," the company added.

"We have fought for two years — by means of investments, product innovations and a reorganization of the plant. After an extensive analysis of all options we now had to realize that closing down the plant due to market development, with a comprehensive cushioning of social hardship for our employees, is the only realistic step," Ganster concluded.

W. Hamburger GmbH is a company of the Prinzhorn Group. Besides the paper mill in Frohnleiten, the group operates plants in Pitten/Lower Austria, Spremberg and Trostberg in Germany as well as Dunaujvaros in Hungary.

SOURCE: W. Hamburger GmbH