UPM Kaukas mill in Lappeenranta in the shore of Saimaa. Photo: Martti Kainulainen / Lehtikuva
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UPM-Kymmene is preparing to shut down paper production at its Kaukas mill in Lappeenranta by the end of the year, affecting an estimated 220 employees. The company cites overcapacity in the coated magazine paper market and declining global demand.
The closure would involve halting operations of Paper Machine 1, originally commissioned in 1975. Final decisions will follow the conclusion of mandatory labour consultations, which begin on 31 July and are scheduled to last six weeks.
The proposed changes were announced alongside UPM’s second-quarter financial results, which fell short of analysts’ expectations. Revenue declined to €2.40 billion from €2.55 billion year-on-year, and comparable operating profit dropped to €126 million, down from €182 million.
UPM said the decision would cut annual production capacity by 300,000 tonnes and generate savings of approximately €32 million. Production of coated magazine paper in Finland will be consolidated in Rauma, though no new positions will be created there. The company aims to increase utilisation of existing machinery rather than expand staffing.
Gunnar Eberhardt, head of UPM’s Communication Papers division, said the move was necessary to improve cost efficiency and support competitiveness. “The planned measures will enable more effective use of capacity and strengthen our cost structure,” he stated.
Antti Hermonen, head of production at UPM Communication Papers, said Europe’s magazine paper market faces a structural overcapacity of 1.1 million tonnes. The proposed shutdown would reduce that figure by 300,000 tonnes, but 800,000 tonnes of excess supply would remain.
Digitalisation is at the core of the industry’s long-term decline. Consumption of printed magazines and advertising-based publications has fallen across Europe and North America, eroding demand for UPM’s core paper products.
UPM confirmed that pulp, sawmill, biofuel and chemical production at the Kaukas site will continue as before. The mill’s research and development operations and forest services unit will also remain. Approximately 800 of the current 950 UPM employees at Kaukas are expected to continue in other roles.
Despite ongoing investments in new bio-based businesses, the planned closure has prompted concern in Lappeenranta and the wider South Karelia region. Kari Rikkilä, chief shop steward at the Kaukas mill, said the decision was not unexpected given recent market trends but was still hard to accept. “You pull your chin to your chest. What else can you do?” he said.
The announcement also triggered a political response. Finland’s Minister of Employment Matias Marttinen announced he will interrupt his summer leave and travel to Lappeenranta early next week. He described the situation as “heavy” for the region and said the government will explore ways to support affected workers.
“Every lost industrial job is significant, not just locally but nationally,” Marttinen said. He added that Finland’s forest industry still has long-term potential, despite the sector’s internal restructuring.
UPM completed a previous round of negotiations in May that affected 613 employees across mills in Lappeenranta and Kouvola. That process resulted in 25 redundancies at Kaukas.
The Kaukas site remains one of UPM’s largest production centres. It includes the company’s main R&D facility, built in 1961, and a range of units producing pulp, biofuels, timber, and pharmaceutical ingredients. Around 500 subcontractors also work at the site.
HT
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Source: www.helsinkitimes.fi
