UPM to Permanently Close Kaipola Paper Mill by Mid-December, Jämsänkoski Paper Mill to Continue Operations

The closure of the Kaipola mill and its three paper machines will lead to an annual reduction of 720,000 tonnes of graphic paper capacity — 450,000 tonnes of newsprint and 270,000 tonnes of coated mechanical paper.

Oct. 15, 2020 - UPM today confirmed that it will permanently close its Kaipola paper mill in Jämsä, Finland, by mid-December. UPM's second paper mill in Jämsä, UPM Jämsänkoski, will continue operations with one graphic paper machine and two specialty paper machines.

Employee consultations for UPM Communication Papers were concluded at the Jämsä River mills this week.

In late-August, UPM announced restructuring plans that included closing the Kaipola mill, selling UPM Shotton paper mill in Wales (UK), and streamlining the company's Communication Papers business function teams.

In a written statement, UPM said, "The parties were not able to identify an economically viable solution for the future operation of UPM Kaipola. Consequently, Kaipola's three paper machines will be permanently closed, affecting altogether 448 positions at the mill, of which 20 positions will be transferred to UPM Jämsänkoski's Specialty Papers operations. Approximately 20% of the redundancies will be retirements, with discussions pending. The closure will lead to an annual reduction of 720,000 tonnes of graphic paper capacity, thereof 450,000 tonnes of newsprint and 270,000 tonnes of coated mechanical paper. An after-care team will ensure safe conditions at the mill after the closing.

"The decisions were based on thorough assessments of graphic paper demand, global economic development and the local operating environment. Global demand for graphic paper has been declining consistently for years. In addition, the COVID-19 pandemic and related measures have caused a short-term disruption in demand and weakened the overall economic outlook."

Winfried Schaur, Executive Vice President for UPM Communication Papers, explained, "UPM Kaipola has competent teams and well operated machines. However, external factors such as high logistics costs in Finland, high tax burden and cost of labour as well as increasing fibre costs make it the least competitive among UPM's graphic paper mills. Its profitability outlook has permanently deteriorated.

"The recent weeks have been demanding. The mill personnel has been temporarily laid-off due to low order inflow. Still, the consultations were carried out in a constructive spirit. The consultations focused on the reasons for the plan, its potential impact and alternatives, and comprehensive change support for the affected employees. Unfortunately, the current economic and market environments do not provide a business case for the continuation of production at UPM Kaipola and actions need to be taken to ensure the future competitiveness of UPM Communication Papers," Schaur said.

"During the consultations we agreed on an extensive 'From-job-to-job-program' to support affected employees. The program has been our model for change support since 2006 and offers voluntary company support e.g. for retraining, re-employment, move to another city and health care in addition to the statutory support defined in the Finnish law and UPM labour agreements," Schaur concluded.

UPM noted that there have been enquiries from companies in different sectors concerning the UPM Kaipola site and it is looking into these enquiries. Further, UPM is participating in the cooperation group for sudden restructuring set up by the the city of Jämsä and is cooperating with authorities from the Finnish Ministry of Employment and Economy.

Through the renewing of the bio and forest industries, UPM is building a sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Paper ENA and UPM Plywood. To learn more, please visit: www.upm.com