UPM Paper to cut capacity

UPM Paper, Helsinki, has announced plans to permanently reduce its graphic paper capacity in Europe by 305,000 tonnes. The capacity reductions are planned to take place in Austria and Germany.

UPM plans to permanently close two of its paper machines: SC (supercalendered) paper machine 3 at its Steyrermühl, Austria, mill; and SC paper machine 2 at UPM’s Augsburg, Germany, mill. The company says that it will continue to produce paper on the remaining machines at the two mills.

The company estimates that closing the two paper machines will provide it with an annual cost savings of around EUR 30 million (US$33 million).

UPM Steyrermühl manufactures newsprint and uncoated magazine papers (SC) with the annual capacity of 485,000 tonnes. UPM Augsburg manufactures coated (LWC) and uncoated magazine papers (SC) with the annual capacity of 498,000 tonnes

 “The demand for SC papers, in line with other graphic papers, has been declining during the last few years, and the decline is expected to continue. Even under challenging market conditions, our employees have always given their best and we regret the impact of the planned closures on the personnel. However, we have to adjust our operations to match with long-term customer demand,” says Winfried Schaur, executive vice president, UPM Paper ENA.

“Due to the adverse market conditions we have conducted a thorough analysis on the cost competitiveness of our graphic paper machines. Because of their scale, technical age and limited further savings potential, PM3 in Steyrermühl and PM2 in Augsburg are the least competitive SC paper machines. The planned closures would ensure an efficient use of our remaining five SC paper machines,” says Anu Ahola, senior vice president, News & Retail, UPM Paper ENA.

Earlier this year UPM sold its Schwedt mill in Germany to the German paper company Leipa. The annual production of that mill is 282,000 tonnes of newsprint, and that facility will end by the third quarter of 2017. Following the closure of the newsprint mill Leipa will convert the facility to making linerboard products.