Helsinki, Finland, 12 January 2010 – In November 2009, UPM announced plans concerning significant restructuring of its Plywood and Timber operations to ensure their competitiveness in Finland. The measures now decided include centralizing operations and investing in the more competitive Finnish units.
In negotiations with the employees, financial prerequisites could not be found to continue the operations at the plywood mills in Heinola and Kaukas in Lappeenranta, the sawmill in Heinola, and the further processing mill in Parkano. UPM will permanently close these mills during the first half of 2010. In addition, UPM is prepared for temporary production curtailments at all of its plywood mills and sawmills in Finland in 2010.
Furthermore, to improve the efficiency of the Plywood business, UPM will discontinue weekend shifts in most of the Finnish mills and streamline its office organization. In the Timber business area, UPM will restructure the production of the Kaukas further processing mill.
As part of the measures to improve the competitiveness of the Plywood and Timber operations in Finland, UPM will invest approximately EUR 25 million to expand the Savonlinna plywood mill and develop 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.
UPM estimates the restructuring costs to be approximately EUR 44 million, including impairment charges of approximately EUR 11 million. The restructuring costs for the fourth quarter of 2009 are estimated to be in the Plywood business approximately EUR 30 million, including a cash impact of approximately EUR 24. In the Timber business, the cost is estimated to be approximately EUR 14 million, including a cash impact of approximately EUR 9 million.
Implementation of these measures will decrease the amount of UPM employees by approximately 830 persons, of which approximately 650 work in the units to be permanently closed. The Kaukas plywood mill employs 298 persons, the Heinola plywood mill employs 212 persons, the Heinola sawmill employs 75 persons, and the Parkano further processing mill employs 63 persons. UPM estimates that approximately 200 persons could enter different pension schemes.
UPM's Plywood business employs currently 2450 persons in Finland and Timber employs around 900 persons. As a result of the measures, the number of employees in the Plywood business will decrease by about 680 persons and by 150 persons in the Timber business.
UPM will start a from-job-to-job program to alleviate the effects of the mill closures. The program includes, in cooperation with authorities and partner companies, active measures to find new jobs and retraining. UPM carried out a similar program when the Kajaani and Voikkaa paper mills where closed in 2008 and 2006.
UPM will support re-employment training of employees who have been given notice. UPM has reserved EUR 1.5 million to support the participation and material costs for retraining with a sum of up to EUR 5000 per person.
In addition, UPM will encourage employees to create new enterprises by offering start-up support. The company has reserved EUR 1 million for this purpose. The start-up support can be applied for until the end of 2011, and the maximum support for an enterprise is EUR 20,000.
After the re-employment obligation of 9 months, UPM is committed to assist employees given notice for an additional 9 months by informing them about UPM's vacancies to their home addresses and the employment authorities of the cities where UPM's plywood mills and sawmills are located.
For employees moving to work in a new location, the company will cover relocation costs and allowance equal to one month's remuneration.
Retiring employees and those given notice at the Heinola and Kaukas plywood mill, Heinola sawmill, and the Parkano further processing mill have the right to use UPM's occupational health services for one year after the end of their employment.
Immediately after the restructuring plans were announced, UPM started cooperation with the Finnish Ministry for Employment and the Economy, municipal bodies, regional and local employment and economic development centers, and local employment authorities in the cities where the mills to be closed are located. The cooperation continues with the target to create new jobs.