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January 18, 2010
January 12, 2010
UPM-Kymmene and the future of Plywood and Timber operations in Finland
A bit off-topic, but relevant nontheless:
According to this press notice, Finnish forest giant UPM-Kymmene is drastically reducing its capacity in plywood and timber production. More than 800 employees lose their job or are transferred to early retirement.
As UPM-Kymmene puts it, the goal is to improve efficiency of the Finnish plywood business:
Furthermore, to improve the efficiency of the Plywood business, UPM will discontinue weekend shifts in most of the Finnish mills as well as streamline the organisation of office employees. In the Timber business area, UPM will restructure the production of the Kaukas further processing mill in Lappeenranta.
As part of the measures to improve the competitiveness of the Plywood and Timber operations in Finland, UPM will invest approximately EUR 25 million in the expansion of the Savonlinna plywood mill and the development of the production at the Kaukas sawmill and the Aureskoski further processing mill in Parkano. After the investment, the Savonlinna plywood mill will be the world’s most efficient birch plywood unit.
However, as is also the case with paper production by and large, this is process innovation rather than product innovation, which has short-term negative consequences for employment and unless demand changes drastically to the positive, also long-term negative consequences for employment - even though UPM says there will be new investments to improve the efficiency of the remaining facilities.
December 16, 2009
Finnish Statistical Yearbook of Forestry 2009
Yesterday I got the new statistical yearbook of the Finnish Forest Research Institute (METLA). Trends regarding profitability (deeply in red) and employment (down by some 5000 people) were expected, but it is interesting to see that the industry nonentheless has managed to reduce its equity ratio! To my knowledge the financial position of especially Metsä-Botnia has been quite week, after the Fray Bentos saga, and because UPM-Kymmene increased its stakes in this enterprise as well, one could have assumed that the equity ratio would have worsened. One reason is at least of a methodological nature: changes in law require capital debts to be counted as outside capital instead of own capital.
Considering the statistical yearbook, it is a shame (in my view) that investments abroad are still not included. From my own experience I know these statistics are difficult to get (apart from StoraEnso) but it is not impossible, certainly not for a institute dedicated to collecting these statistics. Furthermore, until about 2005 the Outlook of the Forest Industry included capacity usage rates for the paper industry, which I think are highly significant in relation to supply and demand, as well as collective bargaining issues. It would be nice to see these rates in the yearbook also, as a time series.
January 14, 2009
Metsä-Botnia closes paper mill in Kaskinen
According to YLE News Metsä-Botnia has officially decided to close the paper mill in Kaskinen. Production will be stopped at the end of March. The closure affects 300 employees, including some 70 maintenance workers.
In connection with the collective bargaining at Metsä-Botnia, it is estimated that 70 people can be transferred to other Metsä-Botnia plants while an equal number of workers can be retired.
The closure is founded, according to the management, because the mill is Metsä-Botnia’s oldest, and the supply of raw materials as well as rising production costs have cut into the mill’s profitability. In addition to this, rapidly declining demand for pulp has also strongly affected the decision for closure. For part of the employees will be tried to find local re-employment. After the closure, 55 paper mills are left in Finland.
In the light of declining demand for paper and a certain difficulty in the acquiring of raw materials, it is perhaps understandable to close a non-profitable firm. As Kari Lilja has shown in many articles, the life span of a paper mill is closely tied to the community. This fact makes it so sad when a mill is closed, because the paper industry represents a big employer in sparsely populated areas and also influences on the communities’ commercial life - ranging from building companies to local shops. Also, through the management and the people in the local chapter of the labour union, the political life of a paper mill community takes shape. Therefore, the closure of a mill, whatever the reasoning behind the decision, is a big blow to the community. As shown in the previous post, regarding Kemijärvi, it is presently difficult re-employing former paper mill workers. Also Harri Melin’s work on the Voikka case tends to confirm this. Worsening economic circumstances amplify this tendency, and one can really ask - also from an ecological and social perspective - whether investment in existing plants (retooling) isn’t preferable over greenfield investment abroad. Perhaps it is time to start seeing the paper industry as a sunset industry, at least on Finnish territory?
January 12, 2009
More lay-offs and slowing Kemijärvi re-employment
On Friday, paperboard- and papercompany M-Real announced that it will lay off over a thousand employees. In the press release the company stresses that this is an anticipatory measure for slowing demand, which however started already in the end of 2008.
The lay-offs will be negotiated in the collective bargaining which takes place according to statutory rule. However, regardless of M-real’s strategic restructuring, as discussed in the EIRO section on Finnish industrial relations, M-real again announced a profit warning, which was also the case last year. In combination with previous announcements that some of its mills will be closed does not bode too well for the future. In a future post I will discuss M-real’s troubled history in greater detail.
Following the closure of the Kemijärvi plant, which was allegedly a result of StoraEnso’s failed American adventures, the Finnish state, StoraEnso and other partners designed plans to re-employ the staff of the mill locally. According to the Finnish Broadcasting Service YLE the recession has already affected the possibilities to re-employ these people, although the Finnish state has invested millions in the ‘after-treatment’. Of the 200 persons which lost their job, about half has been re-employed. Others are unemployed, in schooling or have been pensioned. Although it might be crass to say that the Finnish state suffers for StoraEnso’s management decisions, the recession does put a significant price-tag on the consequences of the closing-down of the Kemijärvi mill, especially considering the town’s Northern location, which makes it an unlikely candidate for large-scale investment (other than by the state).
December 31, 2008
Happy new year!
I’d like to wish everybody in the paper industry, as well as my own colleagues and friends, a very fruitful and creative 2009!
December 30, 2008
Introduction Pt. II
The website www.arjenpolku.fi will in the future have more things connected to the paper industry and industrial relations. Also other areas of personal interest will appear in due time.
Introduction Pt. I
On the eve of the upcoming year, I finally open this blog about the Finnish paper industry. It will feature reflections on developments in the Paper Worker’s Union (Paperiliitto), the industry as a whole and specifically changes in the industry and how they affect the workforce in the paper industry.
I hope for comments and critical additions! The ‘green gold’ of Finland must remain a source of welfare for the country, and it can be a sustainable source of wealth as well.
Although I work as a researcher in the University of Turku, Dept. of Sociology, I wish to stress that the opinions in this blog are my own and do not in any way reflect the university’s or department’s view.
Paul Jonker