Finnish forest products firm UPM plans to shut down paper production at its Kaukas mill in Lappeenranta and move all of its coated mechanical paper manufacturing in Finland to its mill in Rauma.
That type of paper is mainly used in magazines and catalogues.
If implemented, UPM's plans would affect an estimated 220 employees at the Kaukas paper mill.
The six-week-long co-determination negotiations will begin on 31 July after which the company will make a final decision.
Kaukas mill's pulp, sawn timber and biofuels production, as well as research and development operations will continue as before.
According to Antti Hermonen, UPM Communication Papers' operations SVP, approximately 800 employees would remain in Kaukas, compared to the current workforce of around 950.
Digitisation shrunk paper demand
UPM said the planned shutdown is due to overcapacity in the graphic paper market and falling demand.
Hermonen noted that UPM and its rivals have an excess capacity of 1.1 million tonnes of the coated paper in Europe.
The company said the move aims to boost long-term competitiveness by streamlining production and cutting costs. The change would yield annual savings of about 23 million euros.
In a statement, the unit's EVP, Gunnar Eberhardt acknowledged the plans would have a major impact on the firm's employees in Lappeenranta.
"We will find solutions according to local practices. UPM will now engage in dialogue with employee representatives," he said.
Decline in revenue, operating profits
The most recent round of restructuring talks at UPM in Southeast Finland concluded in May. The negotiations affected all 378 employees at the Kymi paper mill in Kouvola, and all 235 employees at the Kaukas paper mill in Lappeenranta.
At that time, 25 employees were laid off at the Kaukas site.
On Thursday, UPM reported a significant year-on-year drop in both turnover and operating profit. Comparable operating profit fell by nearly a third to 126 million euros for April–June, while revenue declined from 2.55 billion euros to 2.4 billion euros.
