UPM to cease production at Myllykoski paper mill in Kouvola, Finland, by end of year, citing mill's weak cost competitiveness; closure to affect 371 mill employees, 21 in sales, management

Kendall Sinclair

HELSINKI , November 3, 2011 (press release) – UPM will permanently cease production at the Myllykoski paper mill by the end of this year. UPM and its employees were unable to establish a way to meet the commercial requirements for continuation of operations at the Myllykoski mill during employee negotiations. In addition, the company is cutting down its overlapping operations in paper sales, the supply chain and its functions in Finland.

The personnel reductions will affect 371 people at the Myllykoski paper mill and 21 people at Myllykoski Corporation and Myllykoski Sales Nordic. Personnel reductions will start in January 2012.

During the negotiations, issues such as pension schemes, relocations within the company, re-training and ways to alleviate the effects of redundancies were discussed. UPM will implement a programme called "From Job to Job" to support its employees during the transition.

“The Myllykoski mill has been making a loss for several years despite numerous measures aimed at making the operations more efficient. The mill’s cost competitiveness is weak. The high costs of raw materials and energy have further increased total costs and permanently damaged the mill's opportunities to reach a profitable level,” states Jyrki Ovaska, President, Paper Business Group.

The declining economic situation has worsened the mill's situation this autumn. Alternative, profitable uses for the mill inside UPM’s businesses have not been found.

The aim of these cuts is to improve the profitability and cost-effectiveness of UPM's European paper business and adapt the company's paper production to the needs of its global customer base.

“This is a heavy day for Myllykoski people. However, it’s important to face the realities and to look ahead. UPM will support re-employment and training of Myllykoski personnel," says Jyrki Ovaska.

UPM to implement From Job to Job programme at Myllykoski

UPM is launching a programme called "From Job to Job" in order to alleviate the effects caused by staff reductions in relation to the closing of the mill. The programme, which is to be implemented in co-operation with the authorities and partner companies, includes active measures that promote employment and re-training.

UPM will support the re-employment of those being made redundant by implementing several voluntary measures in addition to its statutory obligations:

€1.5 million will be invested in training, focusing on re-employment.
Those losing their jobs will be encouraged to become entrepreneurs and will be offered a business start-up allowance. A total of €1 million will be set aside for this purpose. The allowance per business is usually €20,000. €30,000 is the maximum amount that can be obtained, depending on how many people are employed by the business.
People who move to a new location for their new job will receive a moving allowance and their moving costs will be reimbursed until the end of 2013. UPM will now also offer this support to former employees who are not employed by UPM.
UPM will provide support for temporary housing and travel due to relocation for a new job, with a total of €1 million reserved for this purpose. Support can be obtained until the end of 2013. Support will also be given if former UPM employees are employed by a company with which UPM has signed a cooperation agreement. Such companies include the SOK service centre in Renforsin Ranta Business Area, Kajaani and the Transtech Oy plant in Otanmäki.
UPM's re-employment obligation will be extended from the statutory 9 months to 15 months.

UPM will also offer its employees an external employment service in addition to the public services offered by the Employment and Economic Development Office. The Employment and Economic Development Office has had a service point at the Myllykoski mill since September. The collaboration between UPM, the City of Kouvola, the Centre for Economic Development, Transport and the Environment, and the Employment and Economic Development Office has been excellent.

UPM to support the creation of replacement jobs in the Kouvola area

UPM, the Ministry of Employment and the Economy and the City of Kouvola are looking for a new industrial player to occupy the Myllykoski mill. Fields being looked into include bioenergy and the chemicals industry.

UPM will not establish a new business park in Myllykoski, but will continue to develop the nearby Voikkaa Business Park by actively seeking new businesses for the area. The excellent logistics, energy solutions and facilities in the area make the park an optimum location for many different types of businesses.

UPM will also establish a business incubator in the Voikkaa Business Park in collaboration with Kouvola Innovation Oy. The purpose of this three-year Protomo project is to encourage entrepreneurs to establish small businesses. It will also support the business start-up allowance scheme included in the From Job to Job programme.

Press conference:

A press conference regarding these issues will be held at the Myllykoski Virkailijakerho on 3 November 2011 at 5 p.m. Attendees will include Hans Sohlström, Executive Vice President, Corporate Relations & Development; Timo Suutarla, General Manager of the UPM Myllykoski mill; Jukka Arola, Project Director and representatives from the personnel groups.
Contact person: Asta Halme, Manager, Communications, UPM, Paper Business Group, tel. +358 (0)50 389 4315.

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