Helsinki, Finland, 30 October 2008 -- Stora Enso is planning additional production curtailments in its Wood Products business area through temporary mill closures, shift reductions, efficiency measures, and extended maintenance stoppages in Finland, Estonia, and the Czech Republic.
The Group has recently taken similar measures in Austria, Sweden, and the Baltic States. In addition, Stora Enso plans to restructure its joinery component business in Estonia by permanently closing down the Viljandi component mill and transferring the business to Imavere sawmill. Combined, these planned measures would reduce total production by about 1.2 million cubic meters per year in Finland, the Baltic States, Austria, the Czech Republic, and Sweden.
Stora Enso will start codetermination negotiations concerning possible temporary lay-offs of Wood Products personnel at its Kitee, Tolkkinen, and Kotka sawmills and possible temporary and permanent lay-offs at its distribution company Puumerkki Oy in Finland. The total number of employees affected by the codetermination negotiations in Finland is about 460. The company also plans to reduce the number of employees at the Plana sawmill in the Czech Republic by about 30 and about 40 jobs could be lost at Viljandi in Estonia. All these measures are subject to local consultation, as required.
Earlier this month, Stora Enso concluded codetermination negotiations to curtail production at Ybbs sawmill in Austria from the fourth quarter of 2008 and Kopparfors sawmill in Sweden from the first quarter of 2009. These actions, together with other efficiency measures already implemented in Poland and the Baltic States, affect approximately 175 employees. Paikuse sawmill in Estonia, with an annual capacity of 170,000 cubic meters, was permanently closed down in October, instead of December, as announced on 10 September 2008. In addition, most Stora Enso sawmills plan to take extended Christmas breaks to curtail production and adjust inventory levels.
As explained in Stora Enso's interim review for the third quarter of 2008, the Wood Products business area faces very difficult operating conditions due to weakening demand, falling sales prices, and continuing oversupply in most markets. Raw material costs have not adjusted quickly enough to this new reality. The operating conditions and profitability problems are severest in Finland.
“The planned actions will strengthen our position for the very difficult quarters to come, although we cannot be sure that they will be enough. We will limit our exposure to the least competitive raw material regions, aggressively reduce our inventory levels, and reorganize our product portfolio to improve profitability," said Hannu Kasurinen, head of Stora Enso Wood Products. "We are still determined to maintain our level of service to our customers. We also remain committed to minimizing the impact of these planned actions on our personnel and their communities. In the negotiations, we shall jointly with local authorities consider all possibilities for helping the employees affected.”