July 25, 2023 - UPM Communication Papers today announced plans to permanently close its Plattling mill in Bavaria, Germany, reducing the uncoated and coated publication paper capacity by 595,000 tonnes in Europe.
UPM said, "These plans are a continuation of necessary steps to proactively ensure competitiveness of our operations and align graphic paper capacity to a profitable customer demand.
"Should the plans be implemented the number of UPM employees affected in Plattling is estimated at 401. In addition, we expect implications for the service providers on site. The participation process with the workers council will start immediately in line with local legislation," the company said.
The planned closure of UPM Plattling's two paper machines would lead to a permanent reduction of 380,000 tonnes of uncoated publication paper and 215,000 tonnes of coated publication paper. Both paper machines are planned to stop graphic paper production by the end of 2023.
UPM continued, "During the past 15 years the demand for graphic papers has been declining constantly and this trend is expected to continue. The decline in demand has been accentuated significantly over the course of this year. Furthermore, the long-term predictability of production factors, such as energy supply, is essential to our industry. The uncertainty about reliability and cost competitiveness of the energy supply in Germany is currently a big challenge."
Massimo Reynaudo, Executive Vice President, UPM Communication Papers, explained, "Mature graphic paper markets require continuous and relentless efforts to ensure cost competitive operations that also meet the future customer demand. UPM is committed to leading our business in a responsible manner.
"We respect the interests of both our workforce and our customers and consider them a central part of our plans. We recognize that today's announcement is very difficult news for our employees in Plattling. Together with the employee representatives, we will seek responsible solutions for our personnel and enter directly into a fair dialogue."
UPM said the plans announced today would strengthen the overall cost competitiveness of UPM Communication Papers and are a prerequisite for consistent paper operations in the long run. UPM would recognize restructuring charges of EUR 122 million (EUR 106 million cash impact and an impairment of EUR 16 million) and an impairment of EUR 100 million of the leased CHP plant as items affecting comparability in its Q3 2023 result.
The planned actions are estimated to result in annual fixed cost savings of EUR 60 million.
UPM Communication Papers plans to continue the temporary layoffs in Finland. The possible temporary layoffs could take place in several periods and would last a maximum of 90 days. Decisions on the continuation of the possible temporary layoffs in the four mills will be taken after the consultations have been concluded. The total number of employees covered by the employee consultations is approximately 1,100.
UPM delivers renewable and responsible solutions and innovates for a future beyond fossils across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication Papers and UPM Plywood.
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