UPM to lay off 870 workers, close mills in Finland

The world's largest magazine paper maker UPM-Kymmene Corp. said Tuesday it will lay off 870 workers in Finland and close four mills as the economic downturn continues to hit its industry.

Most of the permanent layoffs will be in the plywood and sawn timber sectors of the Finnish company's operations at several domestic mills, where earlier this year it temporarily laid off some 1,200 workers to save costs.

UPM said it also plans to invest euro25 million ($37 million) to expand operations at other mills, with estimated restructuring costs of euro44 million.

UPM's stock was almost unchanged at euro8.08 ($11.84) in late trading in Helsinki.

The company said it plans "significant restructuring to ensure the competitiveness of its plywood and timber operations in Finland and ... to remarkably improve the long-term cost competitiveness."

It will permanently close four mills during the first half of 2010, discontinue weekend shifts at most Finnish mills and streamline the organization of office employees, UPM said. Talks with employees will begin immediately and layoffs are expected to begin early next year.

"Centralization and efficiency improvement create opportunities for profitable operations in Finland in the long term," said Jussi Vanhanen, head of the engineered materials business group. "The employee impacts of these plans are regrettable but the current situation is unsustainable."

The announcement follows UPM's earnings report last week which saw it swing into a third-quarter net profit despite a drop in sales. Revenue in July through September fell by 19 percent to euro1.9 billion, and the company warned it will continue to curtail production in "most of its businesses to respond to the changes in market demand."

Last week, CEO Jussi Pesonen cautioned that although demand had started to bottom out the recession continued to hit demand for all of UPM's products.

Last year, UPM cut production, closed mills in Finland and slashed 700 jobs. It also announced plans to cut thousands of jobs worldwide during the next few years.

The Helsinki-based company has 64 production plants in 14 countries. It employs 23,200 people, down from 25,600 a year earlier.

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